Bailing out lenders

Wednesday, Sept. 10, 2008 | 2:11 a.m.

President Bush will go down in history for many things, but one of them will not be as a friend of the consumer’s. Look at his administration’s sluggish response to toxic toys and tainted food. See how he protects polluters.

Check out how his administration looked the other way as this nation fell into a devastating housing slump.

This is what happens when you adhere to the shallow philosophy, as Bush has, that all government regulation is bad. The president’s style has been to let market forces operate unfettered, regardless of the consequences for consumers.

Inevitably, that way of thinking was bound to land us in trouble. On Sunday it was announced that the federal government would take over mortgage lending giants Fannie Mae and Freddie Mac, merely the latest victims in a crisis that has affected millions of homeowners and countless financial institutions. The bailout reportedly will cost us as much as $100 billion in upfront costs alone.

The White House quickly deflected the blame for the Fannie and Freddie mess and placed it on Congress, accusing the lawmakers of failing to act sooner on an administration request to assign an independent regulator to the two lenders, which own or guarantee roughly half of the nation’s home mortgages.

But the Associated Press reported that the administration’s own regulator believed as recently as July that Fannie and Freddie had adequate capital to remain solvent. It was also the case that the lenders got sucked into a treacherous housing market fueled in part by rampant real estate speculation.

The Bush administration is culpable for the housing crisis because it stood idly by as consumers signed up for what turned out to be risky loans many could not afford. There was no sign of leadership from the White House because Bush was content to let market forces play out.

A proactive president would have stepped in much sooner to avert the crisis by using his bully pulpit to call for restraint on the part of lenders. We are now forced to pay for his decision to stand on the sidelines.