From the August 8 edition of Fox News' Hannity:
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Fox Business host Stuart Varney falsely claimed that policies outlined in President Obama's housing speech will inflate a new housing bubble by "coercing" private banks to provide low interest rates and easy money to unfit borrowers, ultimately setting the stage for another financial collapse.
On the August 7 edition of Fox News' America's Newsroom, Varney argued that the president's call to wind down government involvement in Fannie Mae and Freddie Mac, perhaps dissolving the two mortgage giants altogether, was in fact a ploy to over-regulate private industry. According to Varney, Obama eventually planned to force other banks to lend to the "poor credit borrowers" currently served by Fannie and Freddie. Varney and Fox host Heather Childers agreed that it was a policy of lending to so-called "poor credit borrowers" that caused the financial collapse more than five years ago. They went on to state that the president's proposal would set the precedent for another crash.
Varney continued his attack on the president's housing initiatives on the August 7 edition of Fox Business' Varney & Co. with senior legal analyst Andrew Napolitano who agreed that the president "wants to transform them [Fannie Mae and Freddie Mac] ... into something more sinister" through federal regulation of the banking industry for his own political gain.
Fox is once again attacking the president for policies he does not actually support. Furthermore, they are once again blaming the financial collapse on bad borrowers who were extended loose credit through government regulation, even though economists conclude otherwise.
On August 6, President Obama spoke at Desert Vista High School in Phoenix, Arizona, on the merits of "responsible homeownership." The president outlined a vision to build upon stable growth in the housing market without burdening American taxpayers with the failures of risky borrowers and lenders. From the speech:
We've got to give more hardworking Americans the chance to buy their first home. We have to help more responsible homeowners refinance their mortgages, because a lot of them still have a spread between the rates they're paying right now on their mortgage and what they could be getting if they were able to refinance.
And we've got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place. We got to build a housing system that is durable and fair and rewards responsibility for generations to come. That's what we've got to do.
The president specified that his plan will not bail out risky lenders and borrowers at the expense of the public, and that it would take steps to curtail some of the rampant market speculation that helped drive the housing bubble before the 2008-09 crash. The president indicated support for winding down the two government-backed mortgage giants; meanwhile, legislation to gradually dissolve Fannie and Freddie over the course of five years is already proceeding through the House and Senate.
President Obama also outlined a multi-step program that would allow borrowers to refinance at today's low rates, make more credit available to well-qualified borrowers, rebuild hard hit communities, and ensure affordable rent to families who opt not to buy a home.
The president also commented on the prospect of immigration reform providing a boost to the housing industry. According to The New York Times, a study by the National Association of Hispanic Real Estate Professionals estimates that the Senate's bipartisan immigration reform bill could generate up to $500 billion in mortgage lending to new citizens and documented legal residents.
Contrary to Varney's continued accusations, economists argue that loose private sector lending, rather than government-sponsored loans to "poor credit borrowers," precipitated the housing market's collapse. While Government-Sponsored Enterprises (GSEs) including Fannie Mae and Freddie Mac did contribute to the market's overall instability, a Brookings report finds that "Fannie and Freddie did not catalyze the market for subprime MBS [Mortgage Backed Securities]; rather, they started to hold such mortgages in the pools they purchased, perhaps because of shareholder pressure or to regain market share."
According to Brookings senior fellow Alice Rivlin, it was the private sector's "extraordinary decline in lending standards" that caused the crisis, and GSEs do not deserve the blame. Dean Baker of the Center for Economic and Policy Research notes that GSEs began buying junk bonds "late in the game" as a response to pressure from private market, citing a Moody's investor document. Data comparing GSE lending to the private sector indicates that GSEs took fewer risks than the private sector.
Right-wing media have responded to a proposed rule from the U.S. Department of Housing and Urban Development (HUD) with a barrage of false attacks and overheated rhetoric. The rule, which attempts to increase minority access to community resources like public transportation and education, has been called an act of "tyranny" designed to "encourage diversity, for diversity's sake."
After calling today's presidential address on the economy "a case of political déjà vu," America Live guest host Shannon Bream claimed that the economy has "mostly struggled" since Obama took office, despite evidence to the contrary.
The July 24 edition of Fox News' America Live opened with a preview of President Obama's economic speech taking place at Knox College in Illinois. Bream immediately framed Obama's economic record negatively, saying, "Critics argue, they think it's just going to be more of the same, returning to themes of higher taxes and higher spending, leaving some thinking he's just out of ideas. President Obama took office, since then the economy has mostly struggled." She then asked, "If the critics are right and there's nothing new here, what is the speech really all about?"
