Same Old Rancid Wine - in an Even More Brittle Bottle

A sane person might think twice before repeating a catastrophic error. But sane people are thin on the ground in the Obama administration: they’re pushing for more subprime lending.

Naturally, they don’t call it that: instead, they propose to (1) “issue home mortgages or open branches in disadvantaged areas,” and for good measure (2) attack banks because they refuse to throw good money after bad.

Common sense utterly escapes the U.S. Government: perhaps few loans are issued to people living in “disadvantaged areas” because these people will struggle to repay, and are therefore disproportionately likely to default? Has exactly this not occurred during the past decade? But no matter: Obama wants to force the banks to do it anyway.

When these loans go bad, you can be sure that Obama and his henchmen will blame banks for lending “irresponsibly.” The obvious contradiction (today, Obama shames bankers because they’re too unwilling to lend; tomorrow, he’ll blame them because they were too willing to issue risky loans) isn't exactly something new for the left.

See Leithner's new book about the financial crisis, The Evil Princes of Martin Place.