I have posted much more research data on the housing crisis, the recession and the history of the crisis. I have to admit that my opinions have changed quite significantly as I have researched the issue. I see many more grays but I do have some current observations:

The history of the findings on the research shows that Democrats and many Republicans believe that the crisis had multiple causes of greater or lesser degrees (i.e., regulatory, financial speculation, monetary policy, GSEs, housing bubble, private market, etc.). The far right, American Enterprise Institute (AEI), has pushed the idea that the government and the private GSEs are primarily responsible.

AEI has been criticized for changing the standard market definition of sub-prime housing, skewing the numbers and driving an agenda that appears very monotone; it makes the government (and includes the GSEs as ‘government’) the real culprit in the crisis.

One of the dissents to the Financial Crisis Inquiry Commission (FCIC) findings presses the idea of the world-wide crisis. It shows data that pushes the housing bubble theory as a global event. One question that comes out of this is, how can the US government be the primary cause of the crisis for other countries? Sure there can be US specific causes that are unique to the US crisis but the global scope of the problem gets left behind when the primary cause of the crisis only relates to the US. It appears to me that this and overwhelming amounts of data from many sources make the drum pounding of the AEI sound tinny and forced. This is one reason I find value in the private market credit default swaps theory (and other derivatives) that are bought and sold on the world market and are directly related to the global housing bubble.

Even if AEI is right and we use their data, the Bush administration is clearly shown to be the fly in the anointment. Wallison and Pinto’s data clearly show that the Bush administration vastly pushed up historic goals of HUD for low income housing (Chart 29). There is no way out of this especially in light of the majority that the Bush administration had in the House and Senate for six years AND the head of HUD was appointed by President Bush. Even if you want to blame the ‘government’ for the crisis you have to blame the government as defined by the Republicans as the culprit by AEI’s own data. While I am not aware of any publication of the far right making this point explicitly, it is certainly the elephant in the room.

It is not far removed to make the argument from their conclusions that the ‘Republican government’ caused the crisis. From that concession, the next step would be to use the majority (both Democrats and Republicans), bi-partisan composed FCIC findings that the regulatory function of the government was compromised. Now, is it really hard to believe the, almost rabid, de-regulatory Republicans would be behind regulatory dis-functionality? If this is established, why would the private market police itself? Would they refuse to do risky sub-prime (and below) loans because they wanted to take the mantle of regulatory authority upon themselves? With massive amounts of private market ‘chowing down’ on effectively unregulated goodies and an unregulated derivatives market, is it really hard to believe that financial institutions would abstain and accurately assess their newly found market risks? How far can we strain credulity? Didn’t we just take the far right’s main highway of ‘legitimate’ reasons for the crisis and end up at the house of FCIC’s findings? Could it be that the evil government the far right wants to blame for the crisis is the evil ‘Republican government’? Why does it necessarily follow that because Republicans blew it, Democrats and all government will always blow it? I think there is a jump in logic here that demands long overdue attention. Actually, I think the Clinton administration is proof that occasionally Republicans and Democrats can get it right and balance the budget.