I only mention him in this history is because that is his *only official participation* in the whole mess, bbart.

As I said, minority loans are not bad. Minority loans that abandon all risk criteria are. Look at his quote.. which is all you are basing his culpability on.

We want 5.5 million more homeowners by 2010 — million more minority homeowners by 2010.’

Somehow I just can’t read that as a “million more risky minority homeowners”, in light of him trying to reform the Fannie Freddie debacle. He was not trying to extend the same policies when he’s trying to reform the way the regulation of the GSE’s work.

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Oh, I’m not trying to blame Bush primarily – he was just extending earlier Democrat policies. Just notice that your only mention of him in the history of this whole mess was as someone who tried to reform the GSEs, which is a little too kind.

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Trust me, bbart… if I could recall all of the beltway, I would. There’s ample blame to go around on both sides of the aisle, and in the WH.

Yes, I think the weight of responsibility is heavier on the DNC side. They bucked all attempts at reforming the criteria for lending and oversight for over leveraging.

But to place it unduly on the Bush WH strikes me as not fair. Yes, he was an advociate for low-income and minority mortgages. This in itself is not bad, as long s the intregrity of the lending criteria is sound. And that’s what the DNC, and organizations such as ACORN, pushed… risky loans and a lowering of the credit standards.

As I said in another comment, I liken blaming this on Bush, McCain and a few other GOPers who were trying to address this years ago as holding a fireman responsible for not saving a victim because somebody wouldn’t give him a ladder.

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Thanks for the link, Mata. Lots of specifics there on Clinton’s hand in things; should have read it when you first put it up . I do think you let Bush off the hook too easily, though: you write ‘In 2003 and on, the Bush WH was actively pursuing Fannie/Freddie reform’, which I suppose is true, but completely omits Bush’s commitment to an ‘ownership society’. He was also (like Carter and Clinton before him) committed to having the government (artificially) increase home ownership generally and minority homeownership specifically. Here is one speech he gave; money quote
‘So I’ve set this goal for the country. We want 5.5 million more homeowners by 2010 — million more minority homeowners by 2010.’
Similar liberal thinking in these remarks. It just isn’t accurate to portray Bush as someone who tried (but failed) to reign in the flood of ill-advised lending; he, too, was an advocate for low-income and minority mortgages.

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I can save you some cyber pecking htere, bbartlog. Go back and read my perfect storm of housing and lending events” post back on Sept 22, and you’ll find many links there already. Including linking back to Curt’s original post on the CRA (Community Reinvestment Act) passed by Carter in the late 70s.

But Clinton had his Treasury Dept Secy, Rubin, rewrite the CRA compliance rules because he didn’t want the changes put to a vote for the new incoming GOP majority. These rules forced CRA banks to prove compliance of “minority loans” via numbers instead of intent. If they were not in compliance, they were penalized and denied growth opportunities like mergers, etc.

The housing prices started to go up rapidly after this (I have graphs there), but still the higher rates kept the prices somewhat in check. But after 911, when the rates went really low, you can see the flood of buyers that hit the market with lots of bucks with exotic loans and very low rates. The bidding wars for big supply vs low inventory accelerated the housing prices at 2 and 3x the previous rates… the largest between between 2004-2006.

Even non CRA banks jumped on the bandwagon since the subprime market proved so lucrative for revenue, and lending is highly competitive.

When the buyers defaulted on their paper, the high prices they paid for the houses prohibited replacing one defaulting buyer with another good buyer… the house wasn’t worth the loan amount.

Thus a “perfect storm” of events. But read it and you’ll get the gist of it all.

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even back in 1998-1998

Yes – because one of the seeds of this catastrophe was the push by Clinton to force the GSEs to allocate a certain amount of their business to low- and middle- income borrowers. I’ll have to read the back history to see what really happened in 2005; sounds like Congress decided to double down on the bad bet but I don’t really know the details, I wasn’t paying enough attention at the time.

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bbart, there was no “my guy” in my post specified that Ron Paul beat. That was a reference to many.

I’ve been reading a lot of old financial journalist’s columns even back in 1998-1998 forcasting this problem because of the increased influx of the subprime loans and the price increases. Many of them were complaining because their editors wanted them to tone down the criticism of Wall Street and over leveraging…. they were, afterall, their target readers.

There’s much about Ron Paul I don’t like. His economics, however, has some appeal in areas. THis is one of them. However he wasn’t the lone voice warning on this. He was one more voice added to the few… and no one wanted to listen.

I have no doubts Paul is against this bailout. But he’s got a few GOP and DNC reps and senators on his side as well. Now, if Rasmussen is correct, public support *for* this bailout is about 7%. That, however, will not stop Congress from going their merry way.

Frankly, I wish they had consulted more economists with alternatives ideas prior to obligating on this principle of purchasing bad debt. By all accounts that I have seen, this is not going to work.

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Also apropos would be the old Barney Frank quotes back when he was advocating for loosening the lending standards for Fannie and Freddy (in 2004 if I recall). And now he has the nerve to flap his gums about how the market is undervaluing some of the stocks in question, and the government is really quite likely to actually come out ahead by buying them. Heard him blathering on NPR the other day.

At a time in 2007 when many had already gone on record forecasting today’s economic status

My guy has ya beat by two years – this is from October 2005:

Ron Paul on Fannie and Freddy

(actually you can find stuff from Paul on the housing bubble all the way back to 2004, but this piece is particularly foresighted).

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Yes, I have to laugh at the lack of “regulations” claim, along with the same for oversight. They had an agency in place to over see the GSEs, which is the bulk of the subprime bad paper.

Also, when it comes to regulations… would one consider the rewriting of the CRA compliance rules by Clinton “regulation” or not? I certainly do.

Fact is some “regulations” prohibit, and others mandate *more* activity that should, by all rights, be prohibited, or at least limited.

So government “regulation” is a prime factor in the failures. But it is not a failure of the market. The market was behaving exactly as the govt regs told ‘em to.

And all warning signs were ignored… including by Bernanke, as these quotes prove.

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… “So to claim that this is a failure of the market is overly simplistic. The reality is that what we have is a failure of the regulatory agencies and the government to deal with a correction to the market. In short, due to government incompetence and lack of foresight the very agencies that were to deal with these kinds of problems, and indeed, prevent them didn’t. They failed. Nobody who advocates for a “free” market thinks that the market is always going to produce superior results. Back in the early 1900s and late 1800s the view was that recessions were part of the business cycle. A way of clearing out the rot and deadwood, as well as correcting people’s false perceptions. That was deemed unacceptable so regulatory agencies were put in place. Yet here we are again with another crisis and another bailout. I submit that this is a failure of the regulatory apparatus. A failure to adapt. A failure to be forward looking. A failure to do its job.”

THIS ISN’T A FREE MARKET
http://www.outsidethebeltway.com/archives/this_isnt_a_free_market/

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