Peddling partisanship

Fresh off the heels of a column blaming Republicans for the travails of heavily Democratic California, Paul Krugman's latest piece assigns responsibility for the current financial crisis to...Ronald Reagan, a guy that left office 20 years ago. I kid you not:

“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.

Froma Harrop -- a left of center writer and self-described Krugman fan -- notes that the most partisan columnist in all the land left out one big detail:

Krugman should have elaborated: At Democrats' insistence, the legislation raised coverage by federal deposit insurance to $100,000 per account from $40,000. Had that not happened, taxpayers would have been far less on the hook, and depositors would have cared where their money was being “invested.” In other words, the law of moral hazard would have greatly slowed business at the casino.

Thoroughly unsurprising.

Update: More questions raised here.