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In some circles, there’s a tendency to consider New York City Mayor Michael Bloomberg (I) a liberal. Ralph Nader has even been advocating a Bloomberg presidential campaign. (Seriously.)
But it’s worth appreciating the limits of the NYC mayor’s ideology. Bloomberg is great on marriage equality, and he showed some real leadership during the ridiculous Park51 uproar, but he is not a progressive champion lurking behind an “independent” banner.
Just in recent weeks, Bloomberg has spoken out against tax increases on the wealthy and criticized Occupy Wall Street, and this morning, went so far as to absolve the financial industry of responsibility for the mortgage crisis.
Mayor Michael Bloomberg said this morning that if there is anyone to blame for the mortgage crisis that led the collapse of the financial industry, it’s not the “big banks,” but Congress. […]
“I hear your complaints,” Bloomberg said [about OWS]. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp….
“[T]hey were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”
The mayor added that it’s “cathartic” to point fingers now, but he wants to focus on solutions to the problem.
On that last part, I’m sympathetic, but if we don’t know what caused a problem, we can’t expect to fix it.
And in this case, Bloomberg is just wrong.
These comments indicate Bloomberg is either ignorant of the facts of the mortgage meltdown or so eager to rid his city of Occupiers that he’ll discard the truth. The Community Reinvestment Act of 1977 did not cause the meltdown of 2007, in no small part because that law didn’t apply to the private lenders who dominated the subprime market. The fraudulent practices of those lenders and the financial derivatives the private investment houses used to turn the subprime market into an elaborate game of hot potato were left unregulated by the federal government — but that’s not even the basis for Bloomberg’s criticism of Washington. He claims Fannie Mae and Freddie Mac ‘made a bunch of loans’ even though they (1) do not make loans, and (2) were backing out of insuring subprime loans as private, unregulated firms rushed into the derivatives casino.
If Bloomberg doesn’t know any of this, he hasn’t been paying attention to years of reporting on the subject. If he does, he is carrying water for the big banks and fraudsters who are doing everything they can to help Republicans repeal last year’s financial reforms and restore the casino culture that let many of them profit from the crisis they created.
When it comes to the kind of rhetoric we heard from Bloomberg this morning, I expect it from Republicans, but the NYC mayor is supposed to know better. It’s been several years since the crisis began, and Bloomberg’s charges have been debunked enough times for him to know the truth.
As Pat Garofalo recently explained, “While the mortgage giants were no angels, Federal Reserve data shows that it was private mortgage brokers who drove the subprime housing bubble: More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions…. Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year…. Wall Street firms divvied up the junk loans from subprime dealers and sold them all around the world, setting the state for the 2008 financial crisis. But Republicans … continue to cling to a story that the data doesn’t tell, in order to blame the government for the private sector’s sins.”
As hizzoner demonstrated this morning, it’s not just Republicans.
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Jamie on November 01, 2011 2:51 PM:
correct me if I'm wrong, but Dubya was a big fan of the "ownership society"?
cmdicely on November 01, 2011 3:00 PM:
In what circles, specifically?
What does this have to do with the preceding sentence that is offered as reinforcement for?
scott_m on November 01, 2011 3:07 PM:
This is especially bothersome because Bloomberg is considered the one of the Most Serious of the Very Serious Persons--expect to see this quip reuttered like a mantra among the David Gregories and Gloria Borgers and Wolf Blitzers.
Sam Simple on November 01, 2011 3:09 PM:
Investor's Business Daily, which is just a mouthpiece for the far right-wing, had a similar headline this morning. Some nonsense about "Smoking Gun Edict Proves Government Caused Housing Market Collapse". They point to some obscure 1994 memo encouraging lenders to lower standards to minority borrowers. No analysis of cause and effect or explanation of why the housing market didn't collapse in 1998, instead of 2008. Idiotic, unsubstantiated drivel. But it props up the fact-free, fantast world that so many modern conservatives inhabit.
jjm on November 01, 2011 3:27 PM:
The 1%, from their celestial heights, is blowing a lot of smoke right now, trying to cloud the issues and, I think, mainly failing.
Shame on Bloomberg. But it goes to show you that the 1% is becoming more than a little afraid.
They know that their 'heights' are purely illusory; even though many of them actually believe they are superior and look down on us and think of us as what the French called 'canaille' --scum: witness the Heritage Foundation and American Enterprise Institute issuing a 'study' that says "teachers are STUPID and overpaid." (!!) A 'study'? They would not know proper, unbiased research if it hit them in the behind; and they have not got a single clue what intelligence actually consists of.
But they need to promulgate that illusion. They need to make the 99% believe that they are superior in intellect, wisdom, and of course, power. Once that illusion is shattered (see OWS!) they are left exposed and naked in their actual stupidity: witness the big dumb cluck Jon Corzine, former head of Goldman Sachs, going bankrupt by betting on European debt.
