Given the Bush administration’s past crowing about the “ownership” society and the conservative pundits’ view that predatory lending is a way of democratizing credit, it was momentarily disconcerting to see Treasury Secretary Hank Paulson rip into “shameful” lenders. The timid NYT account goes like this:
Mr. Paulson made it clear that he was dissatisfied with what had happened in the marketplace and that he wanted to push for change. But on many issues, he stopped short of advocating proposals of his own.
He sharply criticized credit rating agencies that had failed to recognize the risks in hundreds of billions of dollars worth of mortgage-backed securities. But he tiptoed around the issue that many analysts have argued is a central conflict of interest for rating agencies: that they earn their fees for evaluating a new security offering only after the offering has been sold to investors.
Mr. Paulson mentioned the issue, saying that “we must examine the role of credit rating agencies, including transparency and potential conflicts of interest.”
The Financial Times was considerably more vivid:
The Treasury, he said, was working on developing a “blueprint” for the overhaul of the country’s fragmented financial regulatory structure but such “fundamental changes” would take years to implement.
Saying the US needed to “ensure yesterday’s excesses are not repeated tomorrow”, he stressed interim changes were needed. These should focus on disclosure, mortgage origination, predatory lending and liability.
Home buyers “get writer’s cramp from initialing pages and pages of unintelligible and mostly unread boilerplate that appears to be designed to insulate the [mortgage] originator or lender from liability rather than to provide useful information to the borrower”, Mr Paulson said.
I’d guess Paulson’s turnabout on this issue has something to do with the way sloppy lending at the level of shady brokers taking advantage of poor rubes has trickled its way up to where it is crippling investment banks and hedge funds and constraining credit for private equity. But it’s still strange to hear him talk like a “Democrat-lite,” as Chuck Schumer called him.
But as weird as that was, reading this bit from Collin Peterson, Democratic chair of the agriculture committee, was even weirder:
Collin Peterson, chairman of the House of Representatives agricultural committee, says the farm sector that raises organic produce and grass-fed beef for local consumers needs little federal help. “It is growing, and it has nothing to do with the government, and that is good,” he told the FT. “For whatever reason, people are willing to pay two or three times as much for something that says ‘organic’ or ‘local’. Far be it from me to understand what that’s about, but that’s reality. And if people are dumb enough to pay that much then hallelujah.”
You have to presume that democrats in Minnesota’s seventh district are not conforming to the ““Whole Foods-loving yuppies” stereotype.