Commentary
Washington seems to have missed the lessons of 2008’s financial crisis that it seems ready to set up the nation for a second run.
The last crisis had lots of moving parts and reflected many bad decisions. One of great significance was Washington’s long insistence that banks and other lenders extend more and more mortgage credit to lower-income people who would likely have difficulty meeting their financial obligations, the so-called sub-prime borrower.
As the government for years pressured banks to make such loans, the risk of default in the financial system grew. When what otherwise might have been a minor economic setback put these poor borrowers in a position where they could not pay, all these lenders found themselves in a precarious position. Now, 15 years on, the Biden administration seems eager to orchestrate a rerun of the disaster….