Study shows democrats had a significant role in financial crisis.

“I think that the responsibility that the Democrats had may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac.” – Former President Bill Clinton (D-AR), September 25, 2008

“Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong.” – Congressman Artur Davis (D-AL) , September 30, 2008

 

Conservatism is the problem, no one can deny that.
it was conservative ideas that started the bubble, conservative bills that allowed it to happen, conservatives that did nothing to stop it and conservatives that have tried to shift the blame every since.

 

Financial crises just do not happen overnight and for no special reason. The changes to the GSE system that really enabled the financial crisis began in the mid-1990s. No one change, especially at the beginning, caused the crisis by itself, but all the pieces were essentially in place by the wind down of the Enron scandal in 2001. At that point, it became a matter of reversing course in Washington, which can be a curiously difficult thing to do.

In 1995, the Clinton Administration changed the law governing GSEs’ mission — the Community Reinvestment Act (CRA) — to encourage more lending in poor neighborhoods. Previously, the CRA directed government to monitor banks’ lending practices to make sure they did not violate fair lending rules in poor neighborhoods. With the 1995 change, the government published each bank’s lending activity and started giving bank ratings based primarily upon the amount of lending it performed in poor neighborhoods. These changes empowered community organizations, such as ACORN, to pressure banks to increase lending activities in poorer neighborhoods — which involved reducing mortgage loan standards — or face backlash from those organizations’ private and political associates. For instance, if Chase made 100 mortgages in a poor Chicago district, and Countrywide 150, the government would likely give Chase a lower CRA rating, and community organizers could pressure politicians to make it more difficult for Chase to get licensed to do full ranges of business in new areas of the country. Low CRA ratings could also disadvantage Chase with regard to government lending programs and make it more difficult for Chase to participate in mergers and acquisitions.

Through Fannie Mae, the government controlled banks’ mortgage lending activity rates. As long as Fannie was willing to buy these mortgages, banks had no problem lowering their standards if necessary, making the loans and selling them off to Fannie Mae. Banks could even buy the mortgages back from Fannie Mae, with Fannie’s payment guarantee, thereby eliminating the credit risk (as long as Fannie was government backed). Now, if the US federal government is behind Fannie – and the government has a perfect credit record – there is really little worry for banks, so they might as well make all the mortgages Fannie Mae is willing to buy, and purchase all the guaranteed debt Fannie puts up for sale. However, to the extent investors ever believed Fannie was just like any other company — without the US government guaranteeing its debts, at least in bulk — well that would be a different story. The risks involved would go from theoretically near zero, to well, who knows… Throughout the Congressional debate on GSE regulations in 2003-2005, senior Congressional Democrats repeatedly inferred — even directly stated on at least one public occasion — the US federal government would bail Fannie Mae out if required.

In written law, the US government only 100% guarantees Ginnie Mae. The other major two GSEs, Fannie Mae and Freddie Mac, exist in more of a grey area. Nothing explicitly states the federal government is 100% behind them, but it has always been implied. That is why statements of top government officials in the run up to the bubble are so very important, as are actions like the US President personally appointing Fannie’s CEO and directors.

From 1993-1999, the Clinton Administration replaced many of Fannie Mae’s key executives, including the CEO, the CEO’s number two, and nearly half the board of directiors. As a government sponsored enterprise (GSE), the President had the authority to make those appointments. The board, which increasingly consisted of Presidential appointments, then worked with the new CEO to change Fannie Mae executives’ salary structures in order to incentivize them to reach higher mortgage targets. More specifically, the board promised senior executive millions in bonuses each year as long as Fannie reported certain earnings figures. Just a quick reminder… Fannie’s ability to reach earnings targets is directly related to the number of mortgages it buys, as long as those mortgages do not default or as long as Fannie executives do not recognize negative changes in the payment flow.

