‘THE COLLAPSING CRISIS COMMISSION’…. We learned this week that the bipartisan Financial Crisis Inquiry Commission isn’t having much luck. Republican members on the panel want to ban the phrases “Wall Street” and “shadow banking” and the words “interconnection” and “deregulation” from the panel’s final report.
It was a reminder that just when it seems Republicans are incapable of surprising, they manage to kick things up a notch. This even applies to a panel instructed by law to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.”
As you may have heard, Democrats on the commission balked at the Republicans’ Orwellian requests, prompting GOP panelists to issue their own report. Paul Krugman wasn’t impressed by their nine-page effort, which features “few facts and hardly any numbers.”
In the world according to the G.O.P. commissioners, it’s all the fault of government do-gooders, who used various levers — especially Fannie Mae and Freddie Mac, the government-sponsored loan-guarantee agencies — to promote loans to low-income borrowers. Wall Street — I mean, the private sector — erred only to the extent that it got suckered into going along with this government-created bubble.
It’s hard to overstate how wrongheaded all of this is. For one thing, as I’ve already noted, the housing bubble was international — and Fannie and Freddie weren’t guaranteeing mortgages in Latvia. Nor were they guaranteeing loans in commercial real estate, which also experienced a huge bubble.
Beyond that, the timing shows that private players weren’t suckered into a government-created bubble. It was the other way around. During the peak years of housing inflation, Fannie and Freddie were pushed to the sidelines; they only got into dubious lending late in the game, as they tried to regain market share.
But the G.O.P. commissioners are just doing their job, which is to sustain the conservative narrative. And a narrative that absolves the banks of any wrongdoing, that places all the blame on meddling politicians, is especially important now that Republicans are about to take over the House.
Remember, just this week, Rep. Spencer Bachus (R-Ala.) said, “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
And who’s Spencer Bachus? He’s the conservative who Republicans tasked with chairing the House Financial Services Committee, which is responsible for oversight of the banks and Wall Street.