Henry Paulsen as Mary Bailey

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4 Responses

  1. JP says:

    “the systemic reaction of the Roosevelt administration to the last similar mortgage crisis.”

    Of course, it appears “systemic” when, with the benefit of hindsight, you cherry pick certain programs. (Specifically, those related to one part of the problem that weren’t killed by the S. Court or discontinued during WWII.) The actual response to the Great Depression at the time was pretty “ad hoc and disjointed.”

    Also, the Federal Home Loan Bank Act was passed during the Hoover administration. Did Roosevelt change it in some way?

    Moreover, it doesn’t make much sense to compare Bush’s policies over the last 3-4 months with a selection of programs created between 1932 (FHLB) and 1938 (FNME). (Much less to compare Roosevelt with a lame duck President with an opposition Congress).

    Finally, Congress, as well as the Bush administration, “seems to have empowered Henry Paulson to spend $700 [billion] as he sees fit”

  2. Mark Edwards says:

    Yes, Roosevelt changed the FHLB — by funding it and staffing it.

    Bush has had far, far longer than “the last 3-4 months” to address this crisis; the fact that he failed to do so in a coherent way is why the crisis is as deep as it is now. Just like Roosevelt, he’s had years to formulate an approach to resolving the crisis. Unlike Roosevelt, he’s fiddled while the system burned.

    Congress has the responsibility to provide funding for the tools for the President uses to address a crisis. Unfortunately, the Bush administration’s only tool has been the wad of cash Congress provided, and it seems at a loss about what to do with it.

  3. JP says:

    The FHLB was a program Hoover fought pretty hard for. As far as I can tell, Roosevelt did not support the efforts of congressional Democrats to repeal the FHLB, and he augmented it with the HOLC. The Federal Home Loan Banks were operating before he got into office, and the Board was essentially left to defend its existence on its own.

    Your assertion that Bush’s situation is “Just like Roosevelt” is pretty unconvincing. Roosevelt took office at the low point of the Great Depression. Bush has been a lame duck throughout this “crisis.” It would make more sense (though still not much) to compare Roosevelt’s response to the 1937 recession.

    Are you suggesting that it was clear several years ago that there was a housing bubble and Bush should have formulated an approach then? If so, should the administration have deflated the bubble? Propped it up? And how, without adverse effects?

    (I certainly think that Bush [and Clinton, and Greenspan] unfortunately encouraged the housing bubble, but I haven’t seen any kind of consensus as to how one goes about deflating that sort of thing.)

  4. JP says:

    By the way, Roosevelt’s response to the 1937 recession was basically to spend a big wad of cash.