Bloomberg: How the Democrats Created the Financial Crisis

are there non-biased sources that share this opinion?

 

I did not read basso's post, but at it's core the problem was both democrat and republican caused IMO. Phil Gramm for the repubs (now a mccain advisor!) and Clinton for the democrats (who allowed the Gramm bill to go through provided it maintained a poorly worded "requirement" for loan access for minorities and those with poor credit).

 

LMFAO, i knew as soon as this was posted to the wire basso would come out to grab this.

What was missed at the top was that the gentleman lecturing us about economic bubbles was the author of a little book called "Dow 36,000".

Thankfully he is the one lecturing us now about catching bubbles in hindsight lol.

Anyway - just skimming briefly

1. His explanation as to why the Republicans who controlled the committee were apparently too afraid to bring this to the floor because the democrats had signaled that it would become a partisan issue by voting against it in committee (source?_?

LMFAO, since when were Republicans too afraid to bring measures to the floor of the Senate out of fear of political opposition from Democrats?

What an idiotic cop out. The Republicans introduced a bill which Senator Shelby (R-Alabama, Committee Chair) sat on for a year and a half.

2. His timing is totally off. As chronicled earlier, much to embarrassment of basso, that bill was introduced in early 2005 (after a lot of the damage had already been done) and languished in the Republican committee until 2006. By the time the bill was implemented, assuming it had passed - it probably wouldn't have been effective till 2007 - as previously stated that's deck chairs on the titanic. I was working on matters involving large mortgage securitizations which were eventually the subject of swaps and derivatives way back when I first started working - that market was already big by the late 90's.

3. St. Alan Greenspan. I can't believe anybody is still stupid enough to pull out this line. In 2006, That idiot pronounced that "the worst may well be over" with respect to the housing market. Is he f-king serious? NOt to mention that he kept rates way too low for too long which enabled the bubble in the first place.

 

No, Hassett is basically picking something off the FREEPER forums that wingnuts have been posting about since mid-last week.

 

as much as i would wish that were the case, I don't think we can attribute the mess to the Democrats. I'm sure if we dig deep, we could find some Democrat policies which may certainly have exacerbated the situation but the crisis - but not outright cause.

 

basso, thanks for the bolding thingy, but it doesn't hide the fact that this was written by "an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election." Nice try, though.

 

The Republicans controlled BOTH HOUSES of CONGRESS for 12 STRAIGHT YEARS until 2007, yet the Dems created this mess? Oooookaaaaay.

Are people really stupid enough to believe this pile of typical basso nonsense that was written by an adviser to McCain? Unbelievable. Truly breathtaking!

Needless to say, this should have been posted in an already existing thread.

 

People who post at Free Republic:
http://www.freerepublic.com/tag/*/index

 

now the republicans claim to be the regulators, it would be funny if it weren't true.

george bush has pushed houses for everyone to prop up the economy since before his second term started

 

That is completely false. The lowering of credit standards primarily by the GSE's then securitized and pushed by wall street started in 1995 and perpetuated over the years.

The % of American families that own a home grew from about 64% in 1995 to 75% in 2005. Some of that was based on natural organic growth, but much of it was subsidized by weakening of credit standards that was primarily due to the idea that more people deserve a home and Fannie and Freddie are willing to back that notion.

Greenspan's keeping rates too low for too long probably did more to contribute to perpetuating of this situation more than anyone and I think he was completely blindsided by the post-tech bubble gains that were based on expansion of credit. Interest rate changes now will do little as spreads and liquidity isn't the issue, but solvency is.

 

If it is "completely false" you should inform the White House webmaster to remove this webpage asap:

Factsheet: America's Ownership Society

http://www.whitehouse.gov/news/releases/2004/08/20040809-9.html

excerpt:

Expanding Homeownership. The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security. In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade. Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent. Minority homeownership set a new record of 51 percent in the second quarter, up 0.2 percentage point from the first quarter and up 2.1 percentage points from a year ago.

President Bush's initiative to dismantle the barriers to homeownership includes:

American Dream Downpayment Initiative, which provides down payment assistance to approximately 40,000 low-income families;

Affordable Housing. The President has proposed the Single-Family Affordable Housing Tax Credit, which would increase the supply of affordable homes;

Helping Families Help Themselves. The President has proposed increasing support for the Self-Help Homeownership Opportunities Program; and

Simplifying Homebuying and Increasing Education. The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners.

 

In what ways did the Bush policy promote ownership of homes beyond affordability? Who is responsible for that? I feel like the answer is going to be like the one I get from my kids: NOT ME...

 

Next on the basso agenda of public information:

How Walking Created the Oil Crisis

by Exxon

 

The lenders, spurred on by Clinton's "mandate" regarding the aforementioned Gramm-Leach-Bliley Act.

Naturally, old Gramm was getting an enormous amount of campaign donations at the time from Merrill Lynch, Citigroup, Morgan Stanley, Bank of America, JPMorgan and Fannie May. Those names sound familiar as of late?