But in fact, housing prices have consistently risen, the Dow Jones Industrial average, also on the rise, has posted record highs, and private sector job growth has steadily increased since February 2010:
Although the economy has improved, Republican obstructionism "has blocked pro-growth policy and backed job-killing austerity," Guardian columnist Michael Cohen argued. Economic experts have argued that lowering public sector spending has held the economy back and government spending cuts have consistently lowered GDP growth in recent years, but Bream made no mention of Republican plans to gut the president's proposals to remedy this.
While the five largest network and cable Sunday shows underreported economic developments in the past month, MSNBC's Melissa Harris-Perry provided ample discussion of the economy.
A Media Matters analysis of Sunday show coverage from May 12 to June 9 found that ABC, CBS, CNN, FOX and NBC devoted less than 36 total minutes to the economy. This lapse in coverage occurred despite multiple economic developments emerging over that period.
Of the Sunday shows analyzed, MSNBC's Melissa Harris-Perry stood out for its economic coverage. In five weeks, the show dedicated almost three hours to discussion on the economy -- by far the most coverage of the seven shows Media Matters analyzed. Melissa Harris-Perry was almost five times more likely to discuss the economy than CNN and network Sunday shows combined.
The show's discussion of the economy was diverse, touching on a range of topics including poverty in America, food insecurity, student loan reform, and the recent rebound of the housing market.
The show's ample and diverse economic coverage comes at a critical time -- according to a May 7 Gallup poll, a majority of Americans view an array of economic issues as high priorities.
Is the media's heavy focus on Washington "scandals" pushing positive economic developments to the wayside?
CNN correspondent Christine Romans observed that focus on Washington "scandals" may be knocking positive economic news off the agenda, claiming "now the economy is slowly healing, all the conversation is about controversies though."
Romans isn't alone in her observation. On the May 29 edition of MSNBC Live, Talking Points Memo's Igor Bobic highlighted the fact that "scandal-mania" in Washington is taking all the oxygen out of positive economic developments, prompting host Thomas Roberts to note, "There really is this obsession we have in D.C. right now talking about the IRS or Benghazi or even the DOJ scandal, but we're not talking about where we're moving economically as a country, but it is in a positive direction."
Indeed, media has been largely silent on economic gains, most recently demonstrated by an underreporting of the housing price surge.
On May 28, Standard & Poor's released its Case-Shiller index of home prices. The report showed that in March, housing prices rose at an annual rate above 10 percent, posting the largest gain in the housing market since April 2006.
This positive news, however, did not garner any significant attention from cable news networks. According to a Media Matters analysis, in the day following the release of the Case-Shiller report, Fox News, MSNBC, and CNN spent a total of nine minutes and 32 seconds discussing the surge in housing prices.
Housing prices in March rose at the highest annual level since April 2006, a sign of positive economic development that went largely underreported by cable news networks.
Right-wing media continue their relentless campaign to undermine the Labor Secretary nomination of Thomas Perez, pushing the baseless claim that he acted unethically in his involvement with a withdrawn Supreme Court case that could have undone decades of civil rights precedent.
The Wall Street Journal and the National Review Online have been at the forefront of allegations, most recently made by the WSJ on May 6, that Perez perpetuated a "shady quid pro quo" with the City of St. Paul, Minnesota, because of his involvement in deliberations that resulted in a withdrawn Supreme Court case, Magner v. Gallagher, and the decision of the Department of Justice to not intervene in an unrelated False Claims Act lawsuit.
By holding a surprise hearing for the "whistleblower" who initiated the False Claims Act case against St. Paul, Congressional Republicans have used the allegations that something "awfully suspicious" occurred to push back Senate mark-up of Perez's nomination until May 8. The "whistleblower," a small business owner named Frederick Newell, may have lost a sizeable sum of money he could have been awarded if DOJ had intervened. As explained by Mother Jones, "given all the hard work he put in, it's understandable he's ticked off at Perez. But the fact that Newell didn't get his money doesn't mean Perez did anything improper."
Indeed, it's unclear if Newell could have won even if DOJ had joined the case. DOJ's top expert on these sorts of claims, Deputy Assistant Attorney General Michael Hertz, determined the case was weak, reportedly deciding "this case sucks" and to not intervene. The Magner case at the other end of this "quid pro quo," however, was of far greater significance.
