Behind-the-Scenes Cronyism That Sparked a Crisis

Itâ??s the fifth anniversary of the financial crisis that sent panic through the markets and inspired historic federal interventions into the economy. Frequent readers of these pages understand governmentâ??s role in planting the seeds of the crisis. In 2008, about two-thirds of the risky home loans in the system were held by government entities or entities operating under government control. Through its affordable housing directives, the federal government had created a massive artificial demand for housing through risky loans, and the market delivered.