WILLIAMS: Stubborn ignorance

Dr. Williams has hit the nail on the head again. He nearly always does. Making the arcane accessible to the masses is his gift. Thank you, sir!

Walter E. Williams correctly says “These financial problems are not market failures but government failure”. He is quite wrong though blaming “The Community Reinvestment Act of 1977”. The blame lies, ironically, with the extreme risk adverseness of the financial regulatory wimps; that thought their only mission in life was to drive out the risks of default in the financial system; and arrogantly thought themselves capable to do so; and to that effect created minimum bank capital requirements based on risks, as measured by their outsourced risk kommissars, the credit rating agencies. And then the credit rating agencies gave AAAs to securities backed by transparent and easily understood plain lousy mortgages to the subprime sector; and the markets followed those signs… and here we are.