Between 1994 and 2004, Fannie executives improperly reported $10.6 billion of earnings. Franklin Raines, the Clinton-appointed CEO, received over $90 million. Jamie Gorelick — a top Clinton Administration lawyer whom he appointed in 1997 to be Fannie Mae vice chairman despite having no formal financial experience – received over $26 million. Just by way of reference, in 2002, 21 senior Fannie Mae executives received over $1 million each.

Just before Mr. Clinton curiously appointed Jamie Gorelick to the lucrative Fannie Mae post in 1997, she had authored a very significant and controversial legal document that came into sharp focus on 9-11. Her policy, which became known as the “Gorelick Wall” established barriers that prevented federal anti-terrorist criminal investigators from accessing various federal records and databases…one of the top causes for the 9-11 intelligence failure. And Jamie Gorelick’s curious appointments did not stop with Fannie Mae… Democrats selected her to serve on the 9-11 Commission; the official government investigation into what happened from an intelligence standpoint, and why. She was in the perfect spot to head off the “Gorelick Wall” from being a cause celeb in the 9-11 Commission’s final report.

The only way to change the structure put in place in before 2000 would have been to forcibly replace the board of directors and senior management…but for that, the President would need hard evidence that justified cause. As far as Washington insiders publicly knew, all Fannie Mae was doing was helping poor people buy homes and, in the process, boosting economic activity. Who could argue with that? Certainly not any nationally-elected politician.



That evidence finally came in 2004, despite fierce Democrat party efforts to prevent it and their systematic attacks on people who tried to bring it to light. Even after the evidence was in clear public view, Democrats continued to resist any changes to the regulatory structure that would have slowed GSEs mortgage lending activity.

Franklin Raines moves Fannie into Subprime



The Clinton Administration’s 1995 CRA changes authorized GSE’s to buy subprime mortgages, which it began to do in 1997. “Subprime” means that the person receiving the loan has a poor credit record and/or very low income compared to the loan size.

Almost immediately, Fannie began to loosen its standards, requiring people to show lower wealth amounts in order to qualify for mortgages. By 1997, Fannie Mae was offering to buy 97% loan-to-value (LTV) mortgages. If a mortgage is $300,000 on a house worth $500,000, the LTV is 60% (3/5). The higher the mortgage relative to the house value, the higher the LTV. In other words, in 1997, Fannie started offering to buy mortgages that required recipients to put barely any money down. Fannie’s subprime backing caused the percentage of all new US mortgages that were of subprime quality to rise to 13% by 1999, versus 5% in 1994 when the Clinton Administration changed the CRA. According to a 2002 Housing Department report, “From 1993 to 1998, the number of subprime refinance increased tenfold.”

As Fannie’s CEO, Franklin Raines explained in 1999, “Fannie Mae has expanded home ownership for millions of families in the 1990′s by reducing down payment requirements. Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”

A September 1999 New York Times article describing the situation stated, “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.” That stockholder pressure was primarily through the board of directors, much of which was Clinton appointed, and specifically due to the earnings-based compensation program the directors structured.

The chart below shows the dramatic rise in home ownership rates during Mr. Raines’ tenure, from 1995 to December 2004, after roughly 25 years at roughly constant levels. This chart is what the Democrat party fell in love with, and represented what Congressional Democrats so fiercely defended in committee hearings about regulating Fannie. The vast majority of the rise happened before George W. Bush became President.

 

Known for a long time. Nobody even bothers to listen anymore. 56 per cent of CNN's viewers believed UN Ambassador Susan Rice when she made her five station stop tour of lies.
"I voted Obama because if Romney win, no more food stamps" courtesy Jesse Watters on a Fox News "Watters World" segment.
CNBC's Maria Bartiromo recently gave Senator Ben Cardin (D-MD) a new @$$hole on air when he insisted the Democrats were never going to give up their Santa Claus role and activities even after they finished using up all of Mitt Romney's and the Koch Bros financial resources. When Ms Bartiromo abruptly terminated the interview after listening to Cardin's nonsensical replies the NYSE traders on the floor near her who had been watching the interview on the TV monitors broke out into hearty applause.
Thats why the Founders graciously gave American Citizens their Second Amendment rights early leaving such comparatively trivial things like Universal Suffrage on the shelf for nearly a hunnert years for they foresaw the political rise of Barack Obama and the Democrats.
When political discussions are settled fairly in true democratic style as in 1861, unlike in the more common general elections when the Democrats Get Out The Vote Miracles Of The Loaves And Fishes come into play, ie Florida's St Lucie County where 155,000 registered voters cast 247,000 ballots, come into play, the dead cannot vote and no early voting or absentee ballots, voting early in Pam Beach or Dade, then moseying on up to St Lucie for same day registration there, is allowed.

