BCT Editorial – 9/2/10

The editorial leads off with misrepresentation.  First, the editorial asks “What do the financial institutions, whose wheeling-and-dealing contributed mightily to the Great Recession …?”  There is no mention of the federal programs (The Community Reinvestment Act is one example.) that encouraged banks to lend money to people who had little chance of paying it back (aka, subprime loans).  The editorial also failed to mention the central role of government-sponsored entities Fannie Mae and Freddie Mac.  For more on this issue, please read my critique of “Let us have some of the $700 trillion.”

Second, the editorial asserts, “Both were allowed to operate under the assumption that they would police themselves out of their own self-interest, and both proved that assumption wrong.”  To claim the financial industry was largely unregulated is self-serving BS.  I’m not an expert on regulation, but I’d be willing to bet the financial industry is/was the most regulated U.S. industry.  To claim otherwise is simply an attempt to justify even more regulation.

As for the rest of the claims in the editorial, I don’t know which are true.  That’s because I don’t trust what I read until I can verify it independently and that’s not yet possible regarding the egg recall mess.  It’s clear something went wrong, but who, what, why, and how I don’t know.

The editorial asks, “When are we going to understand … tough state and federal standards with stringent inspection guidelines are needed to protect the nation’s food supply?”  Who says they don’t already exist but are not enforced, just like our immigration laws?  Given the Times editorial body of work seems to indicate it hasn’t found a private-sector regulation it doesn’t like, it’s not surprising the editorial would jump on the more-regulation bandwagon without having all the facts.