One of 300 million Americans. Just another victim of the federal bailout (and, now, maybe AIG’s lawyers). He’s just like you, and he speaks for all of us.
But not really. Goolsbee is in fact an influential, well-heeled academic who served as Chairman of the Council of Economic Advisers under President Barack Obama.
Goolsbee is right to be outraged that AIG is considering suing the federal government over the terms of its bailout. Of course, AIG’s problems were the direct result of a massive bubble in the U.S. housing market. Ironically, one of the most outspoken supporters of the easy-lending policies that led to that bubble was … wait for it … Austan Goolsbee! Here he is 2007, at the peak of the bubble, arguing in the New York Times against any effort to tighten up federal oversight:
Almost every new form of mortgage lending — from adjustable-rate mortgages to home equity lines of credit to no-money-down mortgages — has tended to expand the pool of people who qualify but has also been greeted by a large number of people saying that it harms consumers and will fool people into thinking they can afford homes that they cannot.
Congress is contemplating a serious tightening of regulations to make the new forms of lending more difficult. New research from some of the leading housing economists in the country, however, examines the long history of mortgage market innovations and suggests that regulators should be mindful of the potential downside in tightening too much.
[D]o not forget that the vast majority of even subprime borrowers have been making their payments. Indeed, fewer than 15 percent of borrowers in this most risky group have even been delinquent on a payment, much less defaulted.
We’re not saying Goolsbee deserves blame for the AIG bailout. We know who signed off on that monstrosity, and it wasn’t a Democrat.
If we are going to get up on our moral high horses about AIG, though, can we at least ask why subprime apologists like Goolsbee never get any blame for defending risky lending?