Bush administration ignored clear warnings

[Midway ®]

After the inauguration, when rush and the rest of the usual gang of idiots start playing the "Obama recession" game, think of this.

WASHINGTON - The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying â€" along with assurances from banks that the troubled mortgages were OK â€" regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

For complete article:  http://www.msnbc.msn.com/id/28001417/

No matter how you slice and dice it, no matter how many charts and graphs are posted, it still comes down to  this: all of this trouble came to pass as a result of George W. Bush being the president for eight long years.

[jbm32206]

I agree, he had the opportunity to do something, and he didn't!

[Midway ®]

Well, you make it sound like he was a passive observer, while in fact he was a major causative factor. It was not simply benign neglect, it was criminal negligence at best.

[BridgeTroll]

I wonder how many mortgages he wrote?  Did he veto something??

[Midway ®]

Perhaps you should read the article, and maybe gain some insight?

[BridgeTroll]

I did... sounds to me like you should be blaming congress... and those who wrote mortgages, and those that took them.

[RiversideGator]

Please dont attempt to speak truth to midway.   

[jaxnative]

Don't Blame Bush For Subprime Mess
By INVESTOR'S BUSINESS DAILY | Posted Monday, December 01, 2008 4:20 PM PT

Housing Crisis: A new report from the Associated Press claims that the mortgage meltdown is due largely to President Bush's failure to act in 2005. Sounds plausible â€" until you actually look at the facts.


"Under pressure, U.S. eased lending rules," reads the AP special report's headline. But "U.S." is really a misnomer. The news service really means "Bush."

"The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed," the report asserts.

The report goes on to catalog what it says are Bush's crimes. Namely, that his administration bowed to "aggressive lobbying" by banks and delayed doing anything for a year. This, says the AP, is "emblematic of a philosophy that trusted market forces and discounted the need for government intervention in the economy."

All utterly wrong.

Here at IBD, we've done more than a dozen pieces â€" most recently, in yesterday's paper â€" detailing how rewrites of the Community Reinvestment Act in 1995 under President Clinton, along with major regulatory changes pushed by the White House in the late 1990s, created the boom in subprime lending, the surge in exotic and highly risky mortgage-backed securities, and the housing boom whose government-fed excesses led to inevitable collapse.

Despite this clear record, we're now besieged by enterprising journalists blaming Republican "deregulation" or the president's failure to recognize the seriousness of the problem or act. But these claims fall apart, as a partial history of the last decade shows.

Bush's first budget, written in 2001 â€" seven years ago â€" called runaway subprime lending by the government-sponsored enterprises Fannie Mae and Freddie Mac "a potential problem" and warned of "strong repercussions in financial markets."

In 2003, Bush's Treasury secretary, John Snow, proposed what the New York Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." Did Democrats in Congress welcome it? Hardly.

"I do not think we are facing any kind of a crisis," declared Rep. Barney Frank, D-Mass., in a response typical of those who viewed Fannie and Freddie as a party patronage machine that the GOP was trying to dismantle. "If it ain't broke, don't fix it," added Sen. Thomas Carper, D-Del.

Unfortunately, it was broke.

In November 2003, just two months after Frank's remarks, Bush's top economist, Gregory Mankiw, warned: "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole." He too proposed reforms, and they too went nowhere.

In the next two years, a parade of White House officials traipsed to Capitol Hill, calling repeatedly for GSE reform. They were ignored. Even after several multibillion-dollar accounting errors by Fannie and Freddie, Congress put off reforms.

In 2005, Fed chief Alan Greenspan sounded the most serious warning of all: "We are placing the total financial system of the future at a substantial risk" by doing nothing, he said. When a bill later that year emerged from the Senate Banking Committee, it looked like something might finally be done.

Unfortunately, as economist Kevin Hassett of the American Enterprise Institute has noted, "the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter."

Had they done so, it's likely the mortgage meltdown wouldn't have occurred, or would have been of far less intensity. President Bush and the Republican Congress might be blamed for many things, but this isn't one of them. It was a Democratic debacle, from start to finish.

[Midway ®]

Thats all great, but the republicans controlled congress and the senate in 2003. If they wanted to do something, they could have. But they were too busy making sure that the ten commandments could be posted outside of every city hall instead.

The IBD has a vested interest in doing a historical rewrite. their constituency and that of the bush syndicate are the same.

[rjp2008]

Since MSNBC is well known and documented at framing everything under sun as President Bush's fault, it's good to hear another side of the story which is probably closer to the truth from IBD.

Since Dems were a minority for a while, it does beg the question why didn't the GOP majority "just force through" the changes that were needed. Of course, if they had, MSNBC and co would have been the first to cry foul. Darned if you do, darned if you don't.

[RiversideGator]

Thats all great, but the republicans controlled congress and the senate in 2003. If they wanted to do something, they could have. But they were too busy making sure that the ten commandments could be posted outside of every city hall instead.

The IBD has a vested interest in doing a historical rewrite. their constituency and that of the bush syndicate are the same.

Have you ever heard of Barney Frank?  Him and his gang which couldnt shoot straight have been covering for Fannie/Freddie, loose lending and the CRA for years.

BTW, what is the "Bush syndicate"?  Must we use such strange, inaccurate and inflammatory terminology?

[tufsu1]

Have you ever heard of Barney Frank?  Him and his gang which couldnt shoot straight have been covering for Fannie/Freddie, loose lending and the CRA for years.

Barney Frank and his gang were in the minority....they had virtually no say in what got passed in Congress....nice try though!

[RiversideGator]

hahaha.  You dont think he had a few Republican fellow travelers to help him with his games?  The bottom line is some Republicans attempted to reform Freddie/Fannie and the reforms were resisted by some Republicans and all Democrats including Mrs. Frank.

[Midway ®]

Bush was president for last eight years.   Period. End of story.

Try as you may (and you are just parroting rush, sean and rove) to revise history, thats the fact, Jack.

We'll see how that revisionist history thing works out for bush.

It was not so splendid for Nixon. The internets tends to upset those attempts.

[BridgeTroll]

Bush was president for last eight years.   Period. End of story.

Very insightful...  But...

Did Mr Frank and Carper NOT say...

"I do not think we are facing any kind of a crisis," declared Rep. Barney Frank, D-Mass., in a response typical of those who viewed Fannie and Freddie as a party patronage machine that the GOP was trying to dismantle. "If it ain't broke, don't fix it," added Sen. Thomas Carper, D-Del.

Did Mr Mankiw NOT say...

"The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole."

Did Mr Greenspan NOT say...

"We are placing the total financial system of the future at a substantial risk" by doing nothing