Taking down a RW talking point - they are blaming the housing crisis on Clinton. WRONG!

[jillan]

Their newest talking point is that it is all the Dems fault that we are in this housing crisis.
Why? Because of the Community Reinvestment Act. That was a bill used to end discrimination in lending.

This is wrong on so many parts -
First of all, lending to minorities doesn't mean you lend to people that can't afford it.
(so typical of repugs - thinking minorites can't afford a loan)
Second of all - this legislation was passed into law in 1977! Actually it was Carter - not Clinton who signed it into law. However there were regulations on banks at that time.

50% + of the subprime mortgages were written by independent mortgage companies THAT WERE NOT REGULATED by the CRA.

And according to Business Week:

Finally, keep in mind that the Bush administration has been weakening CRA enforcement and the law’s reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well. It was only after the Bush administration cut back on CRA enforcement that problems arose, a timing issue which should stop those blaming the law dead in their tracks. The Federal Reserve, too, did nothing but encourage the wild west of lending in recent years. It wasn’t until the middle of 2007 that the Fed decided it was time to crack down on abusive pratices in the subprime lending market. Oops.

http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html



We cannot let the Repugs continue to lie like this.

[abluelady]

1. What About Barney Frank?

He's the culprit among the republicans I know! It really doesn't matter what their talking point is. They believe it. I have never met people who only believe what they want like republicans! Any time I bring up a "fact," they question how do you know it. No matter what source I show them they believe it is bogus. Unless they believe it, it isn't true. Amazing.

[nxylas]

7. They create their own reality

They believe that any outlet outside their echo chamber is compromised. They will only trust Free Republic, Fox News, the Washington Times and a few others.

[Jennicut]

2. Typical Repukes, trying to lay blame at someone else's feet

Do they ever take any reponsibility for ANY of their actions? I know the answer is a no but still. And I wish more people here would stop playing into their game of blaming Clinton. Like you said, he had more regulations in place.

[vaberella]

3. What about Minorities (specifically Blacks) and the poor? Don't forget Michelle Bachmann

These idiots think this is a two way occurence and has nothing to do with the bankers themselves. Bachmann went on the floor to say it was Blacks and the poor, alongside Clinton who caused this housing debacle.

http://www.youtube.com/watch?v=4DHuxHyafyM

[jillan]

9. These are the idiots that are out on the airwaves spewing this shit.

[Zynx]

4. First of all, the problem is suburban overbuilding, not the urban poor.

Secondly, what Business Week said that the Bush administration was cutting back on the implementation of the CRA.

[Arkana]

5. CLINTON WAS TWO FUCKING PRESIDENTS AGO NOW.

IT DOESN'T WORK ANYMORE. IT'S LIKE BLAMING IT ON KENNEDY--IT MAKES NO GODDAMN SENSE.

[jillan]

10. AND W could have passed new legislation to undo Clinton's legislation - if it was so bad.

He was (unfortunately) Prez for 2 terms...which is another example of why this talking point must be stopped.

[struggle4progress]

39. Remarks by the President on Homeownership (June 18, 2002)

REMARKS BY THE PRESIDENT ON HOMEOWNERSHIP
at the Department of Housing and Urban Development
Washington, D.C.
June 18, 2002, 10:30 A.M. EDT

... Let me first talk about how to make sure America is secure from a group of killers, people who hate -- you know what they hate? They hate the idea that somebody can go buy a home ... So I've set this goal for the country. We want 5.5 million more homeowners by 2010 -- million more minority homeowners by 2010 ... Well, probably the single barrier to first-time homeownership is high down payments. People take a look at the down payment, they say that's too high, I'm not buying. They may have the desire to buy, but they don't have the wherewithal to handle the down payment. We can deal with that. And so I've asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy ... It is essential that we make it easier for people to buy a home, not harder ... http://www.hud.gov/news/speeches/presremarks.cfm

[polmaven]

18. Sure, but, if FDR caused

the Great Depression.....maybe this is just lingering from that....What do ya think? IT'S ALL FDR'S FAULT!

[zulchzulu]

6. What year are they referring to even if it was Clinton?

The Republicans took the House and Senate in 1994 elections and would be responsible for passing legislation....no?

[jillan]

8. Oh yeah - I was reading on Wiki that Graham (yes that Graham) stood in the way of any legislation

that Clinton wanted to pass re the CRA.

Graham wanted to loosen restrictions saying that smaller banks would not be subject to the same laws as larger institutions.

[customerserviceguy]

11. The Community Reinvestment Act is just another way to point the finger

at poor people. In reality, there have been a number of governmental policies that have pushed the real estate bubble up to the lofty heights from which it could only collapse.