http://www.bing.com/videos/search?q...15C3A388B76BB5CB24B515&view=detail&FORM=VIRE7

 

I don't think there is any doubt that Bush could have done more to stop the bleeding in the housing market. He wanted to keep the market going too. I'm sure he wanted part of the credit for putting the poor into homes. Even helping to lower the amount of down payment to get the poor into homes.

What it shows is how government can screw things up when they get to involved in business. Things were going along smoothly until both sides decided that it would be nice to get the poor into homes, even if they couldn't afford them. Business would never operate the way government does. Banks on their own would never give out loans to people who's credit and finances are so low. But if they can have government backed agencies like F/M & F/M take over the risk, what do they have to lose? That is why government's roll in business should be limited and why I have little faith in government helping. They usually screw up more than they help. Both sides can take a lot of (credit) for bringing this economy down. Not only through this housing fiasco, but also in how the drew up NAFTA, Free Trade and how they allowed Japan to shut us out of their markets back in the 1960's. They have done more to hurt us than anything business could do.

 

It more depends on whether we deal with reality and facts. The so-called surplus had already fallen in half before the first Bush budget, have you forgotten the economy started slowing dramatically in the 3Q of 2000 before Bush was even elected and went into a recession within weeks of his taking office which caused the slowdown in tax revenues? Are you ignorant of the fact that those tax rate cuts didn't go fully into effect until 2003 and that from that point the economy took off and the top earners paid not only a huge amount MORE in tax revenues, those revenues reaching record levels, but a higher share of income taxes while millions at the bottom had their entire tax liability wiped out. Are you ignorant of the fact that with those soaring tax revenues the highest earners were sending into the treasury that Bush and the Republicans then cut the recession deficits three years in a row down to a measly $161B?

Now tell us where Obama and the Democrats then took the deficits to after they took over the budget in 2008.

 

Really? What happened to capital gains tax revenues and the economy and unemployment after the Bush tax rate cuts went into full effect after 2003?

 

Bush wanted programs to assist low income people to save for down payments in order for them to buy houses, not to irresponsibly just sign them up for loans they could not afford. And anything that had to be done had to be done legislatively, and Bush called for tighter reigns being legislated some 18 times. It's easy to say "well soandso could have just done more" trying to pass blame when the blame should be cast on those who REFUSED to do anything and ran cover for their buddies at Fannie&Freddie.

 

Where did you cut and paste that piece of trash from?

 

Look, bottom line here, show the actual language in the CRA that makes a bank write a loan they know is bad or ****.
The CRA had NOTHING to do with the housing bubble, no matter how badly you need it to.
It was 100% the conservative repeal of Glass-Steagle.
Try as you might to make it other wise you know it is the reason.

 

For a very brief time they went up, then as always they fall.
Trickle down doesn't work, we are living the results of it now.

 

When you have to lie......

 

Repeal of portions of the Glass-Steagle act sure didn't help any. It allowed banks to get into risky adventures they had been kept out of. But don't think for a minute that putting pressure on these lending institutions to give loans to millions of people who couldn't afford it didn't weigh in just as bad. I know you'd like to put all the blame on Republicans and business and pretend that Democrats are blameless, but history shows differently. There are no innocence here.

 

You said debt, but I wasn't sure that you knew what you were talking about. I mean, whether you are referring to the deficit or debt, it's laughably wrong on it's face, but go ahead, how is our national debt 80% Republican?

