Did Progressive intervention in the housing industry contribute to the mess we are in? Four Committee Republican say "yes" and we agree. Here is why.

Here is one of the more misleading stories of the year, literally. It was written by a second string journalist at the Huffington Post, probably one of that blog's many unpaid "reporters" (or so the rumor goes). It concerns the Debt Commission ordered by Mr. Obama and the four Republicans on the committee who have decided to publish their own report rather than support the written opinion of other's on the commission. The Post's resident Leftist journalist, opened his article with this summation:

The four Republicans appointed to the commission investigating the root causes of the financial crisis plan to bypass the bipartisan panel and release their own report Wednesday, according to people familiar with the commission's work.

The Republicans, led by the commission's vice chairman, former congressman and chair of the House Ways and Means Committee Bill Thomas, will likely focus their report on the explosive growth of subprime mortgages and the heavy role played by the federal government in pushing mortgage giants Fannie Mae and Freddie Mac to purchase and insure them. They'll also likely focus on the Community Reinvestment Act, a 1977 law that encourages banks to lend to underserved communities, these people said.

The Republicans' report is expected to conclude that government policy helped inflate the housing bubble and that prices weren't expected to crash because the government pushed homeownership so aggressively. They say that the report will note that once the bubble burst, a financial panic followed because firms weren't adequately prepared. LINK.

Here we are, more than two years after this crisis had its beginning, and a very junior editorialist stumbles onto the reason for the crisis and rejects it. What you have read in the quote, above, is precisely what most economists believed was the cause for the financial crisis. Within weeks of the financial collapse, economist speaking on CNN, MSNBC and Fox Business News seemed agreed that high risk loans were at the heart of the disaster.

Midknight Review has reported on this issue a number of times. The conclusion of the four Republicans is the same as our reporting. The "government policy" referred to in the article is a program called "Affordable Housing." Fannie and Freddie were used as clearing houses for the "bad paper" high risk loans to those normally unqualified to purchase housing. These two institutions remain in deep financial trouble. Most reports inform us that it may take more than 1 trillion dollars to "bail out" the two mortgage houses. We have seen reports that as much as 3 trillion dollars is closer to the truth. The two institutions own more than half of all mortgages in this country and that problem has yet to resolved or even seriously considered.

Two years after the fact, the Marxists of the Left have decided to make it a crime to "blame the government" and the article above does just that. The author's research poor but, hey !!, he is reporting the party line.

Understand that from the very beginning of this mess, Progressives and Socialists have been covering both their behinds and their pet political housing project with claims such as the article above and others such as one out of Bloomberg Business Week (September 29, 2008) headlined "Community Reinvestment Act had nothing to do with subprime crisis." The cover-up and associated lies have been in the works from the moment of the collapse. But the jig is up. More and more folks know the truth and , and, and the conservatives are coming to town!

Understand that we are not saying the conclusion of the four committee members is the solitary reason for the crisis, but it was a primary cause. Bloomberg is simply wrong. Even a novice economist should show caution as she reads ". . . . . had nothing to do . . . ." Nothing, as in "absolutely nothing"???????!! Such a statement is nearly always wrong. If one studies the Debt Commissions released comments, he would see that even the Commission does not absolve Fannie and Freddie and the CRA from guilt.

The 1977 CRA (Community Reinvestment Act) under Jimmy Carter, was the Socialist Left's intervention into the housing market; "even the very poor deserve the right to own their own home." While the Left has been meddling in federal housing policy since the 1930's (National Housing Act of 1934 and the Housing Act of 1937) , it was Bill Clinton who set the stage for the current financial collapse. 1999 was the year. In the closing months of his Administration and under the supervision of a very Republican Congress with Newt Gingrich at the helm in the House of Representatives, Clinton and his Democrat cronies pressed Fannie Mae to lower credit requirements.

The NY Times (September 30, 1999) reported on the story with these words: " In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders . . . . . . . Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits." LINK.

In the same article and talking about subprime lending, the article goes on to a make startling forecast:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Understand that these are the words of an alarmed economist back in 1999, when the financial crisis of 2008 actually had its beginnings.

We will not bury you in hyperlinked references, although we could do so without much problem. Just know this, Marxist/Progressives continue to fight for the right of home ownership for those who cannot afford same. Nothing has changed since 1999 and earlier, except more of the sane world knows what is going on.

The four Committee Republicans are not upset with the conclusions of the panel, per se. Rather, their concern is that the focus of blame will lead to the exclusion of the 800 pound gorilla in the room, a financial beast the Progressives are trying to hide in the closet.

If you have the time, take the next 7 minutes or so and listen to this video report.

Certainly, the video "lesson" is conservative in origin, but let's not give it walking papers simply because of that fact. In the end, we conclude that there were several highly involved and problematic issues contributing to the current crisis, one of which was/is our 800 pound gorilla.