Barron's Gene Epstein: the U.S. government created the financial crisis

What actually happened is best summed up by Peter Wallison, who declared in a phone interview last week that "the U.S. government created the financial crisis," adding, "Unfortunately, that has not sunk in, as you can tell from both media coverage and from legislation coming out of Washington."

Based on figures that Wallison cites from the work of former Fannie Mae Chief Credit Officer Edward Pinto, the myth that free markets caused the housing bubble is a bit like blaming food shortages in the Soviet Union on private plots cultivated by farm workers. The Russian government was in charge of most of the land, just as Washington accounted for, directly or indirectly, most of the risky mortgages.

And the U.S. government is currently in the process of creating the next crisis, which might make the last one look like a picnic.

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