Paul Krugman back in March stated
For example, there was a 2003 photo-op in which officials from multiple agencies used pruning shears and chainsaws to chop up stacks of banking regulations. The occasion symbolized the shared determination of Bush appointees to suspend adult supervision just as the financial industry was starting to run wild.
Oh, and the Bush administration actively blocked state governments when they tried to protect families against predatory lending.
Nothing has harmed America, Americans and the world more than the systematic sabotage of the regulations that were meant to prevent banks and their surrogates from fraudulent and destructive behavior. Bush and the GOP have been ideologically committed to "free-for-all" markets not free enterprise.
Free enterprise requires markets with open and fair competition or it will always end up with the bullies monopolizing the game. Most sports without rules and impartial referees would end up the same. Why would our economy, the biggest ongoing sporting event in history be any different?
This irresponsible and even criminal behavior has caused potentially even more damage to the economy and our savings than the Iraq war.
The damage has not yet run its course.
We have a melt-down in progress and the GOP who has made this all possible has the hubris to talk about it as if their hands were clean.
The Democrats seem incapable of laying the blame where it belongs, with the President, the Congress and the Federal Reserve under Greespan.
It also turns out that the Supreme Court back in early 2007 made a decision that enabled the Bush administration to over ride the wishes of all 50 states to curb predatory lending. In a special case of irony it was the Liberal justices who were behind this ruling.
This quote from the NYT Editorial back in March 2007 sums it up:
The mortgage lending subsidiaries of national banks are immune from state regulation, the Supreme Court ruled on Tuesday in a decision that upheld a controversial regulation issued six years ago by the office of the comptroller of the currency, the chief federal bank regulator.
The attorneys general and bank regulators of all 50 states had urged the justices to find the regulation out of bounds, either as a misinterpretation of the National Bank Act or as a matter of constitutional federalism. Consumer groups told the court that a decision upholding the federal agency's claimed power of pre-emption would displace state oversight at a time when the mortgage lending industry urgently needed close supervision.
Apart from taking action to avert a complete catastrophe there needs to be some accountability for this damaging behavior.
First, to prevent the meltdown:
Reposessions should be suspended (for those where the home is their primary residence) and legislation passed to retroactively prevent walk-aways from mortgages that are under water. The banks need to be forced to rewrite the loans with fair fixed-interest 30-year loans.
The walk-aways are making the valuation melt-down much worse than it need be.
The people who sabotaged the regulations that were meant to prevent this kind of fiasco need to be exposed and in some cases brought to justice.
They should NEVER be able to run for office again without this record being firmly in the public eye.
The use of regulation as a demonized term rather than as a protective legal framework needs to be attacked as illigimate. Regulation needs to be reframed as rules to facilitate a free enterprise system based on the most level playing field possible. Free for all markets need to be seen for what they are, unfair, predatory and in the end can destroy far more value than they could ever generate. Nothing exceeds like excess, comes to mind.