Because Magner had the potential to present yet another opportunity for the conservative Justices to dismantle long-standing civil rights precedent, advocates ranging from civil rights attorneys to former Vice President Walter Mondale joined the DOJ in requesting St. Paul drop its appeal that had brought the case to the Supreme Court. In a recent op-ed for Politico, Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, explained the stakes:
As any lawyer knows, bad facts make bad law. This adage aptly applies to a fair housing case involving the city of St. Paul, Minn., that is now being unfairly used to tarnish the integrity of Tom Perez[.]
What made [Magner] so unusual was landlords' claim that by enforcing housing codes against them the city was committing a civil rights violation under the Fair Housing Act. Their argument was that bringing their buildings up to code would cost too much money, cause them to dispose of the properties and thus, affect the access of their minority tenants to housing. The district court dismissed the landlords' claims, but they prevailed on appeal.
This case represented a real threat to established civil rights laws that have protected millions of Americans from discrimination. It would be a real threat to the integrity of the Fair Housing Act if these landlords could use it to keep tenants in squalor.
St. Paul's mayor, Chris Coleman, was working with Perez on this issue and on an unrelated False Claims Act case against the city. The false claims case was relatively weak, and the Justice Department chose to dismiss it. During this same period, I was among the civil rights advocates who initiated conversations with the mayor to ask if he would withdraw the city's Supreme Court appeal in the landlords' case. Coleman's public interest background and commitment to preserving the Fair Housing Act made him uniquely sympathetic to our concerns. After due deliberation, the city dropped its Supreme Court appeal.
A Wall Street Journal columnist cited a new Urban Institute study on the increased wealth gap between communities of color and whites to both revive the debunked accusations that fair housing policies caused the subprime mortgage bubble and falsely link Assistant Attorney General Thomas Perez to these claims.
Continuing the outlet's relentless attacks on current Labor Secretary nominee Perez, editorial board member Jason Riley wrote a WSJ column claiming Perez is responsible for the racial wealth gap documented by a recent Urban Institute report by purportedly "saddl[ing] a lot of minorities with foreclosed homes, huge debt burdens and bad credit scores."
The support for this backwards allegation was that as head of the Civil Rights Division at the Department of Justice under President Obama, Perez effectively pursued lawsuits against banks that impermissibly discriminated against communities of color during the administration of former President George W. Bush. From the WSJ:
Not surprisingly, neither the Urban Institute nor the New York Times have much to say about the federal policies that pushed lenders to loan money to people unlikely to be able to repay it. But the reality is that well-intentioned housing policies aimed at low-income minorities have ultimately left those folks worse off.
President Obama's nominee for labor secretary, Thomas Perez, made a name for himself in the Justice Department by shaking down some of these lenders for "racial discrimination" if blacks and Hispanic applicants weren't approved for some loans at the same rate as whites. Other lenders got the message.
Mr. Perez is getting a promotion, and the Obama administration is patting itself on the back for pursuing these so-called fair-lending cases. Of course, all they've really done is saddle a lot of minorities with foreclosed homes, huge debt burdens and bad credit scores.
Conservative media figures are painting a new White House push on affordable housing with the same dishonest brush they used to shift blame away from Wall Street for the housing bubble that precipitated the 2007-08 financial crisis.
On the April 3 edition of Fox News' America's Newsroom, Fox Business host Stuart Varney said that "lowering standards for who can borrow money to buy a home" is "what got us into trouble in the first place." The Washington Free Beacon made the same claim in an article titled "Subprime: The Sequel," and Ed Morrissey of HotAir.com claimed "the central failure in that bubble...was incentivizing increasingly risky loans with government cash and coercion."
But the housing bubble of the early 2000s was caused by private sector lending behavior, not government policy. The government-sponsored entities Fannie Mae and Freddie Mac, commonly called the GSEs, didn't lead private financial institutions into the subprime market and the complex financial instruments that made the bubble so toxic. Instead, they followed Wall Street there. As the University of North Carolina's Center for Community Capital explained, "Ultimately, profit not policy was what motivated Fannie and Freddie and loan products not borrowers were what caused their collapse."
