LETTER TO THE EDITOR: Plenty of blame to go around
October 24, 2008 · 5:04 PM
To the editor:
Before you start blaming President Bush, and subsequently all Republicans, for the recent crisis facing the financial markets, you should check your history.
Fanny Mae was created as part of the New Deal in 1938 and privatized in 1968 by Johnson (D). In 1970 Freddy Mac was created to compete with the extremely successful Fanny Mae, and since these organizations were backed by the government they both took stupid risks.
In 1977 the Community Reinvestment Act (CRA) went into effect under Carter (D) and ACORN started challenging and bullying banks into giving loans to individuals that never could have qualified under traditional banking standards. Toward the end of his term, Clinton (D) pushed for “affordable housing” and insisted that Fanny Mae and Freddy Mac increase their portfolios to contain
50 percent of these high-risk loans.
In September 1999 Steven Holmes of The New York Times commented about the Administration’s focus on affordable housing and warned about the easing of credit to aid mortgage lending.
In 2001 Bush (R) noted there were potential problems with Fanny Mae and Freddy Mac, and in 2002 the Wall Street Journal voiced further concerns regarding these two organizations and their subprime loans. Neither the Democrats nor the Republicans listened.
In 2003 Bush (R) again made significant recommendations to oversee Fanny Mae and Freddy Mac, but Barney Frank (D) wanted affordable housing and both Fanny Mae and Freddy Mac continued to buy risky subprime loans. Around
2004-05 Greenspan warned us of Fanny Mae and Freddy Mac’s unchecked growth, and Frank (D), Schumer (D) and Dodd (D) all opposed change.
In 2005 Bush tried again to gain control over Fanny Mae and Freddy Mac’s unchecked growth by proposing changes that would have prevented the collapse of Fannie Mae and Freddy Mac. Republicans all voted “yes,” Dems all voted “no.”
In 2006 McCain helped introduce a bill in an attempt to gain control and again these efforts were ignored by the Democrats. In 2007 the housing mortgages started to default and the rest is history.
So while you can state that Democrats ignored the problem and Republicans didn’t fight hard enough to fix the problem, you can’t blame Bush or the Republican Party for today’s financial crises — there’s plenty of blame to go around.