 

Sam,

Every president uses the same rhetoric regarding increasing home ownership etc. I'm not defending Bush, as the government promoting this by both parties and presidents contributed to this.

Bill Clinton had goals of increasing the home ownership rate to over 67.% by the year 2000 and succeeded.

http://www.issues2000.org/Celeb/Bill_Clinton_Families_+_Children.htm

Incentives for home ownership
There is no more crucial building block for a strong community and a promising future than a solid home.“ The Clinton Administration is dedicated to making the dream of homeownership a reality for all Americans. In 1995, the Administration, in partnership with 50 key public and private sector organizations, formed a National Homeownership Strategy with the goal of helping more Americans become homeowners.
[Accomplishments include]:
Highest Homeownership Rate in History, 67.2% in the 2nd quarter of 2000.
Lowering Interest Rates by Paying Off the National Debt.
Record Levels of Homeownership Assistance via 1.3 million loans from the Federal Housing Administration.
Helping Renters Buy Their First Home via homeownership vouchers for 50,000 families.
Providing Incentives to Save for a Home via Individual Development Accounts, providing incentives through federal matching funds for low-income families to save for a first home, higher education, or to start a new business.
Source: WhiteHouse.gov web site Aug 1, 2000

http://financialservices.house.gov/pr060903.html

U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON FINANCIAL SERVICES
Rep. Barney Frank (D-MA)
Ranking Democratic Member

For Immediate Release:
Contact:
Jennifer Porter Gore, 202-225-7141
Kay Gibbs, 202-225-7054



June 09, 2003

Barney Frank And Democratic Financial Services Members Reject Rhetoric Of Homeownership Month

WASHINGTON--Rep. Barney Frank (D-MA) today led a group of Democrats from the House Financial Services Committee, on which he serves as Ranking Member, in criticizing the Bush Administration’s launch of National Homeownership Month. The House Financial Services Committee has jurisdiction over all of the nation’s housing programs.


“The Bush American Dream proposal is likely to remain just that—a dream—because after eight straight years of dramatic gains in minority homeownership the Bush Administration has the distinction of presiding over a widening homeownership gap between both African Americans and Hispanics and white homeowners, a soaring mortgage delinquency and foreclosure rate, and a rising rate of homelessness,” said Rep. Frank.


The Democratic members noted that the key Bush Administration’s initiatives have not produced a single new homebuyer. The president’s signature down payment assistance program has not yet begun and provisions allowing low-income Americans to use Section 8 vouchers for down payments have been stalled at HUD. Also, despite enactment of more than $1.8 trillion-worth of tax cuts, the Administration failed to move on its Single Family Tax Credit proposal. These activities have occurred in an economic climate that has reduced housing opportunities for low- to moderate-income people overall. While homeownership is recognized as a sign of upward mobility, this administration has pursued policies that impede economic advancement that can lead to increased homeownership.

“The hypocrisy of the Bush Administration is just staggering,” added Rep. Maxine Waters (D-CA), Ranking Member of the Housing and Community Opportunity Sub-Committee. “Feel Good” rhetoric about the importance of homeownership is being used as a smokescreen to hide the fact this Administration is starving federal housing programs.”

The members also pointed to the fact that last year’s bipartisan bill that would have authorized down payment assistance was killed at the initiation of the Administration and to its efforts to slash funding for various housing programs that assist low- and moderate-income renters such as the HOPE VI public housing revitalization program and the Section 8 housing voucher program. Although the Administration’s efforts to end the successful HOPE VI program may be thwarted, Republicans still blocked Democrats’ attempt to include language providing homeownership counseling and foreclosure prevention assistance in legislation approved in May.

“Obviously, helping people keep their home enhances homeownership rates, something both the current Administration and all members of Congress want to do,” noted Rep. Barbara Lee (D-CA), who introduced the amendment that would allow HUD block grant funds to be used for foreclosure prevention. “I hope that increasing our homeownership rates will include a full range of initiatives instead of throwing money at part of a complex problem.”

 

Repeating: focusing on housing and mortgages alone gets WAY off track.

A simple housing collapse would have been one thing and would have been largely contained, but the fact that the housing bubble had been securitized, derivativized, then swapped around and multiplied a hundred times, while being leveraged is the real issue of why this cascading sh-tstorm is coming back.

 

going back to johnny mack calling himself a deregulator

also, mortgage growth did shoot up under clinton, because people saw REAL growth in wealth and income under clinton

 

I don't care what Clinton said.

You said that PG was saying something "completely false" when he noted that GWB made home ownership increases a feature of his presidency in 2004.

It's not completely false - it was completely true.

A philosophical question for another thread: Why should we encourage home ownership via tax deductions etc?

What is so great about it that we need to have it?

A recent book called the gridlock society (or something like that) showed how having too much ownership can result in less efficient outcomes economically due to bottlenecks, last mile problem etc.