There were plenty of indicators pointing to the fact that this collapse was inevitable, including the repeal of the Glass-Steagle Act a decade ago
Which was accomplished by a Senate vote of 90-8 and signed into law by one William Jefferson Clinton. Not that it really matters, since the Gramm-Leach-Bliley Act had nothing to do with the mortgage market meltdown.
…the Republicans understand that if they try to hawk the lie that Freddie and Fannie were responsible for this crisis, they will get shot down by actual economists who know what they are talking about.
Republicans don’t claim that Freddie and Fannie are solely responsible…Clinton’s 1995 revisions to the CRA helped an awful lot.
Be sure to check out the chart on page 9 that details the history of CRA “commitments” – “shakedowns” would be a more appropriate term, but we all know about the Left’s creative use of language. Think “choice”.
Back to the chart, two spikes in “commitments” are of immediate note: one around 1996 and another around 2002. So what could have lead up to the 1996 spike? Maybe a 1994 lawsuit against Citibank for violating CRA provisions – a lawsuit that was filed by ACORN (Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994)? And just maybethe 1995 regulatory revisions to the CRA that were also pushed for by ACORN?
Oh…and who was the lawyer representing ACORN in both instances? Barack Obama.
Next, let’s take a look at this article from 2002.
Warning to Leftists: bothersome facts lie ahead.
“How big are the gorillas? They [Fannie, Freddie] guarantee payments to BOND INVESTORS for $2.7 trillion in mortgage debt, or 44% of the U.S. total. By comparison, the U.S. Treasury’s public debt is $3.4 trillion.
Hmmm… “bond investors”. I wonder if any of those investors – which include entities as large as FOREIGN GOVTS – were at all hurt by the collapse of Fannie/Freddie’s mortgage-backed securities? And for that matter, were the economies of those foreign nations hurt?
Seems I remember hearing something about a global financial crisis…
As for the 2002 spurt, manga!
Money quote:
….there had been a sudden spurt of GSE subprime investment, “partly in response to higher affordable-housing goals set by HUD in 2000.” Fannie had gone from $1.2 billion in subprime-mortgage and securities purchases in 2000 to $9.2 billion in 2001 and $15 billion in 2002. Freddie’s numbers were murkier, but clearly also on the rise. In 2003 alone, the two bought $81 billion in subprime securities—which also count against the goals.
So let’s review: two HUGE up ticks in sub-prime lending commitments, one immediately following changes to the CRA by the Clinton administration and another immediately following Fannie/Freddie vastly increasing their sub-prime purchases.
Yup…nothing to see here.
