Wow! Everyone is pretty quick to blame Barney and Friends yet are pretty ignorant of Bush’s actions. In short, Bush was involved in this up to his eyeballs. As long as we’re taknig a trip down memory lane, let’s see what Bush did to worsen this mess.
On February 16, 2001, just 3 weeks after his inauguration, Bush met with Vicente Fox to hammer out the Partnership for Prosperity Agreement (with Mexico) a.k.a. P4P, which was signed on September 6, 2001.
On October 26, 2001, Bush signed the USA PATRIOT Act of 2001. Contained in section 326(b) was the provision that allowed US banks to accept the Mexican Matricula Consular card as valid ID for opening a bank account. Congress questioned it, and Bush’s Treasury department defended it.
On June 17, 2002, Bush held a press conference. In this press conference he said that by 2010 he wanted to see 5.5 million new ‘minority’ home owners. He also called on Fannie Mae and Freddie Mac to increase commitments to the ‘minority’ market by $440 billion.
Here’s how Bush described the minorities he wanted to ‘help’: “Three-quarters of white America owns their homes. Less than 50 percent of African Americans are part of the homeownership in America. And less than 50 percent of the Hispanics who live here in this country own their home. And that has got to change for the good of the country. It just does.” In response to the mandate contained in the P4P agreement, the New Alliance Task Force was formed in May 2003.
The NATF is a broad-based coalition of 62 members, including the FDIC, Mexican Consulate, 34 banks, community-based organizations, federal bank regulatory agencies, government agencies, and representatives from the secondary market and private mortgage insurance (PMI) companies.
Their goal was to open the Mexican illegal alien market to US banks and visa-versa using low-cost remittances as the bait. As Bush’s 2002 speeches show he was talking about hundreds of billions of U.S. tax dollars going to directly benefit millions of Mexican illegal aliens.
In Bush’s June 17, 2002 speech, he also called for the creation of the American Dream Down Payment Fund. And, the 108th Congress (2003-2005) responded with the American Dream Downpayment Act. The act was authorized to appropriate up to $200 million per year of US taxpayer funds between FY2004 through FY2007 to go to Bush’s ‘minorities’. The sponsors of this bill were all Republicans.
And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away. Many economic experts, including some in the White House, now share that view. The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.”
“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.” But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.
The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report.
As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks.
The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary.
“In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month.”
Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.
Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.
In December 2005, Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst.
It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”
When the USA PATRIOT Act came up for renewal in 2004, some republicans wanted to remove the provision that allowed banks to accept Matricula Consular ID as the consular ID is unreliable and the bearer’s identidy all-but untraceable.
Barney Frank (D-MA) and some of his Republican and Democrat friends swung into action to protect it. In the final roll call vote, 49 Republicans supported the Oxley-Frank-Kolbe-Pastor-Hinojosa amendment and 16 Democrats opposed it. This legislative victory was a joint effort by financial institutions, immigrants’ rights groups, consumer groups, and many others who worked in coalition to defeat, once again, efforts to limit the acceptance of consular ID cards by banks, credit unions, thrifts, and other financial entities.
