Once Upon a Time

We all have at one time or another heard recited various fairy tales beginning with the words which are the title of this posting. A variation of the phrase has been fed to us recently by the political candidates of both major political parties and dutifully echoed by the punditocracy of the so called "mainstream media". I am of course referring to the finger pointing and blame assignment for the recent meltdown of the investment banking and insurance giants on Wall Street. The most recent version goes something like this: "Yes Virginia; once upon a time in the United States there existed a group of evil and avaricious men called 'predatory' lenders who preyed upon unsuspecting poor people and minorities and whose aim was to trick them into mortgages at usurious rates of interest in order to deprive them of any hope of achieving the 'American Dream'." If these poor victims could not convince the lenders to provide financing for homes or businesses due to the unscrupulous practice of having a reasonable assurance that the funds would be repaid, the lenders (banks) were obviously guilty of the evil practice of 'red lining'."

Government (or more precisely Democrat politicians) to the rescue, and voilá President Carter signs the "Community Reinvestment Act of 1977. As of late 2000:

Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, [i.e. ACORN, the Obama connected group] intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.

Not to worry Virginia, "the prices of real estate will continue to rise forever" and these shaky loans will be refinanced.

Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we're seeing is the inevitable result of political interference in free market economics. Acme bank didn't want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn't all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under political pressure; the loan, with millions like it, failed - and now we are left to enjoy today's headlines.

And Ms Pelosi has the gall to absolve her party, the dimocrats, of all responsibility for the meltdown.
In the words of John Stossel: "Gimme a Break." And be sure to keep kissing those frogs Virginia.