I used to be enrolled to practice before the IRS, and was a tax accountant who got very, very familiar with tax law in the 1980's, and I worked in the title insurance industry both before and after that, which gave me quite an interest in the tax aspects of real estate. The home mortgage interest deduction has shoved a lot of people into home ownership, since renters just don't get that kind of tax break, their landlords do.

Also, a landlord can depreciate the building component of realty as a deduction against ordinary income, but if they use only a straight-line method of doing so, when they sell the depreciated rental property, that portion of gain that relates to the depreciation (that really didn't happen!) is taxed at favorable capital gains tax rates. Put it this way: If I was able to reduce my taxes by $1000 a year from straight line depreciation for ten years, thus saving $10,000 over that time, then upon selling the house that was being depreciated, I'd only have to pay back $4K or $5K, you can see how that would powerfully incentivize me to be a landlord.

And let's give Bill Clinton credit or blame for the most major real estate tax break, the ability of a married couple (single people have amounts half as much) to call the first half million dollars of gain on a primary residence every two years as tax free income. Yes, that was in the 1997 tax bill that a Repuke Congress drew up, but President Clinton willingly signed. I think you can trace the beginning of the last bubble to that event.

Look at the $7,500 tax credit for first time homebuyers, and the new $15,000 credit that's been part of the current stimulus bill as further examples of how this bias for housing is still a powerful part of our nation's tax policy.

Thirty years ago, when I first studied tax law, we had an exemption on the first $200 of dividends received from stock or mutual funds, but that's long disappeared. We never had an exclusion on interest income of small amounts. We've favored real estate assets over financial assets as the way that ordinary people are encouraged to save. This means that for very many working class people, their chief form of savings is their house, if they're lucky enough to have one. Now, the bottom has dropped out of the housing market, and there's no end in sight.

It's no wonder that consumer confidence is at a record low.

[jillan]

13. Interesting. There were so many factors that brought us to where we are now.

And to place all the blame on Clinton, as the RW are doing, is absolutely insane.

[Lasher]

12. I have referenced that same article to defeat the same talking point.

This Wikipedia article is another good resource.

Federal Reserve Governor Randall Kroszner, says the CRA isn’t to blame for the subprime mess, "First, only a small portion of subprime mortgage originations are related to the CRA. Second, CRA-related loans appear to perform comparably to other types of subprime loans. Taken together… we believe that the available evidence runs counter to the contention that the CRA contributed in any substantive way to the current mortgage crisis," Kroszner said: "Only 6% of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes."

FDIC Chairman Sheila Bair disputes that the CRA was a problem "Let me ask you: where in the CRA does it say: make loans to people who can't afford to repay? No-where! And the fact is, the lending practices that are causing problems today were driven by a desire for market share and revenue growth ... pure and simple."

[jillan]

14. What prompted me to post this today was that I had Washington Journal on this morning

and heard two Republican callers bring it up.

I had questions, so I did some research. And yes, I read the article in Wiki.
It really gives a great history of the CRA.

[Lasher]

17. Save your bookmarks.

We'll be seeing this talking point over and over, no matter how many times it is debunked.

[wyldwolf]

15. Jillian, it has become a left wing talking point, too, repeated on DU many times

And I have no doubt the "Blame Clinton" progressives will soon be here to tell you you're wrong.

[rvablue]

23. Yep.....sad isn't it? n/t

[jillan]

24. Clinton was in no means perfect - Deregulation comes to mind.

But this is not all his fault like people are saying.

He was President in a time of peace and prosperity. In hindsite he is probably kicking himself just as hard now for not putting on tighter restrictions as he is for getting to know a certain aide.

[uponit7771]

16. Clinton did it dammit!!! These people are going crazy, it's sKeery

[karynnj]

19. The CRA - as written under either Clinton or Carter was not to blame

Here is a well researched article showing that the CRA did not lead to the bad loans as the Republican talking point has it - this program is being "swiftboated" because they don't like it. http://www.johnkerry.com/blog/entry/community_reinvestment_act_loans_were_good_investments/

There is a battle going on to create CW on what caused the financial melt down. To me the answer is one word - deregulation. Many of the FDR era safe guards set in place to avoid what happened in 20s/30s were lifted or softened - this included - bank regulations, SEC regulations and Glass Segall. (The Democrats were not innocent here - but the Republicans were the more eagar to deregulate - which fortunately a public that heard them proudly say that for years knows.

There are other Republican revisions of history - that Bush (and McCain) wanted to regulate Freddie and Fannie and the Democrats didn't let them - ignoring that this was 2005 and there was nothing the Senate Democrats stopped successfully, this is a lie. Another lie is that the Democrats pushed the banks into making bad loans - when the truth is the opposite - the Republicans stopped the Democrats from legislating against these reckless loans.

