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Fannie Mae and Freddie Mac were the chief culprits in the housing crisis because they encouraged people who could not afford payments to borrow money, according to a congressional report released Tuesday.
The claims in the report have long been advanced by conservatives, who argue that the Community Reinvestment Act and other federal programs fed the housing bubble that burst in 2007 and led to the economic downfall in 2008.
But thereport explains in detail how Fannie and Freddie -- government sponsored enterprises (GSE) that were not subject to the same oversight as other publicly traded firms -- “privatized their profits but socialized their risks.”
“In the short run, this government intervention was successful in its stated goal – raising the national homeownership rate,” says the report, the result of an investigation launched last fall by Republican members of the House Oversight and Government Reform Committee.
“However, the ultimate effect was to create a mortgage tsunami that wrought devastation on the American people and economy,” says the report. “While government intervention was not the sole cause of the financial crisis, its role was significant and has received too little attention.”
The report talks about the Clinton administration’s National Homeownership Strategy, citing President Clinton’s directive to “lift America’s homeownership rate to an all-time high by the end of the century.”
The Clinton strategy further said that Freddie and Fannie should reduce down-payment requirements and, according to the report, “called for increased use of ‘flexible underwriting criteria,’ which it said could be achieved in concert with ‘liberalized affordable housing underwriting criteria.’”
“That is the perfect smoking gun that tells how Barney Frank [D-Mass.], the Clinton administration and others would do it in those days,” Rep. Darrell Issa (R-Calif.), the ranking member on the House Oversight and Government Affairs Committee, said Tuesday in a speech at the Heritage Foundation.
“The seeds of the meltdown began with the well-intentioned goal that everyone have a home even if they can’t afford it,” he said. “It led to one of the biggest ponzi schemes ever.”
Fannie Mae and Freddie Mac made 54 percent of the “subprime” mortgage loans from 2002 to 2007, or about $1.9 trillion in mortgage loans to borrowers with credit scores lower than 660.
The report comes after Rep. Barney Frank (D-Mass.) – who fought against regulation of the two quasi-public mortgage giants -- and Rep. Anthony Weiner (D-N.Y.) wrote a letter in June to Fannie Mae and Freddie Mac calling on the GSEs to lower lending standards on condo buyers.
The report argues that lowered lending standards were the cause of the housing crisis and did not exempt the Republicans or the Bush administration from blame. It said placing certain lending quotas for under-served populations allowed “both Democratic and Republican administrations to consistently make campaign promises to boost homeownership through government intervention in the market.
CNSNews.com - Federal Government Was Culprit in Housing and Economic Crisis, Says Congressional Report (http://www.cnsnews.com/public/content/article.aspx?RsrcID=50680 - broken link)
2001 to 2007: There didn't exist a single Democrat with an ounce of power in any branch of the federal government.
I love Issa telling us how Clinton would do it in "those days." LMAO. What happened to the Republicans? They had power of the whole government for six years. What about THOSE DAYS? They did nothing. Republicans truly are the "do nothing" party, even when they're in power. What a joke.
2001 to 2007: There didn't exist a single Democrat with an ounce of power in any branch of the federal government.
I love Issa telling us how Clinton would do it in "those days." LMAO. What happened to the Republicans? They had power of the whole government for six years. What about THOSE DAYS? They did nothing. Republicans truly are the "do nothing" party, even when they're in power. What a joke.
The report came out yesterday. You can't say Republicans are rewriting history. Democrats controlled the Senate in 2001 and 2002, and they controlled The entire Congress in 2007. The rest of the time they threatened filibuster. Do nothing? The new Congress is doing plenty. They're just not reading the things they pass.
The report came out yesterday. You can't say Republicans are rewriting history. Democrats controlled the Senate in 2001 and 2002, and they controlled The entire Congress in 2007. The rest of the time they threatened filibuster. Do nothing? The new Congress is doing plenty. They're just not reading the things they pass.
Laying the blame on Clinton and Frank, without taking responsibility for the years of complete Republican control of government, is intellectually dishonest. Are you intellectually dishonest, mo?
...argue that the Community Reinvestment Act and other federal programs fed the housing bubble that burst in 2007...
I remember when I was a bank teller back in the mid 90's, there were a lot of "rules" that we (the tellers) had to tiptoe around because of the CRA. I also remember there being an air of concern over the act, as if it was going to break the bank or something.
Laying the blame on Clinton and Frank, without taking responsibility for the years of complete Republican control of government, is intellectually dishonest. Are you intellectually dishonest, mo?
Clinton in 1999 put the ball in motion by de-regulating Glass-Steagall! Look it up.
In 2001 President Bush called attention to it all and Frank and others said there is NO problem bla bla bla
In 2001, Republicans controlled the House. Try again.
Frank was more powerful than Bush in 2001? Are you really gonna go there?
Oh...nevermind. You'd defend Satan if he joined the Republican Party.
Quote:
And I am a dudette............
I'll remember that next time.
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