I normally write a very straight forward, non-opinionated blog, but today I digress. I simply cannot take hearing one more person blaming the Bush administration for today’s current economic recession. Yes, the Bush administration did contribute, but the whole chain of events was set in motion by the Clinton administration. In fact, I can tell you that the Clinton administration put us on this collision path with Bank failure on September 30th, 1999. Yes, it was one of those “I’m leaving office, now I am going to make all of my constituents happy” policy changes. It was banking sabotage. It was irresponsible and reprehensible. In an article dated that same day in the NY Times:
A little research can go a long way… pay very close attention to this part of the article:
“Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people…”
And further into the article even predicts exactly was is happening today:
“In moving, even tentatively, into this new era of lending, Fannie Mae is taking on significantly more risk which may not pose any difficulties during economic flush times. But the government subsidized corporate may run into trouble in an economic downtown, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
So to summarize: Stop blaming the Republicans and the Bush Administration for this Banking collapse. Yes, they do share blame in its magnitude, no they DID NOT cause it. Even us independents who don’t know what they believe are also to blame!
Read more on my Nashville real estate blog
March 1, 2009, 7:28 pm
I enjoy reading your blog on the weekends and hope I don’t offend you. I hope you enjoy hearing things from another prospective.
I would say the blame still rests with Bush. This article speaks about a trial program, which was obviously expanded. It was up to the Bush administration to question this policy and take appropriate action, he was president for 8 years, right? Instead they kept the gravy train moving. This whole mess is really just about everyone spending beyond their means and when the people with good credit maxed out, the lenders moved down the ladder to those with mediocre credit and so on. It is up to the government to correct such a dangerous progression since it controls access to money through interest rates. A monetary policy that provides cheap money to everyone will inevitably lead to artificial demand, raising prices, and a lot of bad loans (don’t forget the people had a less than desirable credit history). Since the cheap money artificially raised demand that lead to increased prices for those with good credit. Unfortunately the high demand lead to a high supply and now, since this bubble burst, an oversupply of housing exists. Those artificially inflated prices are falling hard and leaving people (those with good credit that made a good decision when times were good) with an upside down mortgage further increasing the inclination to file bankruptcy. Add to this a global recession and you have a perfect storm of economic disaster. However, it is easy to sit back and say the government should have, could have, would have. Without the falsely inflated housing market, what would our economy have been 10yrs ago? Maybe we will find out in the coming years since we now have no choice but to create a new economy.
I was also disappointed to read your post proposing the developers of Icon take a sympathy loss. Would you have given them some sympathy money if the contracted amount didn’t cover their costs and you sold it at a profit? I highly doubt it, I think the buyers of the Icon made a bet and lost. Now it is time to pay up. No one should open their books other than the buyers and that book should be a checkbook.
March 2, 2009, 2:28 am
I enjoy reading your blog on the weekends and hope I don’t offend you. I hope you enjoy hearing things from another prospective. I would say the blame still rests with Bush. This article speaks about a trial program, which was obviously expanded. It was up to the Bush administration to question this policy and take appropriate action, he was president for 8 years, right? Instead they kept the gravy train moving. This whole mess is really just about everyone spending beyond their means and when the people with good credit maxed out, the lenders moved down the ladder to those with mediocre credit and so on. It is up to the government to correct such a dangerous progression since it controls access to money through interest rates. A monetary policy that provides cheap money to everyone will inevitably lead to artificial demand, raising prices, and a lot of bad loans (don’t forget the people had a less than desirable credit history). Since the cheap money artificially raised demand that lead to increased prices for those with good credit. Unfortunately the high demand lead to a high supply and now, since this bubble burst, an oversupply of housing exists. Those artificially inflated prices are falling hard and leaving people (those with good credit that made a good decision when times were good) with an upside down mortgage further increasing the inclination to file bankruptcy. Add to this a global recession and you have a perfect storm of economic disaster. However, it is easy to sit back and say the government should have, could have, would have. Without the falsely inflated housing market, what would our economy have been 10yrs ago? Maybe we will find out in the coming years since we now have no choice but to create a new economy.I was also disappointed to read your post proposing the developers of Icon take a sympathy loss. Would you have given them some sympathy money if the contracted amount didn’t cover their costs and you sold it at a profit? I highly doubt it, I think the buyers of the Icon made a bet and lost. Now it is time to pay up. No one should open their books other than the buyers and that book should be a checkbook.
