Blaming Clinton after all these years.
Wingers believe that Bill Clinton caused the current market meltdown as much as they believe that Ronald Reagan was a free market lovin’ evangelist. In both cases there’s a sliver of truth which, like all good propaganda, is all it takes to convince an uncritical mind. In the case of Reagan he was certainly an evangelist but hardly a practitioner. In fact, he was one of the most protectionist presidents the country has ever seen. As for Clinton and his detractors the only noteworthy historical moment on our long march into financial Armageddon was the regulatory changes made to the Community Reinvestment Act in 1995 that required Fannie Mae and Freddie Mac to make mortgage loans more available to people who would not otherwise qualify for them. At the time the changes were lauded on both sides of the political isle because not only is purchasing a house viewed as an investment vehicle it can also encourage responsibility in the buyer as well as serve as an anchor to their respective local communities. To borrow a popular Republican phrase, it got people involved in an “ownership society”. A few of the crazies mention Clinton’s last minute signing of the Commodity Futures Modernization Act but most don’t because even the most casual analysis reveals that it was a Republican bill, hence it’s exclusion by most of the online lunatics who are slavishly devoted to white-washing any Republican participation.
David Fiderer lays out a more instructive time line of events as a preface to his critique of Time Magazine’s recent article listing the 25 People to Blame. Fiderer goes over conspicuous omissions, factual inaccuracies and some straight up smears written if only to satiate the desires of the media bipartisanship cult. Here’s a favorite passage about frequent right-wing dartboard target Barney Frank and racial scape goat Fannie Mae:
Everyone in financial services knows when and how things happened. Hank Paulson’s report to the President reflected the common knowledge expressed by Treasury, the Fed, the SEC and the CFTC:
‘The turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for US. subprime mortgages, beginning in late 2004 and extending into early 2007.
“We see this in all the numbers. According to a survey by the New York Fed, about 77% of subprime mortgages and 85% of Alt-A mortgages were issued after 2004. What happened in 2004? Subprime mortgage securitizations were able to take off because, as Bloomberg reported, in August 2004 Moody’s and Standard and Poor’s loosened their standards for rating mortgage backed securities…
And this:
In October 2005 the House, by a vote of 331-90, passed a bill to establish a new federal regulator created for Fannie, Freddie and the Federal Home Loan Banks. The new regulator was authorized to set capital standards and, if it deemed necessary, require reductions in mortgage portfolios. The White House opposed the proposed legislation and instead supported the pending Senate bill. But the Senate bill never came up for a vote, and the legislation died. In other words, the Republicans failed to negotiate a deal when they were in charge, and now place the blame on others. And once again, Fox News treats their distortions of history as reportable fact.
One Republican has a different take on events. Rep. Michael Oxley claims his bill was opposed by White House ‘ideologues’ who wanted to privatize Fannie and Freddie and who opposed a bigger government role.
Looking back on how we got to where we are currently there are lessons to be learned. Some of them have to do with the undue influence the corporate finance lobby has on our political process or the dangerous outcomes of putting fanatical ideological devotions to a mythical “free market” before rational policy making. Sadly, these mistakes will go misunderstood to a frighteningly large portion of the population because accurate and constructive analysis is not what they seek. Doing so would lead them to inconvenient conclusions; that problems can’t be blamed solely on a specific political doctrine or solved with slogans.
-mg
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