Clinton's and Democrats' Responsibility for Sub-Prime Crisis

Merv of PrairiePundit links to an excellent post by Hans Bader of Openmarket.org (h/t Larwyn) who in turn quotes Washington Examiner and Village Voice articles that attribute the subprime crisis to regulatory pressure on Fannie Mae and other government-created entities to make excessive loans to low-income borrowers. The video I just posted (h/t Larwyn) provides visual evidence of one facet of this saga. It is outrageous that, given the grounding of the sub-prime crisis in government intervention and Democratic Party politics, Barack Obama and the media that supports him is willing to claim that free markets and the Republicans are to blame. Have they no shame?

The Examiner writes:

"Barack Obama held the Bush administration responsible yesterday for what he calls “the most serious financial crisis since the Great Depression.” Obama is hopelessly wrong on the facts. One need look no further than The Washington Examiner and The Washington Post to see that the roots of this crisis sprouted during the Clinton administration’s politically motivated effort in the 1990s to use Fannie Mae and Freddie Mac to expand home ownership. Fannie and Freddie are Government-Sponsored Entities (GSEs) that dominate the U.S. mortgage market...In an oped article published on these pages last February, former Wall Streeter Robert Cox noted that “in response to political pressure at the time, the GSEs took steps to make homeownership more affordable for lower-income Americans and those with a poor credit history.”

Bader adds:

"The current mortgage crisis came about in large part because of Clinton-era government pressure on lenders to make risky loans in order to 'make home ownership more affordable for lower-income Americans and those with a poor credit history,' the DC Examiner notes today."

The Voice argues that Andrew Cuomo, HUD's director under Clinton, was directly responsible for today's meltdown:

"Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

"What he did is important—not just because of what it tells us about how we got in this hole, but because of what it says about New York's attorney general, who has been trying for months to don a white hat in the subprime scandal, pursuing cases against banks, appraisers, brokers, rating agencies, and multitrillion-dollar, quasi-public Fannie and Freddie."

Merv concludes:

"This election can be turned into a landslide for McCain if he focuses on Democrat corruption which caused this debacle. There is no need for Republicans to be defensive about this. The Bush administration, contrary to the statements of Pelosi and others, tried to do something about the corruption at Fannie Mae and Freddy Mac and was thwarted by Chris Dodd and the Democrats who were on the receiving end of contributions from those responsible for the problem. The second largest beneficiary was Barack Obama. The ad that needs to be out there almost writes itself and if McCain doesn't produce it some independent group should be doing it today."