The LATimes weighs in on financial reform

David Lazarus, LATimes financial writer, writes a column today "Delays in reform hasten next crises" in which he excoriates greedy bankers for our current financial problems. He presents Obama as the righteous leader getting at the bottom of the mess and he ends by encouraging the bankers to get on board with the reforms the administration is proposing. This is pretty thin gruel for what happened.  Here are a few facts and some of the background that led to the meltdown, none of which appeared in Lazarus's column today.

To be fair, bankers shoulder some of the blame for the meltdown, along with the rating agencies who routinely gave investment grade ratings to bundled products which included sub-prime mortgages sold to investors worldwide.  Granted the bankers and the rating agencies share some responsibility for this mess.  However, the biggest share of the blame rests with lawmakers and administrations that paved the way for sub-prime mortgages going back to the enactment of the CRA (Community Redevelopment Act) during the Carter Administration.  The lawmakers complicit in this mess are Barney Frank, Chris Dodd, John Kerry, Barack Obama, and the entire Black Caucus.  Chris Cuomo in his role as Secretary of Housing during the Clinton Administration was a key player in opening the floodgates for sub-prime mortgages.  And let's not forget Rahm Emmanuel who served on the board at Fannie Mae during a time when regulators, in the face of orchestrated push back from Democrat lawmakers, were trying to reign the GSOs in even just a little.  In 2004 Alan Greenspan, head of the Fed, warned that the GSOs represented systemic risk, and in 2005 Republican lawmakers led efforts to apply the brakes to the expansion of these GSOs. These Republican lawmakers were summarily rebuffed in the Senate by the Democrats and the 60 vote cloture rule.  Over a period of many years, these same Democrat lawmakers installed Franklin Raines and other party worthies in top jobs at the GSO's where they ignored and demonized regulators and unsympathetic Republican lawmakers trying to blow the whistle.  A disinterested and objective observer might notice that all the bad players in this sordid affair are Democrats.  And yet, there is no mention of any of these facts and this background in Lazarus's column which singles out the greedy bankers as the bad guys.  One could call this biased reporting or incompetent reporting, or both, and one would be right.

For starters Mr. Lazarus should read "Architects of Ruin", by Peter Schweizer, and "The Housing Boom and Bust" by Thomas Sowell.  These two authors have done their homework.