Skip to comments.The Untold Story Of How Clinton's Budget Destroyed The American Economy
Posted on 09/05/2012 8:06:09 AM PDT by SeekAndFind
Bill Clinton is giving the keynote speech at the Democratic National Convention tonight.
The idea is to make people feel nostalgic for the last time when the economy was really booming, and hope that some of that rubs off on Obama.
However, in the New York Post, Charlie Gasparino uses the occasion to remind everyone that the seeds of our current economic malaise were planted during the Clinton years. Basically, it was under Clinton that Fannie and Freddie really began blowing the housing bubble, issuing epic amounts of mortgage-backed debt.
The story that Gasparino tells is basically: Liberal Bill Clinton thought he could use government to make everyone a homeowner and so naturally this ended in disaster.
Gasparino specifically cites the controversial Community Reinvestment Act, a popular conservative bogeyman:
How did they do this? Through rigorous enforcement of housing mandates such as the Community Reinvestment Act, and by prodding mortgage giants Fannie Mae and Freddie Mac to make loans to people with lower credit scores (and to buy loans that had been made by banks and, later, innovators like Countrywide).
The Housing Department was Fannie and Freddies top regulator and under Cuomo the mortgage giants were forced to start ramping up programs to issue more subprime loans to the riskiest of borrowers.
(Excerpt) Read more at businessinsider.com ...
Just this morning, Bill Clinton made the sun come up.
But last night, when it went down - that was Bush’s fault.
Twern't no boogeyman. They gave money away to people who couldn't pay it back. If the issue was red-lining and racial discrimination, then that is the issue that should have been addressed. But liberals (both on the Left and the Right) attack the symptoms, not the root problems, and always end up making the problem worse
Is’nt there a football game on tonight?...FUBC and FUBO!
Don’t forget a certain community organizer who sued Citibank in a large city at the southern tip of Lake Michigan to force them to loan money to people who had no hope of ever paying it back.
The Community Reinvestment Act was only one of the factors, the removal of the GlassSteagall Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms was another. Repealed under Clinton in 1999, it allowed Insurance Companies, Banks, and Wall Street to all get into the same business. The Bad Mortgages by themselves were harmfull, but the sliced and diced bad mortgages sold as AAA rated securities found there way into everybodies balance sheet, that’s what really spread pain far and wide.
You are absolutely correct. You win post of the month.
Unfortunately I’m afraid it’s too late to sell this story. These facts were known in 2008 but the Repubs allowed themselves and Bush to be blamed for the economic collapse. Now after 4 years and thousands of news stories it is considered common knowledge of who was to blame. Changing that perception is going to be very difficult. It certainly needs to be done but the time to do it was years ago.
Re post 9:
The CRA provided a source of bad mortgages, and an example to everyone else. Eliminating Glass-Steagall let those bad mortgages be securitized and drained away, making room for new ones.
It was a deadly combination!
By the way, it looks like O and his crowd are trying to do the same thing all over via the FHA, which will write mortgages with only 3.5% down. That’s less than the broker’s fee, so the house is immediately underwater. It’s only been a few years, but the default rate is starting to climb already.
Phil Gramm was the Republican leader who pushed through Glass-Steagall.
Gramm, a PhD in Economics, was convinced that US banks could be more competitive if the restrictions of Glass-Steagall were removed. Sounded so good.
Economically, it sounded so good. But as brilliant as Gramm was in understanding economic theory, he was a dunce when it came to understanding the human nature side of the equation. He let the millions of bats out of the cave.
It goes against the grain to believe Charlie’s analysis. Government is a disrupter. In a well ordered capitalist economy, stable corporations would issue stable paper for savers and a balanced government budget would issue (and redeem) some paper now and again to smooth out funding of capital requirements..
Glass-Steagall was Rooseveltian fascism, and was rightly repealed. It was a typical Lefty way of protecting certain companies from competition while claiming you were keeping evil capitalists under control. The problem was Clinton's housing fascism, with Baby Cuomo giving speeches threatening to jail bankers who wouldn't lend to deadbeatscreating monopoly-money loans that were taxpayer-guaranteed. I'm guessing Clinton's suppport for dumping Glass-Steagall was to pay off his contributors on Wall Street who were eager to trade the worthless sub-prime mortgages he was creating.
This is my third time harping on this! Please, please will someone contact the RNC and tell them to make a video about this subject to run in Virginia? All weekend long sleazy bill was on the tube ranting about how great his term was for economy and how if just given a little more time the o would be just as successful. BS, BS, BS.
It should read “ How Reagans economics help Clinton ride through 8 years of prosperity. Until he got what he wanted and ruined the Economy”.
"However, in the New York Post, Charlie Gasparino uses the occasion to remind everyone that the seeds of our current economic malaise were planted during the Clinton years."
That is exactly what happened.
Gram’s bill passed the US Senate strictly on party lines, no Dem voted for it and Clinton threatened to veto it. It was during the House and Senate reconciliation committee that the la.guage that did the damage was put in.
The bill then passed the Senate 92-8
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