The data support this explanation. The loans to borrowers with lower credit scores which the GSEs bought up fared much better than did similar privately-securitized loans. (Six times better, according to the Center for American Progress). A Federal Reserve report using different methodology "found no evidence" that government policies designed to encourage lending to lower-income borrowers had contributed to the subprime bubble. The Financial Crisis Inquiry Commission's final report examined and thoroughly debunked the contrary argument, primarily made by the American Enterprise Institute's Ed Pinto:
In direct contrast to Pinto's claim, GSE mortgages with some riskier characteristics such as high loan-to-value ratios are not at all equivalent to those mortgages in securitizations labeled subprime and Alt-A by issuers. The performance data assembled and analyzed by the FCIC show that non-GSE securitized loans experienced much higher rates of delinquency than did the GSE loans with similar characteristics.
Morrissey's post labels Pinto, former executive at Fannie Mae, a kind of soothsayer "who originally pointed out the failure at [the Federal Housing Administration]." But beyond the wonks who've debunked Pinto's claims, financial experts and journalists like Bailout Nation author Barry Ritholtz, The New York Times' Joe Nocera, and Bloomberg's David Lynch have shown him to be a primary driver of the false blame-the-government narrative of the crisis five years ago that conservative media are applying to housing policy developments in 2013.
An April 2 Washington Post article on the White House's efforts to broaden the reach of the current housing market resurgence notes that the recent improvement in the market "has been delivering most of the benefits to established homeowners with high credit scores or to investors who have been behind a significant number of new purchases." Housing officials, however, argue that a housing recovery that is limited to near-riskless buyers is constraining the broader economic recovery. According to the piece:
From 2007 through 2012, new-home purchases fell 30 percent for people with credit scores above 780 (out of 800), according to Federal Reserve Governor Elizabeth Duke. But they declined 90 percent for people with scores between 680 and 620 -- historically a respectable range for a credit score.
"If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you're leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery," said Jim Parrott, who until January was the senior adviser on housing for the White House's National Economic Council.
"I think the ability of newly formed households, which are more likely to have lower incomes or weaker credit scores, to access the mortgage market will make a big difference in the shape of the recovery," Duke said last month. "Economic improvement will cause household formation to increase, but if credit is hard to get, these will be rental rather than owner-occupied households."
Yet conservative ideologues in the media appear eager to cast any attempt to expand the list of winners in the housing market's comeback as a doomed repetition of an invented history of a crisis that was actually caused by widespread private-sector fraud, greed, and collusion.
National Review Online misrepresented the conclusions of a recent Department of Justice (DoJ) Office of the Inspector General (OIG) report on current hiring practices in the department's Voting Section in order to join the right-wing assault on the Labor Secretary nomination of Assistant Attorney General for Civil Rights Thomas Perez.
NRO's aversion to the effective enforcement of civil rights law is well-established and the outlet's wish that precedent in this area is overturned has been repeatedly stated. In addition to Section 5 of the Voting Rights Act and affirmative action, NRO has also expressed its dislike for the currently constitutional "disparate impact" doctrine. This doctrine proves impermissible discrimination against protected groups by demonstrating the disproportionate effects of challenged policies and laws, an evidence-based approach that has drawn the NRO's particular ire in the area of fair housing. A recent NRO post attempted to recycle these attacks as new ones on Perez by observing not many conservatives go to work for DoJ's Civil Rights Division (CRD).
The NRO accuses Perez of dismissing the fact that not enough conservatives serve in the Voting Section - a "disparate impact" - even though Perez enforces "disparate impact" law against banks that impermissibly discriminated against communities of color.
The Wall Street Journal is joining the right-wing campaign against President Obama's nominee for Secretary of Labor, Assistant Attorney General for Civil Rights Thomas Perez, by uncritically pushing the unsubstantiated claim that Perez improperly colluded with the City of St. Paul, Minnesota, to withdraw a Supreme Court civil rights case.
In reporting on President Obama's official nomination of Perez to head the Department of Labor, the WSJ repeated the claim that Perez inappropriately interfered with Magner v. Gallagher, a Supreme Court civil rights case that could have provided the conservative justices with an opportunity to strike down decades of civil rights precedent. Specifically, although the City of St. Paul has clearly stated it withdrew Magner v. Gallagher because it feared a split Court might use it to strike down the established practice of proving discrimination by showing the racial effects of challenged policies - "disparate impact" litigation - the WSJ uncritically repeated the allegation that Perez was improperly involved. From the WSJ:
The nomination of Mr. Perez as labor secretary comes as some congressional Republicans have raised questions about his alleged involvement in the Justice Department's decision to stay out of two lawsuits against St. Paul, Minn., in which private plaintiffs alleged the city defrauded the U.S. in its use of housing funds.
