Hannity baselessly blamed Democrats, CRA for financial crisis
SUMMARY: Sean Hannity baselessly asserted that "[t]he federal government and the Democrats ... forced these banks, through the Community Reinvestment Act, to make these risky loans," adding, "The risky loans started the subprime mortgage crisis, which impacted all these financial institutions, which needed government bailouts." In fact, according to housing experts, the vast majority of subprime loans were made by independent lenders not covered by the CRA.
On the November 24 edition of Fox News' Hannity & Colmes, co-host Sean Hannity claimed that federal regulations are responsible for the current economic crisis, baselessly asserting that "[t]he federal government and the Democrats ... forced these banks, through the Community Reinvestment Act, to make these risky loans," adding, "The risky loans started the subprime mortgage crisis, which impacted all these financial institutions, which needed government bailouts." As Media Matters for America has documented, the assertion that the financial crisis was caused by banks lending irresponsibly to comply with the Community Reinvestment Act (CRA) is widely discredited. According to housing experts, the vast majority of subprime loans were made by independent lenders not covered by the CRA, which applies only to depository institutions, such as banks and savings and loan associations.
During the broadcast, Hannity asserted of new regulations that might attach to efforts to solve the economic crisis: "[I]f we're going to go into this era of government regulation, let's just stand back and see how we got here. The federal government and the Democrats, they forced these banks, through the Community Reinvestment Act, to make these risky loans," leading to the need for government bailouts of financial institutions. Hannity concluded: "In other words, government caused that problem."
In fact, legal and financial experts on housing issues dispute Hannity's conclusion. A study released earlier this year by a law firm specializing in CRA compliance estimated that in the 15 most populous metropolitan areas, 84.3 percent of subprime loans in 2006 were made by financial institutions not governed by the CRA. Moreover, Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco, stated in a March 2008 speech that "studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households" [emphasis added]. And University of Michigan law professor Michael Barr testified before the House Financial Services Committee in February, saying: "More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts."
From the November 24 edition of Fox News' Hannity & Colmes:
HANNITY: Hey, Dick, let me -- let me raise this question with you here. First of all, the left and a lot of Obama supporters are very resentful at the high numbers of Clinton operatives that are now in the camp. That's issue No. 1. You've got the problem of Bill's ethics. That's question No. 2. You've got all these leaks. The Obama people seem to be resentful that it's coming as soon as the Clinton speculation began here. And then on top of it here, you know, I think it reveals their real inexperience. And they disagree on Iran, Iraq, Afghanistan, Pakistan, and on Russia. These are big issues.
DICK MORRIS (Fox News political analyst): Put it simply, Sean -- put it simply, Sean, Hillary Clinton was going to be the Democratic nominee for president until Barack Obama challenged her. The basis of his challenge was that he didn't agree with her foreign policy. Now he just appointed her to run foreign policy. If that isn't cynical, I don't know what is.
HANNITY: All right. So could we put that together, then, with the economic plan? I mean, his entire campaign on economics was he was going to tax the rich. "Read my lips, I'm going to raise taxes on the rich." He's backed off that. So how do we interpret this, that he said anything to get elected?
MORRIS: Yeah, I think that's true, and I think he's adjusting to economic realities, but let me just do an overview with this thing, because the events move so quickly. The era of the free-market consensus began in 1989 and ended in 2008. And we're now into a new era where the consensus will be at least government regulation and perhaps government management, and that's the era Obama is in. He won't raise taxes on the rich, because he doesn't have to. He's allowed to have a deficit as large as he wants.
HANNITY: But Dick, well, let's examine this a little bit --
MORRIS: A trillion-dollar deficit. No economic discipline, no fiscal discipline. And he'll pass his entire liberal agenda under a new tag, calling it the stimulus package.
HANNITY: All right, but if we're gonna go into this era of government regulation, let's just stand back and see how we got here. The federal government and the Democrats, they forced these banks, through the Community Reinvestment Act, to make these risky loans. The risky loans started the subprime mortgage crisis --
MORRIS: Right.
HANNITY: -- which impacted all these financial institutions, which needed government bailouts. In other words, government caused that problem. Government trade policy, energy policy, CAFE economy standards, safety standards, they caused the problems in Detroit. So now we're going to double down on the very root cause of our economic decline --
MORRIS: But Sean --
HANNITY: -- by including government more?
MORRIS: Yeah, that's exactly what we're going to do. And it's wrong in the way that you articulate it, but let's be honest about the long-term nature of this problem. Fifteen years ago, the total debt owed by everybody in the world to everybody in the world was equal to the global gross domestic product. They were the same number. Now it's four times as much. That extra debt is like heroin that we've been taking, and our whole economy has been based on it. And we're going cold turkey now to get out of the debt. If we don't, we'll never cure this problem.
HANNITY: But I'll tell you --
MORRIS: What the fiscal stimulus package is, is methadone to ease the pain.
HANNITY: A hundred and seventy-five billion was his original proposal. Now they're up to $700 billion, and if you read, you know, Bloomberg today -- and I'll get into this when we get back -- $7 trillion we're going to be on the hook for. We can't afford this. But more with Dick Morris after the break.
