Columnist Thomas Frank, in his Wall Street Journal opinion piece, "The GOP Blames the Victim" (Oct. 1) stated that "capitalism sure is fragile if subprime borrowers can ruin it."
Frank also asked Bill Black, a professor of economics and law at University of Missouri-Kansas City, what he thought of the latest blame offensive. Black pointed out that "for all their failings, Fannie Mae and Freddie Mac did not originate any bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck."
Most of the mistakes for which we are paying now, Black told Frank, "were four entities that under conservative economic theory should have exercised effective market discipline: the appraisers, the originators of the mortgages, the rating agencies and the investment banking firm that packaged the subprime mortgage-backed securities. Instead of (disciplining) the markets, these private actors served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble." It is they, Black says, who turned "a crisis into a catastrophe."
If the financial institutions ( lending banks and underwriting investment banks) didn't salivate over profit opportunities in engaging in subprime lending, then the subprime borrowers, including "minorities," would have never gotten loans, even those who deserved them.
The tail (borrowers) didn't wag the dog (private institutions) and shouldn't be the primary scapegoat for the resulting financial disaster.
Tracy E. Williams, Jr.