Earlier this month, the problems involving federal housing policy managed to snag the attention of one of the 22 people currently running for president. On August 3, Carly Fiorina, the former Hewlett-Packard CEO who is now seeking the Republican presidential nomination, used her appearance before the Voter’s First Presidential Forum at New Hampshire’s St. Anselm College to talk about the 2008.
“The financial crisis was caused by Fannie Mae and Freddie Mac, government-sponsored entities that have been supported by both Republicans and Democrats alike,” Fiorina said.
Really? Yes, Fannie Mae and Freddie Mac certainly played a role in creating the grotesque environment that allowed the housing bubble to metastasize – and the regulator for the government-sponsored enterprises (GSEs), the Office of Financial Housing Enterprise Oversight, did a supremely bad job in keeping those reckless entities in line. But to say that Fannie Mae and Freddie Mac were solely responsible for the 2008 crash represents a revisionist blowtorching of history that rivals Elizabeth Warren’s zany claim that mortgage lenders tricked tens of thousands of stupid people into signing loan documents they were incapable of understanding.
Fiorina also used her forum appearance to link two of the least popular results of the 111th Congress with the upcoming seventh anniversary of the GSEs’ federal conservatorship.
“We need to repeal Dodd-Frank just as we need to repeal Obamacare,” she continued. “But we also need to get about what we should have been doing years ago: Reforming Fannie Mae and Freddie Mac.”
Now, I cannot disagree with those points – at least in concept. Sadly, Fiorina has not offered a game plan on how a financial services world without Dodd-Frank is expected to operate, nor did she provide a clue on what her idea of GSE reform would look like. Instead, she went one step further by presenting a future federal housing policy without direct federal involvement.
“The government should not be in the mortgage business, and have government agencies that are supposed to be regulating the financial system be competent at their job, not, as we know from reports, have federal government regulators – supposed to be minding the banking system – watching pornography all day long,” she said.
Again, Fiorina’s instincts were right – I share her sentiments that less government in the mortgage world is better for everyone. And I agree that watching Linda Lovelace movies is not something that should be done in the office of a financial regulatory agency. But Fiorina, a relative novice to the political world, makes the same mistake that veteran politicians make: she calls for change without offering an idea of how to accommodate change.
Yes, it is all fine to demand the elimination of onerous legislation and burdensome regulations and inept agencies. But what do you offer as a replacement? Do we completely erase Dodd-Frank and pretend that it never happened? Do we shut down federal housing agencies and programs and assume all will be well without their input?
Political campaigns are rich with vague ideas and poor with the nuts-and-bolts solutions for rebuilding a broken system. Perhaps it is unfair to single out Fiorina, since she is hardly alone when it comes to the political process of serving up sizzle in lieu of steak.
But if Fiorina wants to stand out from her competitors, she needs to offer specific ideas and a cogent vision and stay away from provocative anti-government talking points that makes her sound like several dozen other politicians. Something different is needed, and while Fiorina deserves credit for being the rare candidate to talk about this, she has yet to figure out how to deliver something better.
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