GOP Candidates School Media On Crisis Origins

IBD Editorial ^ | December 29, 2011 | Editor

[Kaslin]

Journalism: Bloomberg News has published a piece designed to shame GOP White House hopefuls for fingering government housing policy in the crisis. But it's Bloomberg that needs schooling.

Its lengthy article scoffs at top Republican candidates Mitt Romney and Newt Gingrich for laying much of the blame on federal regulations. It argues their view "has been rejected" by the Washington punditry, as well as the Democrat-appointed "commission that investigated the meltdown."

While true, the prevailing wisdom is dead wrong. And the business wire not only parroted this false Democrat narrative, but conveniently omitted key facts.

Take Bloomberg's analysis of the Community Reinvestment Act's role in the crisis. "The Republicans say the federal government pressed banks to make risky housing loans under a 1977 law called the Community Reinvestment Act, helping inflate home prices and ultimately sparking the crash," wrote Bloomberg staff writer David Lynch.

But, the reporter added, the loans didn't start defaulting in droves "until 2007 — three decades after the CRA was introduced and 15 years after affordable housing goals were established for Fannie Mae and Freddie Mac." This tells only half the story. Here's what he and his editor, Chris Wellisz, failed to inform readers, wittingly or not:

• President Clinton completely rewrote the anti-redlining law in 1995, and the changes didn't fully take effect until 1997 — just a few years before the subprime explosion.

• Clinton's historic CRA overhaul — the first and only major revision to the law in its 30 years on the books — toughened enforcement while mandating for the first time that banks use "flexible underwriting standards" to qualify more low-income and minority borrowers for home loans.

• Banks that did not adopt the new standards risked failing their CRA examinations and having their merger plans scuttled by regulators.

[Reddy]

bfl

[cyn]

It is shameful and quite telling that these lies are being perpetuated — even still— in the media. Thanks for posting this bright spot.