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September 22, 2008

Filed under: politics»issues»economy

Bailing Out the Boiler Room

As Congress considers spending $700 billion to bail out irresponsible (and often fraudulent) lenders, I'd just like to draw people's attention to the Columbia Journalism Review's lengthy essay on the topic, which performs two roles: it's perfectly readable, and it gets to the heart of the systematic corruption and neglect behind the crisis.

Conventional wisdom says that the mortgage crisis is a hard story to cover, since it's based in a lot of esoteric debt-trading transactions. But as the CJR points out, that's a clear case of not seeing the forest for the trees. At the most basic level, this is not a complicated narrative: due to a lack of regulation, investment firms created pressure for lenders to take advantage of homebuyers by extending them loans that they couldn't hope to repay. It's a classic American story of big businesses screwing over the little guy. That it has largely been presented as some kind of vast, nebulous market failure reflects, I think, an incredulity of the press to believe that the situation could actually be that corrupt. One would hope that it's finally becoming clear.

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