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.
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.
-
September 1 editorial cartoons
Cartoons Monday’s political cartoons include Labor Day picnic, branding strategy, and more
-
What is Tony Blair's plan for Gaza?
Today's Big Question Former PM has reportedly been putting together a post-war strategy 'for the past several months'
-
When does autumn begin?
The Explainer The UK is experiencing a 'false autumn', as climate change shifts seasonal weather patterns
-
New York court tosses Trump's $500M fraud fine
Speed Read A divided appeals court threw out a hefty penalty against President Trump for fraudulently inflating his wealth
-
Trump said to seek government stake in Intel
Speed Read The president and Intel CEO Lip-Bu Tan reportedly discussed the proposal at a recent meeting
-
US to take 15% cut of AI chip sales to China
Speed Read Nvidia and AMD will pay the Trump administration 15% of their revenue from selling artificial intelligence chips to China
-
NFL gets ESPN stake in deal with Disney
Speed Read The deal gives the NFL a 10% stake in Disney's ESPN sports empire and gives ESPN ownership of NFL Network
-
Samsung to make Tesla chips in $16.5B deal
Speed Read Tesla has signed a deal to get its next-generation chips from Samsung
-
FCC greenlights $8B Paramount-Skydance merger
Speed Read The Federal Communications Commission will allow Paramount to merge with the Hollywood studio Skydance
-
Tesla reports plummeting profits
Speed Read The company may soon face more problems with the expiration of federal electric vehicle tax credits
-
Dollar faces historic slump as stocks hit new high
Speed Read While stocks have recovered post-Trump tariffs, the dollar has weakened more than 10% this year