March 1, 2009, 7:40 pm
No offense taken at all, I also enjoy the banter a good opinion can bring. To address your first comments, yes Bush does have accept blame for not repealing the Clinton Administration’s decree, but I would say that by that time, the wheels had been irrevocably set motion. It would be like telling my kid who just got hit in the head with a baseball bat, that it’s his fault because he should have ducked.
As to your point about the developers of the Icon, the buyers did make a bet and that bet amounts to the amount of earnest money the developer accepted. I think that every buyer is willing to walk away from that earnest money. I am trying to find a way for the buyers and sellers to find a happy middle ground and neither get hurt in a declining market.
March 2, 2009, 2:40 am
No offense taken at all, I also enjoy the banter a good opinion can bring. To address your first comments, yes Bush does have accept blame for not repealing the Clinton Administration’s decree, but I would say that by that time, the wheels had been irrevocably set motion. It would be like telling my kid who just got hit in the head with a baseball bat, that it’s his fault because he should have ducked.As to your point about the developers of the Icon, the buyers did make a bet and that bet amounts to the amount of earnest money the developer accepted. I think that every buyer is willing to walk away from that earnest money. I am trying to find a way for the buyers and sellers to find a happy middle ground and neither get hurt in a declining market.
March 1, 2009, 7:43 pm
BTW – thank you for reading and thank you for posting a comment. I appreciate your willingness to trade comments! Maybe we’ll both learn something.
March 2, 2009, 2:43 am
BTW – thank you for reading and thank you for posting a comment. I appreciate your willingness to trade comments! Maybe we’ll both learn something.
March 10, 2009, 11:14 am
The real question is how President Obama will help correct the financial and housing markets. President Bush was widely criticized for his ties to the oil industry. Many people questioned how he could be impartial with respect to America’s energy problems when he was so close to the energy companies that were perceived to be at least partial causes of the energy problems. I think the same questions should be asked of Obama. He was the 2nd largest recipient of campaign contributions from Fannie Mae and Freddie Mac over the last 10 years (Christopher Dodd (D) and John Kerry (D) were 1st and 3rd, respectively – notice the trend) receiving a total of $126,349. Therefore, my question is how can President Obama impartially fix the problems largely caused by Freddie Mac and Fannie Mae when he personally received so much money from them?
March 10, 2009, 6:14 pm
The real question is how President Obama will help correct the financial and housing markets. President Bush was widely criticized for his ties to the oil industry. Many people questioned how he could be impartial with respect to America’s energy problems when he was so close to the energy companies that were perceived to be at least partial causes of the energy problems. I think the same questions should be asked of Obama. He was the 2nd largest recipient of campaign contributions from Fannie Mae and Freddie Mac over the last 10 years (Christopher Dodd (D) and John Kerry (D) were 1st and 3rd, respectively – notice the trend) receiving a total of $126,349. Therefore, my question is how can President Obama impartially fix the problems largely caused by Freddie Mac and Fannie Mae when he personally received so much money from them?
August 29, 2009, 5:06 am
Grant did not cite the entire article. The rest is on the NYT web site. Significantly, you can see that this innocent little pilot program was not expanded under Bush, but during the “good economy” (i.e., dot-com bubble) of the Clinton years:
“In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.”
44%? Oh, is that all? Some pilot!
“…Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings….”
Bright idea. Isn’t credit supposed to be what mortgage qualification is all about?
“…But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites…”
A democratic engineered and very transparent attempt at vote buying.
