Paul Krugman traces blame for the current economic crisis back to Ronald Reagan:
“This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot.” So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.
He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation’s significance. And as for that jackpot — well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.
Robert Sheer disagrees:
Ronald Reagan's signing off on legislation easing mortgage requirements back in 1982 pales in comparison to the damage wrought 15 years later by a cabal of powerful Democrats and Republicans who enabled the wave of newfangled financial gimmicks that resulted in the economic collapse.
Reagan didn't do it, but Clinton-era Treasury Secretaries Robert Rubin and Lawrence Summers, now a top economic adviser in the Obama White House, did. They, along with then-Fed Chairman Alan Greenspan and Republican congressional leaders James Leach and Phil Gramm, blocked any effective regulation of the over-the-counter derivatives that turned into the toxic assets now being paid for with tax dollars.
I don't know enough to weigh in on the merits of this issue, but I wonder whether Krugman's comments indicate a change in how Reagan's legacy is treated. So far there does not seem to be much of an effort to pin the policies he pushed -- loose credit, lower taxes, fewer regulations -- to have marked the turning point leading to the sizable debt levels, both public and private, that we have now. Perhaps liberals will start that offensive now, in much the same way that conservatives attempted to reshape how FDR and the New Deal were viewed.
