The Big Lie of the Crisis keeps rearing its ugly head.
The latest spotting: Senator Marco Rubio’s response to Obama’s State of the Union speech. When you say something like this, particularly at this late date, you’re exposing yourself as one of two things: dumb or deceptive. Pick your poison (emphasis mine):
This idea - that our problems were caused by a government that was too small - it’s just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies
The straight-news press does a poor job of pointing out Rubio’s giant whopper. Actually, it does no job at all.
The Wall Street Journal quotes this falsehood straight, with no pushback, as does The Guardian and American Banker. CNN replayed the tape after hooking some Republican voters up to those dial thingies, saying, “here’s Senator Rubio’s best moment of the night, according to the frequency with his own party.”
It might be news when a senator, pushed as a frontrunner for his party’s presidential nomination in 2016, gets up on national television and spouts pure falsehoods. It might even be more newsworthy than whether he gets all cotton-mouthed and has to grab for his water bottle.
This shouldn’t be something that’s left to the opinion writers, but unfortunately it all too often is.
Fortunately, Mike Konczal pens a thorough takedown at the Washington Post’s Wonkblog. In short, overwhelming, objective evidence, not to mention common sense, tells us that private, deregulated markets, not government interference, are responsible for the housing bubble and resulting crisis.
Konczal notes that private lenders created the subprime boom; that the Community Reinvestment Act was responsible for at most 6 percent of the loans, and in reality far less; that Fannie and Freddie’s purchases of MBS weren’t responsible; and that conservatives have obfuscated the definition of subprime to make their bogus case.
On that last point, read this piece by David Fiderer, who calls out the American Enterprise Institute’s Edward Pinto, who along with Peter Wallison, has been the primary force behind the Big Lie, noting how he has recently taken in The New York Times, the Los Angeles Times, and others with misleading claims about the Federal Housing Administration.
So what’s going on here? Paul Krugman gets to the heart of the matter:
This really isn’t about the GSEs, it’s about the BSEs — the Blame Someone Else crowd. Faced with overwhelming, catastrophic evidence that their faith in unregulated financial markets was wrong, they have responded by rewriting history to defend their prejudices.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum. Tags: housing bubble, Marco Rubio, regulation, State of the Union