Of Course It Was Reagan
Paul Krugman has a brilliant op-ed piece in the NY Times on why Reagan is to blame for much of the financial mess of today. Here is an excerpt:
The change in America’s financial rules was Reagan’s biggest legacy. And it’s the gift that keeps on taking.What took Krugman so long to figure it out? I've been knowing that Reagan did it. I've never really understood why Reagan is the President most Republicans seem to admire. He was part of the Hollywood elite. He wasn't religious. He spent us into huge debt and raised taxes many times. Of Republican Presidents in my lifetime, I prefer Eisenhower.
The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry — whose deposits were federally insured — a license to gamble with taxpayers’ money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money.
But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.