Oscar, it's important for republicans to avoid personal responsibility. Admitting you were wrong is the worst thing in the world to them.
You realize, of course, that before this is all over the Repugnantcons will blaming the fiscal crisis on widows and orphans too. CEOs? Nah, they're all haloed saints...
It is important for Shamity to keep personal responibility away from certain republicans. In this mess, there is plenty of blame to cover almost everybody. We, I think, forget that when we point fingers, three are pointing back at us. I think one of the things that ticked a lot of us off was for Madame Speaker Pelosi some weeks back stand before the media and absolve the Ds of any responsibility. She should have said something to the effect, "We got into this together and we have to work together to get out of it." Hopefully, that is the type of message we will get during the Inaugural Addrss on Jan 20.
That's why I like you, oscar. Nice rejoinder!
It is important who is responsible, and here, we have Hannity, blaming, without proof, the democrats. No doubt. Seems as though, the Republicans were in power, totally in power, for 6 years, and the democrats have only been in control of Congress for 2 years. This type of damage, was done over a lot longer time period than 2 years and all.
Mags, the Rs certainly have responsibility here, but I don't believe the Ds can totally resolve themselves of responsibility as Madame Speaker tried to do some time back. It goes back further than 2, 6, 8, 12 years ago. Politicians have almost always done what is expedient to "buy" votes. Once they and we realize that we are all in this together, the sooner a solution may be reached. Unlike Shamity and his ilk, I'm not placing all the blame in one spot. There is a shared responsibility in this and many of the other issues facing the country. The sooner that we all realize that the sooner we may be able to turn this thing around.
you have to wonder if this is just becoming something where we just declare everything is a crisis. i think we can probably not let the auto companies fail if possible, because of the ripple effect all down the line, and there should be strict conditions, but does everything have to be bailed out? i'm aware that this is a serious crisis, but are we just throwing money at everything in sight? sometimes recessions are just that. i was watching nbc news tonight and they had some guy saying that the continuing fall of housing prices is a bad thing. well, six of one, half a dozen of the other. falling prices mean more people buy, and that is already happening in some areas. it's hell on the mortgage companies who made the bad loans on over priced homes with no collateral, but not so bad in other areas. maybe, and i could be totally wrong on this, but is some of this just mass belief that the boogie man is about to get us? is it just self fulfilling? there have been times when the stock market has gone down and not recovered previous highs for many years, and i'm not just talking the depression. i know it's a crisis, but are we just willing to throw money at this without any end. to me, this is another example of piling on the debt to pass on the bill to future years. maybe we need to stop and take a breath. or, i'm totally wrong.
I agree. Bailout no one.
Banks gave bad loans, let them suffer. Good banks will flourish.
People did not have enough money to afford their mortgage, let them suffer. Home prices will stabilize.
Detroit makes lousy cars, let them suffer. Cleaner, greener cars will come out.
NO COMPANY IS TOO BIG TO FAIL. If the taxpayers bail them out, they will fail anyway.
What I see is the government underestimating the resilience of its people.
The only thing government can (and should) do is regulate the hell out of these bad guys so that things are fair across the board.
i'm not really saying no bailouts. i think the auto industry is an exception because that will have a big effect all the way down the line. it's not the same as a bank that just changes it's name and opens again the next morning under new management. but i also think that aid to auto companies should be tied to fuel efficiency standards, which both they and the unions have resisted. i think there are cases we have to do bailouts, but now it's like everyone has to be bailed out. we totally agree on the government regulation, which all these business hate, until they come hat in hand to washington to fix the mess they've made. we agree we just can't save everyone from their bad decisions.
Let them suffer, let them eat cake.
I don't understand how you talk about fairness in terms of letting auto workers suffer for the mistakes of management.
I don't understand how you talk about fairness in terms of letting the foreclosed suffer when our culture is steeped in consumerism and materialism. Americans were encouraged to finance their dreams on credit, we were told that we live in an era of infinitely expanding personal net worth. Where were the voices in media and leadership sounding the alarm that these spending habits were dangerous, that they could not be sustained? We were failed by those charged with the task of giving the public clear, unbiased information. I think maybe you make the mistake of believing humans are strictly rational beings, that we make decisions based on careful observation of information. Even if that were the case, we were misinformed or just plain uninformed. And don't think for a moment that lenders who stood to make a bundle were upfront about the risks of taking out a sub-prime loan. It was a con-job.
I think bailouts are necessary and must come with conditions, as well as, regulations.
The CRA may be a small part of the problem, but it didn't force the brokers to create this massive upside down pyramid of paper that sits on top of the mortgages. They sliced and diced these mortgages into investment instruments so that they could milk more money out of the system. They have created such a complicated mess that fixing it will be like untangling a barrel of fishhooks.
You're right, Nerz. Sure people bought homes they couldn't afford but once they bought that home, how many people or firms made profits selling the loan or using it to pad their balance sheets. How many times were those loans traded and fortunes made in the trading?
