Tuesday, September 30, 2008

Can Congress solve the problem it caused?

Thomas Sowell speaks the simple truth.


Nothing could more painfully demonstrate what is wrong with Congress than the current financial crisis.

Among the congressional "leaders" invited to the White House to devise a bailout "solution" are the very people who have for years created the risks that have come home to roost.

Five years ago, Barney Frank vouched for the "soundness" of Fannie Mae and Freddie Mac and said "I do not see" any "possibility of serious financial losses to the Treasury."

Moreover, he said the federal government has "probably done too little rather than too much to push them to meet the goals of affordable housing."

Earlier this year, Sen. Chris Dodd praised Fannie Mae and Freddie Mac for "riding to the rescue" when other financial institutions were cutting back on mortgage loans. He too said they "need to do more" to help subprime borrowers get better loans.

In other words, Rep. Frank and Sen. Dodd wanted government to push financial institutions to lend to people they wouldn't lend to otherwise, because of the risk of default.

The idea that politicians can assess risks better than people who've spent their whole careers doing so is so obviously absurd that no one should take it seriously.