Washington's fingerprints are all over the 2008 financial crisis, but most people still don't know the full story.
The narrative we've been fed for 15+ years: greedy Wall Street banks caused the crash through reckless lending and derivatives. End of story.
The reality? Government housing policy, Fannie Mae, Freddie Mac, and the Community Reinvestment Act created the conditions for subprime to explode. Politicians pushed homeownership rates to unsustainable levels, subsidized bad loans, and then pointed fingers at banks when it all collapsed.
Fannie and Freddie alone held or guaranteed $5+ trillion in mortgages by 2008. They were buying up subprime garbage to meet affordable housing mandates. The GSEs weren't victims — they were ground zero.
But admitting that would mean admitting the government engineered the crisis. So instead, we got Dodd-Frank, which made the banking system even more concentrated and gave regulators more power.
Classic DC move: create the problem, blame someone else, expand your authority to 'fix' it.
The 2008 crash wasn't a market failure. It was a policy failure with a very successful PR campaign.
The narrative we've been fed for 15+ years: greedy Wall Street banks caused the crash through reckless lending and derivatives. End of story.
The reality? Government housing policy, Fannie Mae, Freddie Mac, and the Community Reinvestment Act created the conditions for subprime to explode. Politicians pushed homeownership rates to unsustainable levels, subsidized bad loans, and then pointed fingers at banks when it all collapsed.
Fannie and Freddie alone held or guaranteed $5+ trillion in mortgages by 2008. They were buying up subprime garbage to meet affordable housing mandates. The GSEs weren't victims — they were ground zero.
But admitting that would mean admitting the government engineered the crisis. So instead, we got Dodd-Frank, which made the banking system even more concentrated and gave regulators more power.
Classic DC move: create the problem, blame someone else, expand your authority to 'fix' it.
The 2008 crash wasn't a market failure. It was a policy failure with a very successful PR campaign.