First, the real (at least to the best of my ability to see it) history on the attempt to regulate Freddie and Fannie:

- Representatives Frank and Oxley supported a bi-partisan bill to regulate the FMs, sponsored by Baker, with stronger regulation of these companies (HR 1461) that passed 331 to 90 in the House on 10/26/2005. It was then referred to the Senate, where it went to the Banking Committee.
Senate Democrats picked that bill up and offered it, but the Administration opposed that legislation.

- Senate Republicans backed a Hagel bill(s190) co-sponsored by Dole and Sununu. This was the bill we heard about in the election. McCain actually signed onto S190 on 5/26/2006. That bill was originally introduced on 1/26/2005 by Senator Hagel with Senators Sununu and Dole as co-sponsors. That bill was sent to the Republican controlled Banking committee, where it passed on 7/28/2005 but was never considered by the full Senate. McCain signed onto a bill that had been dormant for 10 months and gave that speech on the floor of the Senate. It was at that time that Hagel, frustrated with the leadership not bringing it to a vote, started a petition to get it to the floor that way. This failed because lobbyists won enough Republicans over to kill the bill.

- What were the differences between Hagel's bill and the bipartisan bill?
- the biggest difference was that the Hagel bill put a cap (below current levels) on total assets the FMs could have. This would mean that they would have to sell some assets (ie packs of mortgages) to the private sectors buying aggregate mortgages.
- a Santorum amendment that would cut money for affordable housing.

But, either bill would have increased regulation and created a position that would do so. The degree this could have helped would depend on the person given the job. As to the differences, Santorum's amendment is irrelevant to regulation. Imagine either bill passed - the cap in Hagel's bill would just have shifted assets from the now more regulated FMs to the less regulated private sector. What almost every article written in 2005 said as being the tougher on the FM bill was in fact not better but worse. In addition, holding out for it ended up with nothing - where the House bipartisan bill could have passed had the Republicans supported it.

But, there's always another but - would regulating the FMs have stopped the deluge? NO - only 17% of the mortgages foreclosed on were purchased by the FMs as it was. Had the best regulator in the world raised the standards at the FM - it is likely all the rejected mortgages would have been bought by the private sector. This is a must read article where that 17% came from - http://www.mcclatchydc.com/251/story/53802.html

Now - The Republicans saying that the Democrats backed the dangerous types of loans.
1) The Democrats tried in 3 Congresses to stop predatory loan practices that gave people the types of loans that have failed. Here is a link to information on a bill introduced by Sarbanes, Kerry, Dodd and Schumer in 2000, 2002, and 2003 - (the later times having 13 and 14 co-sponsors - none of whom were Republican. Senator Durbin tried to do the same thing adding a variation of this bill as an amendment to the 2005 bankruptcy bill and to at least one other bill. All efforts blocked by Republicans.

2) The 2004 platform called for outlawing most balloon loans and other dangerous practices - http://query.nytimes.com/gst/fullpage.html?res=980DEFDF113EF934A1575BC0A9629C8B63&&scp=5&sq=business%20subprime%20Kerry&st=cse Here is a DU 2004 thread that contains more specifics on that plank - http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x678560


(This is all based on stuff found last fall, when some of us in the DU JK group tried to pull what happened in 2 threads - there are a lot of good links here - though this was a messy process - where there are mistakes and I know there are things I would erase because they ended up wrong - but it was an honest process. We did this to enable us to respond better to help Obama and, of course, John Kerry. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=273x152906 and http://www.democraticunderground.com/discuss /duboard.php?az=view_all&address=273x153196 )

[Blue_Tires]

20. i thought it was ACORN?

[jillan]

30. Acorn is soooo yesterday!

[Dora]

21. The housing crisis began with Bush's "Ownership Society" SOTU address.

I remember listening to that drivel and thinking that absolutely no good would come of it.

[Milo_Bloom]

22. Clinton shares some blame

But NOT what they are charging him with.

It begins with the Financial Services Modernization Act of 1999

However, that was only a small step in what became the housing crisis.

To say Clinton is to Blame is completely wrong, because it could have been avoided 1000times over if anyone was paying attention between 2002->2008.

However, to say he is absolutely blameless is false as well.

[MadHound]

25. Well, Clinton does have some responsibility in this current mess,

Just not what this article goes into. Where Clinton's responsibility lies is in three things: First, he vastly deregulated the financial sector, allowing for all these exotic investment instruments to come into play and allowing banks to once again be investment players. Second, he allowed and even encouraged massive outsourcing, stripping our country of well paying jobs and turning our economy into one based on production into one based on consumption. Finally, he helped strip away our social safety net.

Does Clinton deserve all the blame? No, these are problems that have been in play since Nixon, and were certainly exacerbated by Bush II. However Clinton does deserve some of the blame for setting the stage on this mess.

