Jeff Flake: “I have heard him quote Adam Smith and Milton Friedman with the best of them. That is why I was baffled to see this bill…”

“I have heard him quote Adam Smith and Milton Friedman with the best of them. That is why I was baffled to see this bill come to the floor from his committee, a bill that violates the same principles that he has chastened us for not recognizing. He was right then. And he is inconsistent and wrong today. This bill has 'moral hazard' written all over it. We know that a party insulated from risk behaves differently than a party that is fully exposed to risk. The truth is here we are insulating home buyers and home owners from risk. And we will simply prolong the housing crisis by doing so. Let's be real here. The purpose of this legislation is to insulate political parties from risk. That is what we are doing here. If we felt such a need to intervene here, we ought to remember what we did last September when I believe, if I remember right, we encouraged FHA to give no-money-down loans. Why is it that we think that we are so prescient here about what is going to happen? We can't outguess the market. We shouldn't try to. We simply will delay the bottom and delay and increase the dislocations that will occur when its politicians decide to allocate resources and capital rather than the markets.”