Posted at 1:40 PM on Tuesday, September 30, 2008 by David Horowitz
I have received a ton of emails of late with the YouTube video "Burning Down the House" identifying the Community Reinvestment Act as the cause of the current financial crisis. All of these emails without exception come from individuals who are not economists and who have no greater understanding of the economic crisis than the 99.8 percent of pontificators on global warming do about climatology. I think it is prudent to try to be a little more circumspect when sounding off on matters where angels fear to tread.
For those interested, here is the word of an actual economist, and a conservative one at that:
From Tyler Cowen:
Did "minority lending" drive the crisis? Tyler Cowen This is one of the queries I receive, in varying forms, every day. Did policies such as the Community Reinvestment Act significantly worsen the housing bubble and the subsequent collapse? Basically not, although in my view these were bad policies for other reasons. They contributed to our current problems by only a small amount and of course these policies have been around for a long time before the housing bubble ever got started. Here is one back-of-the-envelope debunking of the "diversity recession" idea - http://isteve.blogspot.com/2008/09/diversity-recession-debunking.html . You can, however, cite the general obsession with extending home ownership as strong evidence that putting Democrats in charge does not suffice to solve our regulatory problems.
Only polite comments will be left standing... Hat Tip: Ben Horowitz
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