[demo dutch]

26. Sigh, don't they blame everything on Clinton?

[CitizenPatriot]

27. motherjones had a great article on all of this

but sadly the link is down.

here's a great article to fill in the blanks a bit:

http://losangeles.injuryboard.com/miscellaneous/the-subprime-mess-and-phil-gramm-an-experiment-in-deregulation.aspx?googleid=242468

there was also the issue of the OCC changing banking regulation venue from the states to the feds, so no one would be able to hear the villagers scream anymore...

http://www.allbusiness.com/personal-finance/real-estate-mortgage-loans/140507-1.html

"The National Conference of State Legislatures (NCSL), Washington, D.C., condemned the new rulings, specifically focusing on the second rule giving the OCC the exclusive visitorial rights for national banks. According to the NCSL, this action effectively bars states from identifying wrongdoing on the part of national banks and their subsidiaries and keeps states from bringing enforcement actions in either state or federal court. "


thanks to the GOP for the above gifts.

[struggle4progress]

37. Mortgaging the Future (MoJo Dec 04)

Wed December 15, 2004 12:00 AM PST

In his acceptance speech at the 2004 Republican convention, George W. Bush announced that in his second term, he would "build an ownership society, because ownership brings security and dignity and independence." Indeed, "ownership" may well bring those things, but it's hard to tell -- the term is a bit of an abstraction. As a matter of policy, most of Bush's ownership society involves rather complex financial schemes -- from private retirement accounts to high-deductible insurance policies. In order to sell this whole vision to voters, the president needed to find some way to make "ownership" more tangible.

It's no surprise, then, that Bush latched on homeownership to do just that. On the campaign trail, the president often touted two big numbers from his first term: A record 68.6 percent homeownership rate, and 1.7 million increase in minority homebuyers. Now this was ownership. Indeed, these were the very first statistics he cited in the "ownership society" portion of his convention speech. Never mind that these numbers owed largely to the spectacularly low interest rates over the past four years, or that the homeownership rate for families below the median income level has actually dipped slightly. The president was on a roll: "There's nothing better than somebody saying, welcome to my house; I'm putting out the welcome mat on my piece of property," he told the National Urban League Conference on July 23rd. As rhetoric, this is savvy, putting a heartwarming face on what is ultimately a radical economic agenda. As political strategy, it's brilliant -- no one can possibly be against owning a home, after all.

Or can they? Over the past few years, a growing number of academics and policy wonks of various ideological stripes have quietly begun questioning the American Dream of homeownership. Few of them say that owning a home, in itself, is bad; rather, they note that owning a home may not be right for everyone at every point in time, and that policy should proceed cautiously -- more cautiously, certainly, then Bush has done. Until the late 1990s "there simply wasn't very much research on the actual benefits of homeownership," says Anne Shlay, director of the Center for Public Policy at Temple University. "You had these unquestioned assumptions that homeownership was a perfect way to create wealth for low-income families, that it would create stable families, better students. But it was essentially ideology driving policy."

In the 1990s, the Clinton administration never really had an explicit homeownership agenda, but focused instead on simply ending lender discrimination and enforcing existing regulations. Still, homeownership under Clinton rose at a comparable rate to that in Bush's first term. But Bush, for his part, has set his sights on moving even faster, advocating even more aggressive policies for promoting homeownership: from $2.4 billion worth of tax credits for low-income families, to downpayment grant funds that would allow first-time homebuyers to sign up for mortgages without needing to put up sizeable payments up front ...

http://www.motherjones.com/politics/2004/12/mortgaging-future

[CitizenPatriot]

38. thank you for finding this!

I had it bookmarked and my link said it was no longer valid. It's a great piece. :hi:

[PatSeg]

28. They never take responsibility for anything

And they called us sore losers!

[jillan]

31. Nice to see you here!

Taking a pathwords break :)

[PatSeg]

33. I just trade one addiction for another!

[bvar22]

29. The Clinton administration and "Centrist: Democrats" ..

...bear some responsibility.

If we are content to just blame the Republicans, and not examine the areas where the Democratic Party bears responsibility, we will wind up with deregulators like Geithner, Summers, and Rubin setting the Economic Policy.....
.
.
Oh wait.
.
my bad.

[jillan]

32. I was gonna say . . .

Centrist Dems? You better turn off the news.

[mistertrickster]

34. Thanks. I'm going to use this far and wide. NT

[amborin]

35. and keep in mind the worst part of the mortg crisis: credit default swaps

created, traded, insured by the hedgies and other investment bankers

off the books...totally unregulated, shadow economy...

this is the real cause of the global crisis.....

w/o the CDSs, the crisis would be smalll and contained

[vademocrat]

36. They're rehashing old talking points -

I first heard this several months ago from my RW co-workers. Then they moved on. Just yesterday they were talking about this again AS IF it were brand new. They really don't have much of an attention span...

I remember because I tried to explain why this wasn't true - and remembered why I don't bother talking politics or ideas with any of them!

[democracy1st]

40. thats all they know is Clinton and tax cuts