IBD blames Dems, advances tired falsehood that financial crisis "had its roots" in affordable housing initiatives
September 16, 2009 11:01 am ET by Media Matters staff
From the September 14 Investor's Business Daily column:
The crisis had its roots in innocent-sounding changes made to the Community Redevelopment Act during the Clinton administration. Those changes not only encouraged banks to lend to credit-unworthy customers, they basically forced them to do so. Those that didn't meet CRA standards could be denied the right to expand their lending - or even to merge with another company.
The CRA used Fannie Mae and Freddie Mac, two government-sponsored enterprises that funded the Democrats' massive homeownership scheme, to boost homeownership among the poor.
Banks would be able to make loans to questionable borrowers, repackage the loans in bundles and resell them to Fannie and Freddie and investors around the globe. Fannie and Freddie got the green light to raise virtually unlimited amounts of money to buy up the iffy mortgages from the banks.
Any bank that didn't take part could find itself in big trouble.
As we wrote about this time last year: "With all the old rules out the window, Fannie and Freddie ... eventually controlled 90% of the secondary market for mortgages. Their total portfolio of loans topped $5.4 trillion - half of all U.S. mortgage lending. They borrowed $1.5 trillion from U.S. capital markets with - wink, wink - an 'implicit' government guarantee of the debts."
The Fannie-Freddie explosion in mortgage lending intensified when the Fed cut interest rates to a then-record-low 1% after 9/11, fearing an economic meltdown. By 2007, subprime mortgage lending hit $1 trillion -- up 2,757% from 1994.
From 2000 to 2008, Republicans in Congress tried repeatedly to rein in Fannie and Freddie. But Democrats -- led by Rep. Barney Frank and Sen. Chris Dodd -- spurned effective reforms. Instead, we got crisis. And unbelievably, the system is still in place today.
Previously:
Well, at least they're consistent. They were idiots then and they're idiots now.
Republican legislation that kicked of the closest thing to the next great depression by repealing the Democratic legislation that helped fix the last one!
And before any idiotic conservtaives point out that Clinton signed it - Yeah, I know! It's one of the reasons I don't like him: He went along with you morons too often! But deregulation of the financial markets will never be, and never was part of the liberal philosophy or democratic platform. It's Conservative and Republican no matter WHO signed it.
You must be so proud.
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My Blog
Until we get publically funded elections, this will never end. And if the US Supreme Court loosens the rules even further on how much corporations can give to candidates (which is currently being argued in the US Supreme Court -- http://christyhardinsmith.firedoglake.com/2009/09/10/scotus-citizens-united-brings-out-the-core-belief-splits-from-the-bench/ ), then business will play an even greater role in writing legislation for their profits and against the wishes of the population.
But I'll stop short of saying we need strictly publicly (meaning tax-payer) fuinded elections. If a candidate can raise his or her own money and it's actually from the PUBLIC - similar (but admittedly not entirely) on the scale that Obama did in this last campaign - then I think that's just fine. But, yeah, limit the amount for individuals, and prohibit anything coming directly from corporations.
We absolutely need to keep the corporations out of it. Corporate influence of government is every by as detrimental to the the public good and the institutions of liberty as religious influence is. The wall between BUSINESS and STATE, should be surpassed only by the wall between CHURCH and STATE. And both should be 100 feet high, topped with spikes and barbed-wire, covered in poison ivy, surrounded by jerusalem thorn bushes and patrolled by rabid pit-bulls.
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That's what I believe anyway
No longer do we hear about the corrupt Bush W HUD secretart Alphonso Jackson.
No longer do we hear about Bush W calling for a nonstop "ownership" society.
Yup. This purely a Democratic party led crisis.
These sorts of publications have NO CREDIBILITY.
1. The Republicans, who controlled the Executive, Legislative, and Judicial branches of government, couldn't overcome Barney Frank and Chris Dodd to enact reforms.
2. The majority of those "unworthy" mortgages didn't actually fall into foreclosure until their 5th, 6th, or 7th year, when homes were selling at a record pace at unrealistic prices at about 3 times their initial purchase price.
3. There was no problem with the credit default swaps and over-rated bundled securities, inflated home appraisals, and no-document and interest only loans.
4. The financial markets never hit the wall of reality when the housing market became saturated with new construction and started to cool, causing a panic of home values and the desertion of mortgages by real-estate investors who had interest-only loans and recognized their falling property values.
Investors LOVE to blame their losses on ANYTHING other than their myopia, ignorance, or the fact that they just flat out got caught in their own scheme.
Personally, I blame ACORN.
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I still think the McCain/Palin plan of invading the country of Africa would've an interesting economic fix, purely as a spectator sport. I'm glad we don't actually have to suffer through it, though.
"From 2000 to 2008, Republicans in Congress tried repeatedly to rein in Fannie and Freddie. But Democrats -- led by Rep. Barney Frank and Sen. Chris Dodd -- spurned effective reforms. Instead, we got crisis. And unbelievably, the system is still in place today."
Let me see now, who was in charge of the White House, and both houses of Congress from Jan 20, 2001 until 2007? Yes, correct answer is, REPUBLICANS!
If they tried so hard to get this done, why didn't they? They had almost 7 years of unfettered ability to do so against that mean old Barney Frank and Chris Dodd, who, apparently, the 2 of them were SO powerful, they could overcome republican majorities in both the House and Senate, and the White House.
These people, simply amazing in their ignorance.
Affordable housing legislation did not cause the financial or housing crisis.
The vast majority of the sub prime loans were originated by non-FDIC institutions. It was the likes of the Country Wides, Ameriquest and numerous other company that originated this junk. They then sold it to Wall Street, who packaged the crap up, paid the ratings agencies to slap a AAA rating on them and sold them off.
Yes Fannie and Freddie bought the mortgages, and as under their charter were required to buy only the high grade securities. Which they appeared to be, because the Wall Street banks paid the rating agencies to do that.
Like all other right wing crackpot issues which always have a minority involved, this is a real juicy one. After all it's a two'fer. It has low income people, which of course in their little minds are black, and an openly gay congressman.
Wanna try for a trifecta guys?