Around 1977 Jimmy Carter noticed something unfair was going on.
Banks in minority communities were accepting deposits from minorities, but would not lend money back to those minorities.
So a Bill called the Community Reinvestment Act was passed.
It required banks to lend money back to the minority communities they were accepting deposits from.
But no one enforced this law. For a very good reason, banks depend on people repaying loans to stay in business. The banks were making loans only to people they knew were very likely to pay them back. Credit history not skin color was the deciding factor.
Bill Clinton changed all this in 1994.
Clinton Quote – ”because I enforced the Community Reinvestment Act for the first time and over 90 percent of all lending done under that law was done when I was president”
Suddenly banks were forced to make loans to people who couldn’t pay them back. This was combined with an all out assault on the Mortgage Industry by the Federal Government. FHA, HUD, Fannie Mae, Freddie Mac…
Here is a quote taken from Clinton’s 1996 website –
Bill Clinton 1996 On The Issues
Expanding Affordable Housing
FHA is also providing home purchase loans for low-income and minority home buyers at more than twice the rate of conventional home purchase loan insurers.
Working to reduce barriers to home ownership caused by unlawful discrimination. To date, HUD has signed 70 “Best Practices” agreements with key lenders that are resulting in more fair lending practices and expanded opportunities for low-income and minority families.
Ultimately, there were well over 100 “Best Practices”.
In 1998 the Federal Reserve Bank of Boston produced a document entitled “Closing the Gap: a Guide to Equal Opportunities Lending”, which instructed banks that an applicant’s “lack of credit history should not be seen as a negative factor” in obtaining a mortgage.
Suddenly Credit History didn’t matter. Job History didn’t matter. Income didn’t matter, Loan Documentation didn’t matter.
HUD lowered down-payments from 20% to 3% and then to 0%. The Clinton Administration ordered Fannie and Freddie to expand their quotas of risky loans from 30% of portfolio to 50%.
Because of Clinton’s strong arm tactics, a giant housing boom began. Home values rose and rose and rose and rose.
But the phrase “sub-prime loan” was also born. Basically meaning that the people receiving these loans really couldn’t pay them back. But the ever increasing equity in their homes made it possible to “balance the books”…at least for a while.
Clinton’s next actions are almost impossible to believe.
The ultra-liberal website Slate –
He removed almost all regulations on the Banks and told them just get rid of these “sub-prime loans” any way you see fit.
The ultra-liberal website Daily Kos –
In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks. What happened over the next eight years was an almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and once again they sold them to their customers in the form of securities. The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999.
If that’s not enough for you, Bill Clinton’s Secretary of Labor also explains how Clinton caused the collapse.
The Project On Government Oversight offers a chilling, in the room viewpoint, taken from actual handwritten notes – as Clinton, Rubin, Greenspan, Summers and Levitt charted the course to America’s financial destruction.
Rather than taking the opportunity to tighten the rules for derivatives trading, Congress and the President enacted an appropriations bill in October 1998 that included a six-month moratorium prohibiting the CFTC from taking any action.
Douglas Elmendorf—who was serving on the Council of Economic Advisers and is now the head of the Congressional Budget Office, wrote – “As I suggested before, I think it’s useful to emphasize the idea that financial-market innovation has made the existing disclosure rules and regulatory approaches inadequate,” he wrote. “I’m not sure how much of the story this really is, but it’s a convenient argument because it absolves us of regulating badly in the past and neatly justifies the range of actions we’re now proposing.”
The following year, Congress passed and President Clinton signed the Commodity Futures Modernization Act, which effectively shielded OTC derivatives from virtually all regulation or oversight
The reason DailyKos, Reich and Clinton are willing to admit guilt in causing the recession in some areas while denying it in others, is a common tactic among guilty criminal defendants. Plead guilty to a lesser charge to avoid responsibility for a more serious charge.
If you place the blame on “creative bookkeeping and investing” or as Warren Buffet called them, “financial weapons of mass destruction” then Clinton can share blame with the Banks.