G-d, they are morons in charge and it's time to kick them out of power.
dj spellchecka on November 01, 2011 3:35 PM:
bloomberg is a day late...rolling out a classic zombie lie would have worked better on halloween
zeitgeist on November 01, 2011 3:41 PM:
My wife and I are not Fannie eligible borrowers. So no one can blame Fannie and Freddie for the fact that literally every Realtor and every Banker we talked to when looking for a house 10 years ago pushed and pushed for us to overpurchase and to use gimmick loans. "You should buy as much house as you can afford because it is the best store of value!" "A house is the best long-term savings plan - it always goes up in value!" "With this balloon loan, you can qualify for 3x your combined earnings and either your earnings will grow into it or you can just refinance -- with more tax deductions! -- when the balloon gets close, or sell at a profit!"
It is easy for people to blame the buyers who overextend, but novices hear these things from experts they have little choice but to trust because of the information and expertise gap. Fortunately, we'd both been through the drill before and bought very conservatively, on a very traditional loan. Even then, we saw inspectors and appraisers who did little to nothing and just rubber-stamped what the Realtor and Bank wanted to ensure the transaction went through.
And Fannie and Freddie didn't come up with the idea of rolling risky mortgages into securities and calling it "diversified" and low risk. And Fannie and Freddie didn't rate those novel securities AAA. And Fannie and Freddie didn't come up with the idea of selling these dubious securities with one hand and selling credit default swaps against them with the other hand.
And neither did the lowly homebuyers.
Or even the "main street" banks.
These are all the manipulative schemes of various entities with big offices in Mayor Bloomberg's backyard, and in the end no one is to blame for the following disaster more than them.
AK Liberal on November 01, 2011 3:44 PM:
In some circles, there’s a tendency to consider New York City Mayor Michael Bloomberg (I) a liberal.
I think in the past Bloomberg would have been known as a Rockefeller Republican. That he isn't now shows what's become of the GOP.
Jay C on November 01, 2011 3:48 PM:
Well, it's no surprise that Michael Bloomberg would spout the stale "minority-loans-caused-the-meltdown" crapola line: he is, first and foremost, a creature of Wall Street (he made his billions off of providing financial data), and, just as importantly, as Mayor of New York, street-junkie-addiction-level dependent on "Wall Street" money as one of main revenue sources for the (very expensive) City he administers.
It has been a truism for decades that NYC's budget deficit fluctuates in direct ratio to the levels of Wall Street Bonus money handed out every year: and, since most other revenue-producing industries have fled the region, or been forced away (and nobody has made much effort to replace them), it has made The Big Apple into something of a company town. Though with the FIRE sector in general as the "company".
Oh, and by contemporary Republican standards, Mayor Mike IS a "liberal" - he has no patience for any social-agenda nonsense, is indifferent about religion, and is far from the anti-"government" crusader type too often typical of most GOP officials these days.
Stephen on November 01, 2011 4:01 PM:
The government didn't force Wall Street to bundle the bad mortgages together or create other financial instruments based on these bad mortgages.
The government didn't force the ratings agencies to give good ratings to the bundled mortgages.
The government didn't force anyone to buy the bundled mortgages.
The government didn't create a marketplace for selling the bundled mortgages.
All these multi-billion dollar firms crashed because some poor people got loans they couldn't afford ?
Peter C on November 01, 2011 4:20 PM:
@ Stephen, you are right. Sadly, the government was supposed to regulate Wall Street. The problem was caused by Wall Street but enabled by the Bush Administration shirking its regulatory responsibilities.
Through TARP, we gave the banks money to revalue their risk, but the credit rating agencies (who punish homeownwers who default) ALSO assure that they face less risk than they deserve. Only the homeowners have been punished. Only the homeowners feel the brunt of the housing bust.
Oh, and billionaire Mike Bloomberg had better shut his 'let-them-eat-cake' hole before he starts looking like Marie Antoinette to the 99%. He'll sure never convince anyone he's one of us.
Vince on November 01, 2011 4:24 PM:
There is so much wrong with Bloomberg it's hard to know where to start.
First, he doesn't want to point fingers...as he points his finger at the government.
More importantly, the gall of the masters of the universe is truly amazing. On the upside, when they were making money hand over fist pumping toxic assets to unwitting buyers, they hailed themselves as geniuses that had eliminated risk in finance, and using the argument that they are unmitigated geniuses justified their stratospheric compensation. Then, when the house of cards came falling down, a result predicted by many by the way, it's suddenly the government made me do it. Come on. Really? Are you geniuses deserving of your grotesque compensation, or mere stooges at the mercy of an oppressive government that *makes* you dish out loans to deadbeats who will never be able pay them back? You Wall Street freaks can't have it both ways.
