Thursday, October 23, 2008
Some financial news pundits must not watch “Seinfeld.” The pundits have come to the revelation that everything they ever professed about the economy was wrong and that market is behaving in the exact opposite to the way it should be.
Yet a number of them have come back from wherever pundits go when they’re not pundit-ing, presumably some rip in the fabric of space time, to put their latest spin as to what the cause of the housing crises and subsequent stock market turmoil really was.
Jim Cramer, CNBC’s personal Howard Beale, was on “The Colbert Report” and explained that it wasn’t predatory lending and an overall lack of regulation it was … wait for it … too much regulation!
This was echoed by an opinion piece in The University Daily Kansan titled “How Over Regulation Has Ruined Wall Street” (Oct. 21). The piece explains that Fannie Mae, Freddie Mac, Bill Clinton, Jimmy Carter and the Community Reinvestment Act were really responsible and not corporate greed.
Fannie and Freddie are not without blame, but let’s look at the root cause of the crisis: those who did the original lending of the subprime mortgages. Private sector mortgage service companies, like Select Portfolio Servicing, Inc., made 50 percent of these loans. Banks made another 30 percent.
These companies were not subject to any government regulation, including CRA. According to a report by a private legal firm, institutions that were covered by CRA were half as likely to resell these loans to other parties.
Fannie and Freddie generated virtually none of the $1.5 trillion in subprime mortgages. The CRA did not require banks to fail to verify that their clients had a legitimate source of income or not make sure they had made payments in the past.
These pundits should remember Jerry’s advice, “If every instinct you have is wrong, then the opposite would have to be right.”
Maybe then they’ll be able to help us get out of the financial crisis. Either that or they’ll wind up working for the Yankees.
— — Adam Meredith is senior from Lenexa.
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Comments
Letter: What advice the pundits can get from ‘Seinfeld’
this submission is a work of fiction and a distortion of facts. it NEVER should have been printed. printing such obvious and outright lies is a serious offense. this crux of this submission relies on legal analysis by a law firm who is representing CRA banks who are now facing crimial prosecution. who allowed this to be printed?
Letter: What advice the pundits can get from ‘Seinfeld’
Ed. note: Outside advertising removed.
Letter: What advice the pundits can get from ‘Seinfeld’
Like you, I am inclined to believe that this analysis is incorrect, but can you get more specific Todd?
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