By Jon Fledderjohann Santa Monica
I always look forward to the weekly editorial by the latest hack from the Ayn Rand “Institute.” It always starts my day with a good laugh.
The lack of academic rigor displayed by these contributors shows why the beliefs of these people are not taken seriously by anyone with anything beyond a middle school education. The latest, by Yaron Brook, most clearly exposes the thinking behind this psuedo-philosopy.
Reading carefully, one can see that the “Randists” want to blame the poor not only for their own problems, but for the problems of American society at large. Brook claims that “irrational lending standards have been forced on lenders by the Community Reinvestment Act …” and that “the CRA forces banks to make loans in poor communities ….”
First, it must be noted that such loans were a small and relatively insignificant portion of the portfolio of IndyMac Bank.
IndyMac specialized in “Alt-A” loans, which are given to borrowers with good credit, but who do not qualify for what are called “prime loans.”
Second, the real-estate bubble that Japan went through in the late ‘80s, early ‘90s was caused not by the government forcing banks to make loans that they did not want to make, but by the same factor that caused the housing bubble we are currently watching burst — corporate greed.
Third (and Europe always provides me with good counter-examples to the weak arguments of the right-wing), it must be noted that European banks are much more heavily regulated than banks in this country, yet they have not experienced situations like the current one. In short, the latest bubble was caused not by the poor, but by a base, human emotion — greed. And no, Gordon “Rand” Gekko, greed is not good!
Originally published in the Santa Monica Daily Press print edition on August 1, 2008. Read the original PDF.