You are right, Bush did not stop this. But could he? By the time Bush took office in January 2000, this thing already created more pork than a Memphis barbecue and it was seen as a wonderful program of creating opportunities for disadvantaged [read: non-credit worthy] voters. Any attempt to pry this one away would have got about as far as Bush warning about social security being in trouble (which he did, and was laughed out of the room by congress).
We really should be asking not only Dodd, but Barney Frank why he flat out lied to the markets about Fannie and Freddie being A-ok barely a month before they both went belly up. I’m still amazed their stocks were not de-listed from the NYSE after that fall and investigations did not ensue.
August 29, 2009, 5:06 am
Grant did not cite the entire article. The rest is on the NYT web site. Significantly, you can see that this innocent little pilot program was not expanded under Bush, but during the “good economy” (i.e., dot-com bubble) of the Clinton years:
“In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.”
44%? Oh, is that all? Some pilot!
“…Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings….”
Bright idea. Isn’t credit supposed to be what mortgage qualification is all about?
“…But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites…”
A democratic engineered and very transparent attempt at vote buying.
You are right, Bush did not stop this. But could he? By the time Bush took office in January 2000, this thing already created more pork than a Memphis barbecue and it was seen as a wonderful program of creating opportunities for disadvantaged [read: non-credit worthy] voters. Any attempt to pry this one away would have got about as far as Bush warning about social security being in trouble (which he did, and was laughed out of the room by congress).
We really should be asking not only Dodd, but Barney Frank why he flat out lied to the markets about Fannie and Freddie being A-ok barely a month before they both went belly up. I’m still amazed their stocks were not de-listed from the NYSE after that fall and investigations did not ensue.
August 29, 2009, 5:06 am
Grant did not cite the entire article. The rest is on the NYT web site. Significantly, you can see that this innocent little pilot program was not expanded under Bush, but during the “good economy” (i.e., dot-com bubble) of the Clinton years:
“In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.”
44%? Oh, is that all? Some pilot!
“…Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings….”
Bright idea. Isn’t credit supposed to be what mortgage qualification is all about?
“…But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites…”
A democratic engineered and very transparent attempt at vote buying.
You are right, Bush did not stop this. But could he? By the time Bush took office in January 2000, this thing already created more pork than a Memphis barbecue and it was seen as a wonderful program of creating opportunities for disadvantaged [read: non-credit worthy] voters. Any attempt to pry this one away would have got about as far as Bush warning about social security being in trouble (which he did, and was laughed out of the room by congress).
We really should be asking not only Dodd, but Barney Frank why he flat out lied to the markets about Fannie and Freddie being A-ok barely a month before they both went belly up. I’m still amazed their stocks were not de-listed from the NYSE after that fall and investigations did not ensue.
August 29, 2009, 12:06 am
Grant did not cite the entire article. The rest is on the NYT web site. Significantly, you can see that this innocent little pilot program was not expanded under Bush, but during the “good economy” (i.e., dot-com bubble) of the Clinton years:
“In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.”
44%? Oh, is that all? Some pilot!
“…Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings….”
Bright idea. Isn’t credit supposed to be what mortgage qualification is all about?
“…But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites…”
A democratic engineered and very transparent attempt at vote buying.
You are right, Bush did not stop this. But could he? By the time Bush took office in January 2000, this thing already created more pork than a Memphis barbecue and it was seen as a wonderful program of creating opportunities for disadvantaged [read: non-credit worthy] voters. Any attempt to pry this one away would have got about as far as Bush warning about social security being in trouble (which he did, and was laughed out of the room by congress).
We really should be asking not only Dodd, but Barney Frank why he flat out lied to the markets about Fannie and Freddie being A-ok barely a month before they both went belly up. I’m still amazed their stocks were not de-listed from the NYSE after that fall and investigations did not ensue.
June 23, 2011, 2:17 pm
I agree totally! I get so upset whenever anything is wrong, Obama mentions that he was handed a tough situation, insinuating that it is all Bush’s fault! Give me a break, whatever he waa given, he has made much worse, and we will never get out of the debt he has put us in! God help us, if he is reelected!