Aug 21, 2009
A Different Narrative
Last year, as the financial crisis gathered pace, free market commentators, both conservative and libertarian, would emphasize how federal law and federal agencies had pressured banks and other mortgage lenders into making loans to subprime borrowers who then defaulted as house prices collapsed so causing many banks to go bankrupt.
Today's Financial Times reports here and here that an investigation has shown"[t]he top 25 US originators of subprime mortgages - the risky assets that sparked the global financial crisis - spent almost $370m in Washington over the past decade on lobbying and campaign donations as they tried to ward off tighter regulation of their industry." If true, this doesn't surprise me nor, I suspect, will it astonish many of our readers who are well aware of how big business is usually, perhaps always, in bed with the state and is rarely, if ever, simply the victim of government intervention.
Of course, the two stories are by no means mutually exclusive. Nonetheless, if today's study by the Center for Public Integrity is accurate, it suggests that the narrative free market commentators like to tell fails to provide a full explanation of the subprime mess.
Today's Financial Times reports here and here that an investigation has shown"[t]he top 25 US originators of subprime mortgages - the risky assets that sparked the global financial crisis - spent almost $370m in Washington over the past decade on lobbying and campaign donations as they tried to ward off tighter regulation of their industry." If true, this doesn't surprise me nor, I suspect, will it astonish many of our readers who are well aware of how big business is usually, perhaps always, in bed with the state and is rarely, if ever, simply the victim of government intervention.
Of course, the two stories are by no means mutually exclusive. Nonetheless, if today's study by the Center for Public Integrity is accurate, it suggests that the narrative free market commentators like to tell fails to provide a full explanation of the subprime mess.