Stifling my effort at demonizing McCain and Bush …
Brian points out:
… the fact is, President Bush in 2003 tried desperately to stop Fannie Mae and Freddie Mac from metastasizing into the problem they have since become.
Here’s the lead of a New York Times story on Sept. 11, 2003: “The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.”
Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government-sponsored enterprises, Fannie and Freddie.
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Rep. Barney Frank, then ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
It’s pretty clear who was on the right side of that debate.
As for presidential contender John McCain, just two years after Bush’s plan, McCain also called for badly needed reforms to prevent a crisis like the one we’re now in.
“If Congress does not act,” McCain said in 2005, “American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole.”
Sounds like McCain was spot on.
But his warnings, too, were ignored by Congress. …
Two links he had me check out:
Still, the current under-regulation of GREED in the USA started in earnest with Reagan. Continued under Democrat Jimmy Carter. Slowed somewhat under Clinton. And, most to blame, are the two Bush administrations.
… Who’s most likely to fix it now?
McCain?
I think not.
Rick McCharles 
Reagan after Carter, not before.
As for Clinton, HE is at the very top of the list of people responsible for the current crisis. It was his will that banks be forced to make loans to people who the banks were NOT making loans to. The banks saw this as a business decision, no race involved. Clinton saw it as racism.
The result was a law that saw that banks were FORCED to make loans to people that they otherwise would not have given loans to.
Freddie Mac and Fannie Mae saw this as no problem because times were good and housing prices were going up. Indeed they were benefitting from the increased mortgage business (and they were now private businesses, not government agencies, though their entire loan portfolios were implicitly backed by Congress), so they liked the trend. Here’s a quote from NYT 1999 (1999!):
*** begin NYT 1999 quote ***
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements,” said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. “Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
*** end NYT 1999 quote ***
In addition, the people who made the mortgages (they were only BACKED by FM and FM) securitized them. That is, they bundled with a bunch of cash and the credit ratings companies gave them instead of F- rating a AAA rating. THIS NEEDS TO BE LOOKED AT!
The net result is that when the housing boom started by Clinton’s legislation cooled off, people just abandoned their homes rather than pay more in mortgage than the homes were worth. Who lost? Not the people who made the loans (well, not much) because they had securitized them. The people who lost big were the people who bought these securitized loans.
BUT, it all started with a well-intentioned idea to eliminate a perceived racist slant to banks not making loans to minorites. (You may recall earlier in this election cycle, though Obama had most black votes, many black people were sticking with (Hillary) Clinton, and many people call Clinton the first black president. Much of that good feeling is due to his intervention on behalf of minorities who felt they were not getting a fair shake with banks.)
As an interesting sidenote, you will see right now that Wells Fargo is doing pretty well. Their stock value is ok which right now, for a bank, is great. You may also recall that that a few years ago, after being forced to make loans to people to whom they ordinarily would not make loans to, they actually foreclosed on people not making their payments. The HOWLS!!! Big bank preying on little people, etc.)
Well, enough. As you can probably tell, I could go on and on. Main point: it’s not republicans, it’s not democrats. The system is broke and whoever gets to play with the levers gets rewarded NO MATTER WHAT THEY DO.
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