Bernanke Blames Mortgage Lenders For Federal Reserve's Own Irresponsible Activities

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Fed Chairman Ben Bernanke used a time-honored method for evading responsibility by blaming mortgage lenders for the current financial crisis.

by Walt Thiessen

According to the Associated Press, Federal Reserve Chairman Ben Bernanke is blaming the mortgage industry for the way they loaned out money during the recent, Fed-induced real estate boom. In doing so, he blames others for his own failings.

The AP quotes Bernanke saying, "Far too much of the lending in recent years was neither responsible nor prudent. The terms of some subprime mortgages permitted homebuyers and investors to purchase properties beyond their means, often with little or no equity. In addition, abusive, unfair or deceptive lending practices led some borrowers into mortgages that they would not have chosen knowingly."

What Bernanke did not admit was that it was a long series of Federal Reserve stimuluses, in the form of discount rate reductions, which encouraged lenders to lend out more and more money that the Fed was thereby creating out of thin air which really caused the current crisis. In essence, Bernanke is refusing to acknowledge that he bears any responsibility for the creation of this new money. Instead, he's blaming those for whom he created it, as if it's all their fault.

Bernanke is pissed off that the money he created was loaned to lower income, higher risk borrowers. He'd much rather that it only be loaned to wealthier, lower risk borrowers, because then it would be so much easier to get away with eroding everyone's wealth via Fed-induced inflation. Shaking down the entire population by eroding the value of their currency is much easier to do when the method involves only government and corporate borrowing. When lower income people get involved in the borrowing, it upsets the apple cart.

Such a shame...all those carefully laid plans for milking America one more time have been washed down the drain, and the milkmen are finding that they, themselves are being milked this time around. It's a bizarre version of "what goes around, comes around."

The truly irresponsible players in this whole charade are the Federal Reserve Board of Governors themselves, including current chair Bernanke and his predecessor, Alan Greenspan. I mean this literally, because they are responsible to no one, which is the ultimate in irresponsibility. The worst they ever have to worry about is when Bernanke appears before Congress and is required to accept another tongue-lashing from Congressman Ron Paul of Texas. It's a small price to pay for all the wealth the bankers secretly steal via Fed policy.

Speaking of Dr. Paul, his campaign released an extensive statement on hard money vs. fiat money today. Too bad he didn't do that before the New Hampshire primary, when it might have done more good. Instead of going with the "tried-and-true" method of limiting himself to generic soundbytes, it would have been really interesting if Paul had pounded the podiums with detailed messages about the ravages by the Fed on the economy. What Paul did say was very good, of course. I just wish he had said a whole lot more.