Alan Tomlinson on November 01, 2011 5:07 PM:
Bloomberg isn't "wrong," he's lying, there is a difference. Someone who was misinformed about the situation could be wrong, it seems highly improbable that he lacks for good information. Therefore, he must be lying.
Michael Bloomberg is a liar.
Cheers,
Alan Tomlinson
2Manchu on November 01, 2011 5:57 PM:
My questions for the mayor.
How exactly did the federal government "force" lenders and banks to make these loans, and what would of happened to said institutions if they did not comply?
Also, before the market tanked:
How may houses were purchased via the CRA?
What was the median value of these homes?
What was the default rate of these homes?
And finally, what percentage of the total market did these homes make up?
digitusmedius on November 01, 2011 7:14 PM:
There's a good reason that Bloomberg ran as a Republican rather than a Democrat and it wasn't just because he wasn't going to win Democratic primaries. It's because he's a Republican. He's old, northeastern banking class Republican, a dying breed nationally, but still managing to function past his sell-by date in NY.
Nalliah Thayabharan on November 01, 2011 9:03 PM:
Wall Street, Greed & Disaster - "Foreclosure of American Dream By Wall Street"
- Nalliah Thayabharan
Wall Street is a confidence trick, a dazzling edifice built on paper promises, gambling, bets and rampant speculation. Wall Street doesn’t manufacture or produce anything. The Wall Street however attractive it may appear is built on paper.
Modern day bank robbers are at Wall Street but they wear grey suits and not masks. Rampant speculators, propagandists and financiers of Wall Street are given some unfair advantage over the average consumers and taxpayers and the cumulative effect of the people watching selfishness prevail over the public interest has been an undermining of the public’s trust in the present US government. There’s no question the Wall Street is rigged against the average consumers and taxpayers. The Wall Street has a lot more information. Wall Street jerry-rig the system so that Wall Street always win. If the Wall Street loses trillions, the US Treasury will bail the Wall Street out so it can go back and do it again.
50 trillion dollars in global wealth was erased between September 2007 and March 2009, including 7 trillion dollars in the US stock market, 6 trillion dollars in the US housing market, 8 trillion dollars in the US retirement and household wealth, 2 trillion dollars in the US individual retirement accounts, 2 trillion dollars in the US traditional defined benefit plans and 3 trillion dollars in the US nonpension assets. Greed, arrogance and incompetence created a massive meltdown, cost trillions, and still Wall Street comes out richer and more powerful.
There are trillions dollars of new money taken again from Americans to make deals and hand out outrageous bonuses. And when these trillions run out Wall Street will come back for more until the dollar becomes junk. The value of the US dollar declined very significantly during the last 70 years. The value of the US dollar in 1940 was worth 2,000% more than the value of the US dollar now.
Many big US manufacturers are outsourcing to Mexico and China to increase their profits, adding more unemployment in the USA. Manufacturing jobs in the USA declined 37% between 1998 and 2010. Since manufacturing industries declined in the USA, the US competitiveness in the global marketplace is also declined.
The demise of Glass Steagall act helped spawn the credit crisis by allowing the US Banks to reinvest money that was not theirs; they gambled; they failed; they passed down the burden to the people.
The top 6 US banks had assets of less than one fifth of US GDP in 1995. Now they have two third of US GDP. The financial crisis was created by the biggest US banks to consolidate power. The big banks became stronger as a result of the bailout by the US Treasury. The big banks are turning that increased economic clout into more political power.
Oligarchy is the political power based on economic power. And it’s the rise of the Wall Street in economic terms, that it’d turn into political power. And Wall Street then feed that back into more deregulation, more opportunities to go out and take reckless risks and capture trillions of dollars.
Wall Street only has the lobbyists. Today more than 42,000 Wall Street lobbyists manipulate USA's 537 elected officials with huge campaign contributions that fund candidates who support their agenda. It no longer matters who's the President of USA.
Since the heads of Wall Street and their representatives are afraid because they don’t have the substance or the arguments, they will not come out and debate with the people who occupy the Wall Street.
The political and economical leadership of the US has chosed to cartel profits and transformed the US economy to serve the colluding and unlawful oligarchy. The political and economical leadership of the US is bailing out failed paradigms with trillions of dollars while committing social injustice to its people. The political and economical leadership of the US including the US Congress have now become Wall Street's "Trojan Horses". The US banks are borrowing money at near zero interest from the US government, then lending it back to the US government at even mere fractions higher interest than they are paying. The net interest margin made by the US banks by lending the money back to the US federal government in the first 6 months of 2011 is 210 billion dollars.
