Did Senators Clinton, Dodd, and Schumer Really Know Nothing About the Housing Bubble?

This is the obvious unasked question in a Financial Times piece on plans for helping homebuyers who stand to lose their homes. It does seem incredible that these people could really have been oblivious to the unprecedented run-up in house prices over the last decade. It would have been reasonable for the FT to question the senators or their staffers about how they could have overlooked the most important force driving the economy. Incidentally, the bailouts being discussed would quite likely benefit holders of mortgages that might otherwise be nearly worthless. Some of the holders of these mortgages include banks and also hedge funds. Yes, you've heard of hedge funds -- the funds that are managed by people who earn hundreds of millions of dollars but don't have to pay the same tax rates as the rest of us. It is said that hedge fund managers are highly skilled investors. Since they can get the Senate to bail them out when they get in trouble, I suppose this is true.

--Dean Baker