One of the most under-reported bits of the past week was Lloyd Blankfein's speech on the causes and consequences of the sub-prime meltdown and the panic of 2008. Blankfein is The Man at Goldman, these days.
He starts to say interesting things, including a frank recognition that the financial sector is special:
Financial institutions have an obligation to the broader financial system.
In the very next paragraph, he shoots his credibility in the foot by blaming a Government policy of subsidizing home ownership. [With little rhetorical exception, most U.S. government policies target affordability, usually for low-income, under-served, or first-time homebuyers, not "homeownership" of McMansions.]
Blankfein is, of course, wrong on the facts. Sub-prime lending did not substantially increase home ownership in America.
Tonight, CNBC producers have dug up a clip of a Bill Clinton speech, not setting ownership goals, but touting the arms of government as way to help people live the American dream, which still includes your own home, at least as much as I know it.Blankfein is, of course, wrong on the facts and CNBC's clippings are hopelessly biased. Sub-prime lending did not substantially increase home ownership in America and the vast majority of sub-prime lending was done under Bush-Cheney. What's more, poor credit underwriting standards crept well past the government programs, into the private-only market for jumbo residential mortgages. (We all remember Angelo Mozillo rushing to Congress and getting accommodation from them for the agencies to buy up his jumbos, yes?)
From all that I've read, the incredibly poor choices at Freddie and Fannie can be largely put at the foot of one guy, not "The Government"; and investigating how he got and did his job is still something that may not have been done fully (I certainly don't read everything, so...).
