Once again, the New York Times promises a bit more than it delivers with Sunday’s White House Philosophy Stoked Mortgage Bonfire. It is true that, as part of Karl Rove’s grand design to bring minority voters into the Republican fold, Bush promoted various questionable schemes to facilitate low-income homeownership. It’s also true, as the story spells out, that Bush did the finance industry plenty of favors, treated whistle-blowers capriciously, appointed incompetents to key positions, and (as many others did) ignored the potential dangers lurking in the mortgage markets.
But the headline implies some kind of grand unifying idea behind it all, and there just isn’t any. Making it easier for low-income earners to get mortgages isn’t a philosophy, it’s (in the absence of other meaningful economic policies aimed at this group) using government resources to buy political support. Doing favors for the big players in the financial system isn’t a philosophy either, it’s just patronage. Reading the article, you’re struck by just how incoherent the whole White House economic policy was; there was little guidance from the top (other than: do this group or that business a favor), and none from the Treasury Department (until Paulson arrived and demanded some authority as a condition for taking the job – and then he was slow to grasp how bad things had gotten). As a result, a lot of bad actors were free to do what they wanted; people with more responsible views were ignored.
The one time that ideology did determine decision-making it foreclosed the outcome that Bush wanted – the president opposed a viable House version of a Fannie Mae/Freddie Mac reform bill in favor of a tougher, less viable Senate version. It failed.
Again contra the headline, the article also makes clear that Bush’s “philosophy” didn’t cause our current predicament. The White House, like many other institutions, did contribute to the bubble mentality; but mainly, it sought to tap the housing market bubble for its own purposes.
