In Rolling Stone, Matt Taibi takes down the "Blame Barney" lie that Barney Frank and Fanny Mae and Freddy Mac were the main cause of the financial collapse in the US. As this is the main Republicon narrative about the great recession, it is worth refuting.
Here's the nub of the argument:
"The whole game was based on one new innovation: the derivative instruments like CDOs that allowed them to take junk-rated home loans and turn them into AAA-rated instruments. It was not Barney Frank who made it possible for Goldman, Sachs to sell the home loan of an occasionally-employed janitor in Oakland or Detroit as something just as safe as, and more profitable than, a United States Treasury Bill. This was something they cooked up entirely by themselves and developed solely with the aim of making more money.
"The government’s efforts to make home loans more available to people showed up in a few places in this whole tableau. For one thing, it made it easier for the Countrywides of the world to create their giant masses of loans. And secondly, the Fannies and Freddies of the world were big customers of the banks, buying up mortgage-backed securities in bulk along with the rest of the suckers. Without a doubt, the bubble would not have been as big, or inflated as fast, without Fannie and Freddie.
"But the bubble was overwhelmingly built around a single private-sector economic reality that had nothing to do with any of that: new financial instruments made it possible to sell crap loans as AAA-rated paper."
The whole article and the follow-up rebuttal are well worth reading.
Addendum Monday November 7. Krugman today links to two excellent articles on "the big lie" of the innocence of Wall Street in the financial collapse. I hope this issue is getting enough noise to get into TV coverage.