The big-government ‘regulation’ of the mortgage market is a major cause of our current financial crisis. Problems which were known about nearly two-hundred years ago came back again. Bought-off Senators, such as Chris Dodd and Barack Obama, took the ideological easy route of pushing loans on people who could not pay them off, at the risk of a financial crisis such as we are now having.
The first President of the modern Democratic Party, Andrew Jackson, summarized the corrupt Bank of the United States as follows:
By the early 1830s, President Andrew Jackson had come to thoroughly dislike the Second Bank of the United States because of its fraud and corruption. Jackson then had an investigation done on the Bank which he said established “beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money.” Although its charter was bound to run out in 1836, Jackson wanted to “kill” the Second Bank of the United States even earlier. Jackson is considered primarily responsible for its demise, seeing it as an instrument of political corruption and a threat to American liberties. The head of the Second Bank during Jackson’s presidency was Nicholas Biddle who decided to seek an extension of the bank’s charter four years early, in 1832. Henry Clay helped to steer the bill through Congress. But Jackson vetoed the bill in July.
Now, because in part of Obama’s and Dodd’s actions, we are in the worst financial crisis since the Great Depression.
There are two major approaches being discussed: first, give even more wealth and influence those incompetent investment banks which helped create this mess, or partially nationalize the banks.
Both approaches are ugly, but given the choice between rewarding the stockholders who helped create this mess, or punish them, I say punish.