Republicans have questioned whether the Justice Department stayed out of those cases in exchange for St. Paul dropping an appeal pending at the Supreme Court in a case that civil-rights advocates had feared would undercut enforcement of U.S. housing-discrimination law.
Rush Limbaugh falsely redefined redlining, claiming that it involves forcing banks to loan money to people who can't afford to pay it back in order to blame liberals for the financial crisis. In fact, the prohibited practice involves a lending institution's refusal to lend money based on location.
After noting a news article stating that new regulations will require mortgage lenders to verify and inspect borrowers' financial records, Limbaugh said on the January 10 edition of his radio show:
LIMBAUGH: You know what Obama and the Rev. Jackson and the Democrats used to call that? Redlining. When the banks would look at people's financial records and determine whether or not they could pay them back, if they couldn't, they'd line them out in red and they wouldn't get the loan. And of course, the civil rights crowd said "racist, racist, racist" because the minorities were among the largest group not being given loans, and they said it wasn't because of their inability to pay, it's because people are racist at the banks. So they changed the rules to give them the money.
Limbaugh used his definition of redlining in order to promote the persistent myth that efforts by Democrats to expand homeownership to lower-income families caused the housing crisis in 2008. But redlining as it applies to mortgage lending is discrimination against a borrower based on where the property is located -- typically an area dominated by low-income or minority residents -- regardless of the borrower's ability to pay it back.
From the January 10 edition of Premiere Radio Networks' The Rush Limbaugh Show:
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Media coverage of the economic consequences of sequestration -- steep federal budget cuts mandated by Congress' failure to pass deficit reduction legislation -- has largely ignored the effects of these cuts to the Department of Justice, which in recent years has brought a number of enforcement actions against financial institutions that violate fraud and fair lending laws.
However, comments from Attorney General Eric Holder in an interview with NPR Legal Affairs correspondent Nina Totenberg make clear that the potential effects of the now-delayed sequester could be especially damaging to the DOJ and could seriously hamper litigation against the financial institutions that fueled the Great Recession.
A Media Matters search of major newspapers and evening news transcripts available on Nexis indicated that the media did not explain the economic consequences of mandatory budget cuts to the Department of Justice prior to the fiscal cliff deal, which postponed sequestration for two months.
In the interview given after a speech he delivered at the John F. Kennedy Presidential Library and Museum, Holder revealed that DOJ's need to budget public safety programs in the event of sequestration would sideline successful attempts to hold banks accountable for the mortgage fraud and discrimination that partially caused the Great Recession.
Holder explained the "reality" that civil cases brought by DOJ and the recovery of "money on behalf of the American people" will "have to wait" if sequestration goes through, because public safety - such as maintenance of federal prisons - must be "prioritized." As reported by CNN.com:
U.S. Attorney General Eric Holder said Tuesday that if the Justice Department were faced with budget cuts due to sequestration, he believes that he would be able to maintain public safety by shifting resources and that the federal prison system could operate "for months" if necessary.
"I have the flexibility to move funds within the Department," Holder said.
However, nearly all civil cases would have to be put on hold, he added during an extended interview with National Public Radio reporter Nina Totenberg after giving an address at the John F. Kennedy Presidential Library in Boston.
If DOJ civil litigation is placed on the back burner, then so too is a large component of DOJ's efforts at compensating victims of the illegal mortgage practices of financial institutions before the recession. The DOJ has filed six lawsuits in response to past fraud and discrimination allegedly endemic among banks such as Wells Fargo, Citigroup, and Deutsche Bank, including a recently settled case against the Bank of America.
The DOJ alleged that one of Bank of America's acquisitions "charged black and Hispanic borrowers higher mortgage-lending fees or steered them into costly subprime loans even though their credit histories qualified them for a mortgage with more favorable terms."
DOJ has also recently accused Bank of America of engaging in a "spectacularly brazen" fraud that cost taxpayers more than $1 billion by "selling defective residential mortgage loans to Fannie Mae and Freddie Mac that later defaulted."
Now that the sequester has been postponed, national media has another chance to explain how mandatory budget cuts to DOJ, not just to the U.S. Courts, will affect access to justice for victims of big banks' financial malfeasance. As DOJ's civil litigation over illegal mortgage practices makes clear, the actions of institutions like Bank of America directly contributed to the housing bubble that fueled the Great Recession. In its coverage of the economic consequences of the sequester, the media should point out this specific harm to vulnerable homeowners.