Lying For Wall Street

-Submitted by David Drumm (Nal), Guest Blogger

New York City mayor Michael Bloomberg surprised many when he stooped to the level of Rush Limbaugh to push the Big Lie, that it was the government that caused the mortgage crisis. Bloomberg claimed that “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and to give mortgages to people who were on the cusp.” Bloomberg added that members of Congress “were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will.”

Fannie and Freddie don’t make loans. Whom does Bloomberg think he’s fooling?

 

Matt Taibbi referred to the speech as Bloomberg’s Marie Antoinette moment, his own personal “Let Them Eat Cake” line. Taibbi went on to write:

Well, you know what, Mike Bloomberg? FUCK YOU.

The Big Lie has been shown false so many times, and Bloomberg’s persona as a pragmatic technocrat has been so carefully crafted, that Taibbi’s frank language is not only understandable, but refreshingly honest.

More than 84% of the subprime loans were issued by private lending institutions. Only one of the top 25 subprime lenders was directly subject to the Community Reinvestment Act (CRA).

The Occupy Wall Street movement must be worrying the 1% if Bloomberg is willing to embarrass himself by spouting falsehoods. It was the greed of Wall Street that created the demand for riskier loans. Mortgage Backed Securities were a hugely profitable financial monster with an appetite for more and more mortgages. More mortgages required more borrowers and hence, risky and even fraudulent lending practices.

As we have discussed, here, the Obama administration has proposed a settlement with major banks that would restrict the ability of prosecutors to investigate wrongdoing with regard to bundling of loans into mortgage securities. Taibbi’s frank statement need not be reserved for Bloomberg.

H/T: Mike Konczal, McClatchy, Barry Ritholtz, NYTimes, Center for Responsible Lending (pdf).