Straw Predators

For the mortgage meltdown, the Left deserves a share of blame

THE basic story of the housing crisis goes something like this. For years, prices climbed rapidly. This made mortgages less risky—so far as lenders could tell, every homeowner sat on a pile of $100 bills that bred like rabbits. The industry dramatically lowered its standards, often not even requiring income or employment verification. Lenders approved “adjustable-rate mortgages” that began with super-low “teaser” interest rates, only to “reset” to much higher ones later. No big deal: As long as those $100 bills kept at it, borrowers could always refinance or sell their homes at a profit. Easy credit fueled an even greater demand for housing, which drove prices still higher. Lenders packaged their loans together and sold them to investors as securities, spreading the risk through the financial system.

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Robert VerBruggen

Robert VerBruggen is a senior fellow at the Manhattan Institute.

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For the mortgage meltdown, the Left deserves a share of blame

THE basic story of the housing crisis goes something like this. For years, prices climbed rapidly. This made mortgages less risky—so far as lenders could tell, every homeowner sat on a pile of $100 bills that bred like rabbits. The industry dramatically lowered its standards, often not even requiring income or employment verification. Lenders approved “adjustable-rate mortgages” that began with super-low “teaser” interest rates, only to “reset” to much higher ones later. No big deal: As long as those $100 bills kept at it, borrowers could always refinance or sell their homes at a profit. Easy credit fueled an even greater demand for housing, which drove prices still higher. Lenders packaged their loans together and sold them to investors as securities, spreading the risk through the financial system.