'Not All Financial Institutions Caused the Meltdown'

February 24, 2010

“The CEO of Toyota was on Capitol Hill yesterday and he said he’s not sure if they’ve fixed all their problems,” Rep. Spencer Bachus, told attendees at Wednesday morning’s General Session. “The same could be said of Congress—we’re not sure if we’ve fixed all the problems that caused the recent financial meltdown.

“We need to be careful not to paint with too broad of a brush as we try to identify the culprits and enact solutions. All financial institutions didn’t cause the meltdown. All Wall Street firms weren’t part of the problem.”

Bachus thinks Congress has missed the mark and hasn’t addressed some issues that played a prominent role in the recent financial meltdown:

  • Credit reporting agencies. “We have not adequately addressed the role they played in all this.”
  • Housing policy. “We all assumed everyone should own a home, but not everyone could afford a home. Consequently, people took on too much debt.”
  • Too big to fail. “The thinking that some institutions are too big to fail is wrong because that implies institutions like yours are too small to save.”
  • Spreading mortgage risk. “Taxpayers—even those who rent apartments—have now assumed 95% of the mortgage risk in the U.S., and that’s not fair.”