Hillary Clinton has been trying to label Donald Trump the bad guy, rehashing old comments he made about the housing bubble, but she doesn’t realize there are those of us who remember those who were primarily accountable for that crisis. Democrats.
Yes, Trump did say, “If there is a bubble burst, as they call it, you know you could make a lot of money,” reminding his CNN interviewer that he was a businessman and “I have made a lot of money in down markets.” Business columnist Larry Kudlow calls Hillary’s charge “absurd.”
It seems as though Clinton believes we are all low-information voters; that we won’t remember what brought about the housing crisis. Voters should follow the advice of political historian Michael Barone, who once said, “Voters tend to consider only the history they know. They might do well to look back a little further.” If you are interested, I’ll take you on a condensed seven-decade journey with excerpts from an op-ed I wrote in 2008.
Hillary wouldn’t want you to do that because you would learn that in 1994, President Bill Clinton forced lenders into high-risk areas, where they had no choice but to lower lending standards or face stiff government penalties. In 2000 Clinton pushed through new regulations to provide $2.4 trillion in mortgages for affordable housing.
You would also learn of indictments against its executives selected by Bill Clinton, like Franklin Raines to head Fannie Mae. He collected nearly $100 million in compensation and another $115 million in bonuses between 1998 and 2003. Jamie Gorelick and James Johnson, were two other Clinton appointees that benefited from positions at Fannie Mae.
But it all began in 1938, when President Franklin D. Roosevelt created the Federal National Mortgage Association, to purchase government-insured mortgages, and provide federal money to banks to finance home mortgages. It was an attempt to raise levels of home ownership and the availability of affordable housing.
In 1968, President Lyndon B. Johnson, desperate to remove debt from the federal budget, used the Housing and Urban Development Act to move Fannie’s debt off the federal books. Fannie became a federally chartered private company.
In 1977, Democrat members of Congress persuaded President Jimmy Carter to introduce the Community Reinvestment Act to assist minorities in purchasing homes. It was intended to lend money in poor areas, but a housing boom was fed by shoddy loan practices as bank executives, not wanting to be seen as the enemy of the poor, became shakedown targets by radical community organizers.
In the years 1981-1985 Fannie experienced cumulative net losses of over $350 million, but was rescued through regulator forbearance (ignored), and was permitted to forgo paying federal income tax for 10 years.
Between 1989 and 2008, Democrats kept Fannie Mae and Freddie Mac alive as the two firms funneled six figure campaign contributions to the likes of Democrats Sen. Chris Dodd (D-CT) and Sen. Barack Obama (D-Il).
Over the years, Republicans tried unsuccessfully to end the “housing for those who can’t afford it” program.
In 1954, President Dwight D. Eisenhower attempted to recharter Fannie Mae with sights set on privatization, but was unsuccessful.
With its heavy losses in the early 1980s, President Ronald Reagan, called for an end to all federal benefits and backing for Fannie and Freddie, leaving them fully privatized in 1988.
When President George W. Bush proposed an overhaul in housing finance, it was Rep. Barney Frank (D-MA), ranking member of the House Financial Services Committee, who killed the reform saying, “Fannie Mae and Freddie Mac are not facing any kind of financial crisis.” In 2011, facing ethics charges, Frank abruptly announced that he would not seek reelection in 2012.
In 2005, when Republican Sen. John McCain, one of the sponsors of a new reform act (S-190), predicted that without passage, “American taxpayers will continue to be exposed to enormous risk …” Senate Majority Leader Harry Reid (D-NV) accused the GOP of trying to “cripple the ability of Fannie Mae and Freddie Mac to carry out their mission of expanding home ownership,” and the bill went nowhere.
That’s an abbreviated history lesson. While we really don’t need a reminder of what happened in 2008. Senator Obama, who received more than a million dollars in campaign donations from sub-prime lenders, had this to say on Sept. 30, 2008:
“This financial crisis is a direct result of the greed and irresponsibility that has dominated Washington and Wall Street for years. It’s the result of speculators who gamed the system, regulators who looked the other way, and lobbyists who bought their way into our government.”
Missing was the acknowledgement that lenders were forced to reduce the standards for lending or risk government punishment.
Incidentally, Fannie Mae and Freddie Mac donated $75,000 to Hillary’s senatorial campaign and another $50,000 to the Clinton Foundation.
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