Rick Berg claims the Community Reinvestment Act "strongly encouraged banks to make mortgage loans to borrowers who either did not have the capacity or intention to pay them back," and made banks meet a "quota of dubious loans" ("Who Caused the Meltdown? Democrats!" 10/31/08).
Really? This law simply directs banks to serve their entire communities, including low- and moderate-income segments. There are no civil or criminal penalties for noncompliance. It does not direct banks to make any particular loan or to abandon prudent lending standards.
Many banks expanded their lending criteria and offered dubious products over the last decade - but not because of the Community Reinvestment Act. There may be blame to place on Fannie Mae and Freddie Mac, but neither is covered by the CRA. Nor were the investment banks that invented commercial debt instruments and debt swaps.
The next time Berg wants to start firing blame around, he needs to aim a little more carefully - and with a nonpartisan pea-shooter.
Tom Dunn, McFarland
So who do we have to blame for the current economic crisis?According to Rick Berg, a bunch of closet socialists in the Democratic Party, specifically because they authored the Community Reinvestment Act of 1977 and its revision in 1999.
Berg seems to forget that at least half of all subprime mortgage debt was generated by private mortgage companies, which weren't covered by the CRA in any of its mutations over the last 30 years.Moreover, to the extent that Freddie Mac and Fannie Mae used federal funds to underwrite the subprime mortgage debacle of the past two years, they did so outside of the CRA and at the express order of the Bush administration.
The administration claimed it was buying subprime debt to meet affordable housing goals.But clearly, its real goal was to stave off an economic downturn as long as possible by artificially buoying the housing market.
For Berg to blame the subprime mortgage crisis on the CRA is mean-minded and dishonest. Shame on you, Isthmus, for allowing Berg to publish this hit-and-run screed at the worst possible time, when it couldn't be challenged before the general election!
Rick Berg's entertaining piece properly chastises some deserving targets. Yet the free market Berg so energetically reveres generates the impulses behind credit default swaps, collateralized debt obligations and extreme hedge fund strategies that have so paralyzed world financial systems.
The free-market model is corrupted more through hubris, ignorance and criminal behavior than by the social effort to leash and direct the market's undeniably great power. Democratic reticence to regulate and control is by no means comparable to the Republican embrace of laissez faire ideology.
Frederick M. Arnold
De-romancing the Stone
I don't read movie reviews very often, but generally find the ones in Isthmus well-written and informative. A good example is Kent Williams' analysis of W. ("The Military-Oedipal Complex," 10/24/08), which combines insight with quality writing.
I have seen only two of Oliver Stone's movies: The Doors and Platoon. I wasn't impressed with either, for the same reason: They were superficial. The Doors was an egregious oversimplification of Jim Morrison's life. Platoon was hyper-slaughter, from what I remember.
"God" didn't tell George W. Bush to invade Iraq any more than the "devil" made him do it. Williams is correct to challenge Stone for taking Bush at his word. Reviewers elsewhere should do the same.