Arizona Part Takeover of Private Mortgage Company Evidence Conservatives Wrong About Housing Crisis

Evidence They Will Blissfully Ignore

The scenario’s that Conservatives provide to explain the meltdown of the residential mortgage sector is this.  Liberal do-gooders, like Congressman Barney Frank (D, Ma) forced banks and government sponsored/controlled companies like Fannie Mae and Freddie Mac to provide mortgages to low income individuals who could not afford to own their own houses.  This created a bubble in the housing market, led to the bankruptcy and Federal takeover of Freddie and Fannie, and were the cause of all of our economic problems.

The problem with this scenario of course, is that there is not evidence to support it, and it is not true.  Mr. Frank was a member of the minority in the House, he had no influence whatsoever in the housing market.  From 2001 forward the Republicans were in control of Federal policy towards housing.  And the collapse of Fannie and Freddie was due to lack of oversight, the implicit Federal guarantee of their debt  and gross managerial incompetence along with lack of regulation.

Additional evidence of this comes from the problems of a private mortgage insurance company, PMI.  As a private company PMI was in no way subject to government influence.  So a private mortgage insurance company cannot have been subject to government pressure on issuing insurance, even if that is what the government tried to do, which it didn't. 

Yet the company has been a disaster, and is now  under the control of the state of Arizona.

Arizona regulators have taken over a big mortgage insurer and put restrictions on its claims payments, the latest indication that the housing bust is not finished taking casualties—and that lenders and investors are likely to suffer more losses.

Arizona has an extremely Conservative Republican government.  So doing this is a radical move for them.

The Arizona Department of Insurance, which regulates the insurer because it initially was licensed in the state, now has "full and exclusive power of management and control of PMI," according to an Oct. 20 order posted on PMI's website.

Conservatives are now going to have to come up with a new story, now that there is more evidence and logic that strongly contradicts their current story.  No, wait a minute.  That evidence and logic does not support Conservative’s position is not relevant.  Their positions exist outside of that framework.  No problem, they can and will keep peddling their story.