If you place the blame on the refusal to regulate the “financial weapons of mass destruction” then Clinton can share blame with the Alan Greenspan (the FED).
If you place the blame on Government Agencies handing out of free home loans to people with no money then Clinton can share the blame with his Council of Economic Advisers, corrupt Government Sponsored Enterprises and Congressional Democrats.
If you place the blame on Glass-Steagall repeal then Clinton can share the blame with Congressional Republicans.
But if you place the blame on the Community Reinvestment Act, which is where it all started, there is no one to blame but Bill Clinton.
This is why Democrats are now willing to throw anyone and anything under the bus in order to avoid this conclusion.
Clinton goes into great detail explaining how the actions he took are directly blamed for the collapse.
In this NY Times article, he lays it out just like a lawyer, as if these are charges against him and then attempts to plead guilty to what he considers the lesser charge.
It’s this simple… Gas + Match = Boom.
Clinton forced banks to loan money to people who couldn’t pay them back.
Clinton then destroyed the regulations on the banking industry.
Banks did what they had to do to stay in business.
A completely fraudulent boom occurred. Everybody got rich.
Then Bush took office, he saw the completely fraudulent boom occurring and tried to fix the problem.
In a split second, Democrats labeled him a racist and a bigot for trying to stop lending programs that were putting many minorities into homes.
NY Times 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.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
How Democrats Attacked Bush –
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the 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.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed. ”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
California Democrat Maxine Walters, said: “There were nearly a dozen hearings where we were trying to fix something that wasn’t broke. Mr Chairman, we do not have a crisis at Freddie Mac and particularly at Fannie Mae under the outstanding leadership of Mr Franklin Raines.”
In 2006, it was revealed that Fannie Mae had overstated its earnings – to which its senior executives’ bonuses were linked – by a stunning $9.3billion.
Bush should have done more. But the Boom was occurring on his watch too. What was he supposed to do?
How could he convince that average American that a complex financial shell game was going on and that bad loans which got poor people into homes was at the very heart of it? How was that ever going to fly?
So he did almost nothing.
Next, the FED went crazy. 17 consecutive interest rate hikes.
Beginning June 30th 2004 (1.25%) to June 29th 2006 (5.25%)
The FED kept rates sky high at 5.25%, for more than a year, until Sept. 18 2007.
People with adjustable rate mortgages could not make their payments.
Foreclosures started and the dominoes began to fall.
And then came the final blow.
From our great friends and allies in OPEC….
From Jan. 2007 until Jul. 2008, as America’s economy was struggling, OPEC almost tripled the price of Oil.
From $56 in Jan. 07 to $145 dollars a barrel in July 2008.
Aren’t you glad we spill our children’s blood to defend their oil?
With friend like these, America doesn’t need enemies.
The whole smoke and mirror Clinton economy fell apart in autumn of 2008.
Republicans tried to stop it… But no one could better prove this than Maxine Walters, who openly said: “There were nearly a dozen hearings where we were trying to fix something that wasn’t broke…..”
No Maxine, the those dozen hearings, where Republicans kept trying to fix things you and Bill Clinton broke, would have greatly limited the damage done in 2008.
There was always going to be a correction, but it didn’t have to almost be another depression.
To once again quote this article –
Congressman Artur Davis of Alabama, who confessed this week: “Like a lot of my Democrat colleagues I was too slow to appreciate the recklessness of Fannie and Freddie when in retrospect I should have heeded the concerns raised. I wish my Democrat colleagues would admit that we were wrong.”
Bill Clinton is responsible for almost every part of this mess.
He was the most evil, reckless, short-sighted President in America’s history.
What makes it worse is that he was also brilliant.
If Jimmy Carter did this, I would say he made a mistake. He was just trying to help poor people get into homes.
But Clinton’s actions went way beyond a simple mistake.
People in his own administration were trying to warn him… every step of the way…but he didn’t care.
And what is so dangerous about this is how so few people realize what happened and who is at fault….so we can make sure it never happens again.