Clinton Administration Sowed Seeds Of Credit Mess
Posted by: Jubal | 09/23/2008 1:20 PM
Red County contributor Chip Hanlon peels back the pages of time to nine years ago and the seeds of the current financial crisis:
Why did Fannie Mae and Freddie Mac fail? Let's revisit a prescient September 30,1999 article from none other than the New York Times, which describes the point at which the GSEs jumped the tracks:
The above-mentioned and prescient Peter Wallison co-bylines this column in today's Wall Street Journal, "Blame Fannie Mae And Congress For Credit Mess."
Why did Fannie Mae and Freddie Mac fail? Let's revisit a prescient September 30,1999 article from none other than the New York Times, which describes the point at which the GSEs jumped the tracks:
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 article goes on to describe the political backdrop:
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.And then the dead-on prediction, also from the same article:
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.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'You can read the rest of Chip's post here.
The above-mentioned and prescient Peter Wallison co-bylines this column in today's Wall Street Journal, "Blame Fannie Mae And Congress For Credit Mess."
CATEGORY:
Department of the Treasury, Wall Street
The 'Clinton' loans were done long before this mess & would have had a significant impact long ago...
So you're going to ignore the role Phil Gramm had in further knocking down walls of deregulation to put the blame on Clinton. Its always Clinton's fault. Weak.
Credit where credit is due, Dan.
It's blind loyalty that got us in this mess to begin with.
Redux -
Clinton & Congress (Gramm/Leach) deregulated federally insured institutions - jeprodizing the interests of millions of INNOCENT Americans.
Clinton's impeachment for lying about cheating on his wife - pales in comparason to how he screwed the USA with anti-USA legislation - like Gramm/Leach, NAFTA, PNTR, etc. Nearly pennyless when he got to Washington in 1992 - now he's worth in excess of $100 million dollars plus - richly rewarded for selling the USA down the river.
Impeached?
Time for a TREASON trial ...
So what you're saying is that the government insured loans are the only cause of this crisis? How many government insured loans did New Century write?
Here's a list of subprime lenders (where most of the risk was) and none of them were able to use government backing on their loans:
http://ml-implode.com/index.html#lists
Recognize any of the lenders? The problem had to do with Wall Street insisting on wanting more CDOs/ Mortgage-backed securities to compete with lousy bond returns.
Supply & demand. Investors wanted the loans, they just weren't very conscientious in evaluating the risks that were packaged in with the investment. I made a 685% rate of return investing in the tech boom market from 1997 til 2000 when I got out. I lost on a few options but I didn't whine to the government about bailing me out.
Ultimately what has to happen is either America has to tighten up our belts (and purse strings) or, raid our savings & future income & borrow from China to pay for this. Currently, there are no other choices.