Bill Clinton has been getting a lot of press lately for trashing his own party’s handling of the mortgage mess. Last Thursday, he told Good Morning America, “I think that the responsibility that the Democrats have may rest more in resisting any efforts by the Republicans in Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac.”
Unfortunately, he was fibbing.
He actually set the “standards” that forced Fannie and Freddie to make bad loans. In 1999, the L.A. Times noted that “Under Clinton, bank regulators have breathed the first real life into the Community Reinvestment Act (CRA), a 20-year old statute meant to combat ‘redlining’ by requiring banks to serve their low-income communities.”
The CRA said banks had an “obligation” to lend to “victims of discrimination in borrowing”, meaning low-income people who couldn’t pay off their mortgages. ‘CRA ratings’ are taken into account whenever banks apply to open new branches or merge, and there are fines for non-compliance. The Clinton Administration put out tougher CRA regulations in 1995, forcing banks to issue more and more risky loans.
The Clintonistas went even further. In 1999, the New York Times reported that, “the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.”
President Clinton definitely put the screws to the lending industry, but the only things he “tightened up” were the nooses around Fannie and Freddie’s necks. Then again, it wasn’t all his fault. He had a lot of help from his liberal friends in Congress.
Rep. Barney Frank (D-Mass.), Chairman of the House Financial Services Committee, has been covering up for Fannie and Freddie since 1992. Labeled by the Wall Street Journal as “Fannie Mae’s Patron Saint”, he said in 2000 that that concerns about the two companies were “overblown”.
In 2002, he claimed that they were “not problems” but rather “great assets”, and in 2003 (when Freddie Mac faced a Multibillion dollar scandal), he said “I do not think we are facing any kind of crisis”. To top it all off, he said last year that an independent regulator for the bloated behemoths would be an “inane” idea.
In the Senate, Banking Committee Chairman Chris Dodd (D-Conn.), was leading the charge. Just last year, he wanted to lift caps on how many mortgages Fannie and Freddie could purchase. He also wanted President Bush to “immediately reconsider his ill-advised” suggestion of an independent regulator. Of course, Dodd was also on of the Senate’s top four recipients of campaign Fannie and Freddie campaign donations, so you might say that he had a good reason to be wearing rose colored glasses.
Clinton, Frank, and Dodd are now among the legions of Democrats blaming the others for this mess. But if they really want to point fingers, they should direct their ire toward the men they see in the mirror every morning ...
Townhall's Adam Brickley contributed to this post.
Update: Mona Charen has written a little item on ACORN and Obama which dovetails this post Ken Blackwell has a good column on the topic, as well.. Also, above, I pointed out that the actions of several high-profile Democrats are directly connected to the meltdown we are currently witnessing unfold, but that ACORN — for which Obama used to work (according to the Charen piece) — is also connected to it, and so are other Obama associates beyond the organization and his fellow Democrats. Penny Pritzker would be a prime example of one of them.