Due to the oligarchs’ rapacious looting and their purchase of a politically protected luxurious lifestyle, the people of the US are on the road to permanent serfdom under a police state. The democracy was not given to the people of the US on a platter. It is not theirs for all time, irrespective of their efforts. Either people of the US organize and they find political leadership to take this on or they are going to be in deep trouble.
The failure of governance to address the current critical issues have already produced catastrophic consequences. Now we are experiencing a major global paradigm shift and it is still unfolding.
“There is no calamity greater than lavish desires, no greater guilt than discontentment and no greater disaster than greed”
- Laozi
"Greedy desire is endless and therefore can never be satisfied"
- Buddha
Anonymous on November 02, 2011 12:12 AM:
Nalliah:
You should have put this sentence at the top of your comment:
The demise of Glass Steagall act helped spawn the credit crisis by allowing the US Banks to reinvest money that was not theirs; they gambled; they failed; they passed down the burden to the people.
The repeal of Glass-Steagall Act (GSA)is EVERYTHING that defines this crisis.
Bloomberg is not entirely wrong about the roll of the banks. The none of this could have taken place without the repeal of GSA and the passage of the Gramm-Leach-Bliley Act. (GLB) (Note the involvement of Phil Gramm - his name comes up often in this crisis and as a lobbyist to resist re-regulation of the banking industry)
GLB was a culmination of a Republican majority in Congress pressuring Clinton to deregulate the banking and investment industries, erasing any separation between them. The banking lobby meanwhile insisted that they could police themselves. This was all Clinton needed to hear - he could sign legislation that was industry-friendly that sounded like a gem. While Gramm, Leach, and Bliley knew full well the intentions of the banking industry, Clinton did not. So GLB became law.
For that, some blame rests on Clinton, but certainly the bulk of the blame rests on congress and the banking lobby in equal shares: both knew the trillions of dollars in profits there were to be made - if they could only get a piece of it. They could only get a piece of it if mortgages could be securitized and sold along with their derivatives.
The securitized mortgages are not what collapsed the market - it was a combination of the completely unregulated speculation on the derivatives such as Credit Default Swaps and the promotion of mortgage-based securities by the investment bankers in the form of Collateralized Mortgage Obligations (CMOs,)etc. Investors became enamored by the "C" part and dumped 100's of billions of dollars into these securities. I sold plenty myself.
Anyway, the banks had billions in unplaced cash - the investors who bought the securities didn't pay to have their money sitting around on the sidelines - so the banks forced the money down borrower's throats by allowing no-doc loans and mystery appraisals which encouraged fraud.
Hell, I would not categorically blame the borrowers as Teabaggers might. When you wave free money around with 1% teaser rates with $0 out-of-pocket, what do you expect people to do? These are people who until then could only dream of owning a home.
So, who really deserves the blame? Take your pick:
Clinton?
Congress?
"The Banks?"
Borrowers?
In my own unsolicited opinion, I blame the Republican congress at the very root. You can blame the banking industry for the abusing the public trust but they are in business to make money for their shareholders. Their lobbyists when to Washington, same as every day, they lobbied congress, the way the do every day. But this time under the Republicans, they got a good reception - this congress would allow the lobbyists to write the rules to benefit them. The lobbyists? They were just doing their job.
Clinton was a dupe in this case, and the public did what people to: they took the money that was handed to them.
tko on November 02, 2011 2:55 AM:
It's hard to blame the banks when no one has held them legally accountable for their actions leading up to 2008 and apparently banks and investment firms haven't quit their old tricks judging from Corzine's MF. I guess Eric placeHolder (and his DOJ) took it upon himself to lay off Wall Street investigations after Obama took office. It's more likely that Obama told placeHolder to lay off Wall Street and the banks so Obama is partly responsible for the ambiguity in blame. This could also be the reason Obama can't support Occupy Wall Street protests since he is the enabler that allowed the Wall Street crooks to get away with their ill gotten gains and f**K all the rest of us.
Anonymous on November 02, 2011 4:47 AM:
Looks to me like we can just blame hispanics and blacks, especially upity ones who want houses and presidencies.
Mithrandir on November 02, 2011 5:06 AM:
Many confidence schemes rely on manipulating the victims' greed to convince them that they can get something for nothing. This does not mean that the confidence artists, ultimately, are the most responsible party. Such it is with the mortgage loan scams.
klg1956 on November 08, 2011 4:46 PM:
Bloomberg's wife is best buddies with John Zuccotti's wife..John owns Zuccotti park...hence, you let the protestors into your park and I'll scratch your back.....then, out of nowhere, what a coincidence, John Zuccotti's wind, solar company gets the last $30 million dollars of the taxpayer stimulus bailout money. Kind of like money laundering to elect a DEMOkraut...Mafioso is more like it!