 

Revenues from Capital Gains didn't decline until we hit the recession. That doesn't have anything to do with "trickle down." That was a successful policy.

The Bush Capital Gains Tax Cut after Four Years: More Growth, More Investment, More Revenues

 

Anyone with the slightest bit of common sense or knowledge of economics knew this 4 years ago. I have been pointing at this since 2008 but alas the media and the Democrats have zero interest in telling the truth they only want to push their agenda to get as many morons as they can fool to believe them and win an election which of course lets them push their failed agenda further.

 

So why is your president pushing tax relief? *******s or so funny the fiscal cliff is nothing other than Bill Clinton’s tax policy and some much needed cuts in government spending. Why is it that when Bush rolled back taxes that Pelosi stated that this is Tragic for all Americans yet now all of the sudden Obama wants to keep them in place so all of the ***** are cool with it and in fact the Republicans are obstructing it LOLOLOLOLOLOLOLOL Liberals wouldn’t know their ass from a hole in the ground if their life depended on it.

 

There was no 'pressure' put on any bank to do anything man! What does it take for you to understand that?
Lets run it down for you,
There is NO language in the CRA that does what you claim, none.
Less than 40% of the 'sub-prime' loans made were in the CRA effected areas, and most of them didn't go bad. (Do you really think that few loans can bring down the entire nation?)
The ONLY cause is the repeal of Glass-steagal.

Those are the facts, you can say it was the CRA all you want, you link to BS right wing OP-ED's and cut and paste more trash till the cows come home but you've got no evidence to back it up.
You are only fooling yourself.

 

Do the math, your a bright boy.

 

OUR President isn't, he isnt that stupid.

Typical contard rambling that makes no sense at all.

Why is it that when Bush rolled back taxes that Pelosi stated that this is Tragic for all Americans yet now all of the sudden Obama wants to keep them in place so all of the ***** are cool with it and in fact the Republicans are obstructing it LOLOLOLOLOLOLOLOL Liberals wouldn’t know their ass from a hole in the ground if their life depended on it.[/QUOTE]
More contard lies and weird meaningless rambling.

 

Horsecrap. We achieved RECORD REVENUES after the BUsh tax cuts....all the way through 2007...

Trckle up has us where we are now...

 

Repealing Glass Seagall was deregulation. The conservative response to all problems. Not.

 

Nonsense. Revenues dropped like a stone and have never recovered.

Revenues - % GDP
2000 20.4%
2001 19.4%
2002 17.4%
2003 16.0%
2004 15.9%
2005 17.1%
2006 18.0%
2007 18.3%
2008 17.7%
2009 15.1%
2010 14.9%
2011 15.3%
2012 15.6%

How is it trickle up when the share of the nation's income going to the 1% has increased from 9% in 1980 to 19%?

 

After they stopped cutting taxes and revenues had tanked hundreds of billions of dollars, squandering the Clinton surplus and running up new record deficits, they started growing again. But they proportionately never caught back up.

 

Am I the only one that says ALL of Congress and the Executive branch had a role in overspending and lax oversight? Come on people, titles are what divide us and make it easier for those involved to escape the repercussions of their actions. Its stuff like this that gets us blind sighted and makes us neglect what is right in front of our faces, the truth. You see, as American's we look for the one person to step up to the light and say I was wrong, then after that we judge everyone else for not doing the same. Lets face it though, can anyone who works in government come across as truly apologetic? I believe things like this study is what makes us say, "That congressman/woman is a piece of shod". Seriously? Take a drive to your local library and request the donor list print out that shows who contributes to each member of congress....you would see some of the people who donate to the member are the same people the member of congress is "chastising" only to receive more funds shortly after. It is all a game designed to keep us off track, imagine what we as a nation could do when we set our mind right. When we look pass party obligations and remember we all want to be Americans. A prime example of a rise of the people and knock down of the official is California when they recalled Governor Gray. Where is that action today?