I've heard that there is more than fifty trillion dollars of fictitious money out there that hasn't hit the economy yet. That's a figure that can't be placed on the backs of those foolish enough to buy a home with no money down and no payments for two years. It has nothing to do with autoworkers making the "huge" salaries attributed to them by the ass clowns on Fox.
It's also a figure so large that all the money in the worlds economy won't be able to bail those economies out.
I don't understand the economy and financial system, but from what I can understand in all of this is that I really think we're all screwed but we don't know it yet.
I share that fear, but I try to keep it in a box and not let it out too often. I have long felt that our modern economy was built on a house of cards, especially with our manufacturing base disappearing. Buying stuff we don't need is what keeps the engine running, and most of us are doing it on credit.
It has to come crashing down eventually. The big question is how we deal with the aftermath. We pulled through the last Depression partly because of our strong manufacturing sector. Now that we don't make anything here, how would we survive another depression?
How would we survive another depression? By spreading the wealth around. By tearing up the rules that permit massive inequality.
Mandate that executives cannot make more than ten times the lowest paid employee and make it easier to unionize the low wage industries.
" but it didn't force the brokers to create this massive upside down pyramid of paper that sits on top of the mortgages."
No, it didn't "force" them. It did allow them to create your pyramid. So, it deserves more blame than you seem willing to give it.
It was not a major part in the creation of the slice and dice mortgage recycle market. Nor the massive unregulated betting on forclosure market.
No, CRA, did no such thing. Banks that provide CRA loans are held to strict lending standards and, in fact, only 12-14% of CRA loans are in foreclosure.
No, CRA, did no such thing. Banks that provide CRA loans are held to strict lending standards and, in fact, only 12-14% of CRA loans are in foreclosure.
No, CRA, did no such thing. Banks that provide CRA loans are held to strict lending standards and, in fact, only 12-14% of CRA loans are in foreclosure.
Well, it's official. Hannity and The Dick have the same knowledge about the economy as they do about everything else. They have yet to realize that their party got wiped out in the election.
Actually, they do realize that they lost, and this is the basic reason that they're really super trying to blame everything on democrats.
Hannity states that Democratic concept of Community Reinvestment started the trend of subprime lending. It is a Kindergarden style of argument, "but they started it).
We shouldn't give Democrats all the credit. Republicans have implemented, expanded and perfected the art of subprime lending by extension to independent lenders and their repackaging as securities.
Its amusing that Dick says a bigger concern is our huge burden of debt but leaves nameless the administration whose war, spending and tax policies have created it.
Well, that and the fact the the CRA never forced anyone to do anything. The CRA made it unlawful to "redline," or deny credit to an otherwise credit-worthy borrower based on where he lived or where he wanted to buy.
No one has ever been forced by the government to loan money to any person, period.
Did anybody else notice that Hannity used a quote from George H. W. Bush: "Read my lips, no new taxes." Too funny!
There is NOTHING baseless or false about the assertion that DEMOCRATS are responsible for the economic mess! In 2006, Nancy Pelosi and the democrats took over the house(pursestrings) and stated a "pay as you go" house of congress which NEVER happened! Also, the DEMOCRATS raised the minimum wage which caused unemployment to soar 2 yrs later!!! Also, Barney Frank and Chris Dodd, both DEMOCRATS the last time I looked, caused the subprime mortgage fiasco!!! HOW MUCH MORE "BASELESS" EVIDENCE DO YOU NEED?
Sean obtain this "talking point" from Neal Boortz. Neal has been ranting about the Community Reinvestment Act for a long time.
If anyone would like supporting links to the statements below, reply to this comment and you will be furnished them. Remember. Media matters.
This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration.
It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.
What is a risky loan? It's a loan that the recipient is likely not to be able to repay.
The goal of this rule change was to help the poor — which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay? They get into a house, yes, but when they can't make the payments, they lose the house — along with their credit rating.
They end up worse off than before.
This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.
Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans. (Though why quasi-federal agencies were allowed to do so baffles me. It's as if the Pentagon were allowed to contribute to the political campaigns of Congressmen who support increasing their budget.)
Ah, what th' heck. I'm going to bed. Here, especially for you conscientious media people, are the incontrovertible facts. Certainly you trust the New York Times and CSPAN!
Note the article date: September, 1999 -- George Bush was the governor of Texas at the time...
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
Bush officials sound a firm warning...
http://uk.youtube.com/watch?v=JsfMicOgufA
An obsequious sycophant chairman of Fannie Mae addressing the Congressional Black Caucus
(Senator Obama -- top row center)
http://www.americanthinker.com/blog/2008/09/fannie_mae_and_congressional_d.html
Rep Gregory Meeks, Maxine Waters, Barney Frank, et al poo-pooing the coming crisis.
http://www.breitbart.tv/?p=184743
My take:
Republicans are nearly solely to blame for the foreign policy misadventures that we have undertaken in the past several years. That falls directly to GWB.
However, the economic crisis that we find ourselves in is a SHARED failure by both parties, as well as the citizens of this nation that let greed get in the way of pragmatism and common sense.