The arguments for and against Bloomberg's stance on the origins of the 2008 financial crisis


Billionaire and former New York City Mayor Michael Bloomberg has come under fire after The Associated Press rediscovered a 2008 interview he gave at Georgetown University. During the discussion, Bloomberg blamed the 2008 financial crisis on congressional legislation that pressured banks "to make loans to everyone," while defending the practice known as redlining (denying services to entire neighborhoods). But not everyone thinks Bloomberg's opinion was off-base.
Writing for The New York Times, Christopher Caldwell backed up Bloomberg's claim, arguing Congress put borrowers in an unenviable position by forcing banks to lower their underwriting standards. Caldwell's criticism is bipartisan — he blames the Democrats for coming up with the legislation and Republicans for ignoring it because it didn't affect the federal budget. "That brought an astonishing deterioration in the quality of housing assets," Caldwell wrote. "By 2007, high-risk mortgages made up 22 percent of the (government-sponsered enterprises') portfolio, up tenfold from a decade before."
Caldwell doesn't believe any "well-informed accountant" would think those loans could have survived. "The politicization of poor people’s mortgages in a single country — the promise to make loans to everyone, as Mr. Bloomberg put it — brought the world to the brink of economic disaster," he wrote.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Not so fast, wrote Robert Kuttner in The Washington Post. Kuttner wrote the Community Reinvestment Act of 1977, which created an obligation not to redline and provide credit without regard to location. Kuttner believes everything Bloomberg said about 2008 was wrong because Congress made sure to include language in the legislation which made it clear banks were not under pressure to give out bad loans. The law, he said, was designed to make sure lenders did not ignore entire communities, not to water down underwriting standards.
Later on, another law was even more explicit in prohibiting unsavory lending, but Kuttner says it was never enforced. "The problem was not Congress imposing unsound mandates on bankers," he wrote. "It was bank regulators ignoring legislated requirements intended to protect consumers from banker practices." Read Caldwell at The New York Times and Kuttner at The Washington Post.
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Tim is a staff writer at The Week and has contributed to Bedford and Bowery and The New York Transatlantic. He is a graduate of Occidental College and NYU's journalism school. Tim enjoys writing about baseball, Europe, and extinct megafauna. He lives in New York City.
-
Army commissions tech execs as officer recruits
IN THE SPOTLIGHT Some of the tech industry's most powerful players are answering the call of Uncle Sam
-
'Tariff stacking' is creating problems for businesses
The Explainer Imports from China are the most heavily affected
-
Can MAGA survive a US war on Iran?
Talking Points Trump's wavering sparks debate about 'America First'
-
Economists fear US inflation data less reliable
speed read The Labor Department is collecting less data for its consumer price index due to staffing shortages
-
Crypto firm Coinbase hacked, faces SEC scrutiny
Speed Read The Securities and Exchange Commission has also been investigating whether Coinbase misstated its user numbers in past disclosures
-
Starbucks baristas strike over dress code
speed read The new uniform 'puts the burden on baristas' to buy new clothes, said a Starbucks Workers United union delegate
-
Warren Buffet announces surprise retirement
speed read At the annual meeting of Berkshire Hathaway, the billionaire investor named Vice Chairman Greg Abel his replacement
-
Trump calls Amazon's Bezos over tariff display
Speed Read The president was not happy with reports that Amazon would list the added cost from tariffs alongside product prices
-
Markets notch worst quarter in years as new tariffs loom
Speed Read The S&P 500 is on track for its worst month since 2022 as investors brace for Trump's tariffs
-
Tesla Cybertrucks recalled over dislodging panels
Speed Read Almost every Cybertruck in the US has been recalled over a stainless steel panel that could fall off
-
Crafting emporium Joann is going out of business
Speed Read The 82-year-old fabric and crafts store will be closing all 800 of its stores