Who’s to blame for the current market meltdown? If you listen to Barack Obama, it’s the fault of 1) George Bush (because everything is President Bush’s fault), and 2) free markets.
No. Seriously. Feign surprise that the socialist faults free markets.
Besides from being an idiotic hypothesis, it’s just flat out not true.
The guys at Investors Business Daily have a great article where they proffer that the real blame belongs squarely on the social engineering efforts of President Bill Clinton:
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
IBD Editorials then points out the Clinton-era cronies who were stealing hundreds of millions of dollars from Fannie and Freddie:
As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.
Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.
And now, Obama wants us to believe that it was President Bush and the “free markets” fault? Perhaps it’s so we won’t note his own dubious relationship with Fannie crooks (via Instapundit):
I would put together a commercial that said…
James A. Johnson – former Fannie Mae CEO and Obama Advisor
Just cost you billions in taxes
Franklin Raines – former Fannie Mae CEO and Obama Advisor
Just cost you billions in taxes
Barack Obama – If we can’t afford his advisors, how can we afford him?
Indeed.
HotAir has a good article on how Bush attempted to tighten oversight but it was blocked by the democrats.
Mistakes have been made world wide on this Robbie.
Would a more liberal government would have made the msame mistakes?
Yep. Look across the water at us. Labour in power and with the economy booming so they allow 125% mortgages – something that made my blood boil when I heard about it.
What did they think was going to happen? Allowing people to be in negative equity even before they’ve made their first mortgage payment.
Absolutely ridiculous.
So no, Obama cannot blaim Bush for this as he would have done exactly the same.
We need businessmen with proven track records to hold positions in government where finances are concerned.
Similar to the ridiculous pandemic over here of management in hospitals having no medical training. How can you tell a nurse what to do unless you can do it yourself?
The world economy is f*cked at the moment due to goverments allowing the stretching of every penny/dime.
I have always aired on the side of caution – things looking good? Great, let’s get some cash in the bank for a rainy day.
It doesn’t take a genius to work out that you can’t carry on spending money thinking their is a bottomless pit of cash out there.
Jonny
I think before the election is held, the American people will “get it”. They will understand who started this cascade of failure (Clinton/Democrats), and they will see that both parties did virtually nothing to prevent it, that greedy corporations put the holy dollar before the interests of the country and that those of us who worked hard, lived within our means and paid our mortgages on time are going to be forced to shoulder the burden for those who did not.
The candidate who LEVELS with the American people and shows that he will not allow this to happen again will win the election.
[Editor --- Dianne gets it. Great comment.]
Quite right Dianne.
I believe we are going to enter a new kind of class filled society on global scale. The ‘haves’ and the ‘have nots’.
We had to fight hammer and tongue to get our recent mortgage approved due to us owning more than one home – the only way we swung it was to remind the bank how much business my company puts their way. If I’m struggling, I wouldn’t like to think what someone on a lower wage to me has to go through.
When we enter into this fierce division of ‘have’ and ‘have nots’, I think we’ll find they’ll be more than a couple of key scrapes on cars to worry about!
Jonny
The candidate who LEVELS with the American people and shows that he will not allow this to happen again will win the election.
Rasmussen Reports Presidential Tracking Poll:
Investor confidence has stabilized—at least for the moment–after falling sharply for several days. The economic confidence of those who do not invest was not shaken by the Wall Street events of recent days. As for the political implications, polling conducted last night shows that 49% trust McCain more than Obama on economic issues while 45% trust Obama.
Bush attempted to tighten up regulation 5 years ago but was blocked by the democrats. McCain tried it again 2 years later but again was blocked by the dems. Meanwhile, Chris Dodd was getting his fees ($10,000) waived by his mortgage company. And Clinton cronies were taking in tens of millions of dollars from their Fannie/Freddie jobs.
Just a side note, but when I was in mortgage banking, we were constantly bombarded by new government regulations. At the same time, we were told we had to comply with Community Reinvestment Programs, Down Payment Assistance Programs (Hello, ACORN!), local bond programs, FNMA Community Lending Programs. To not comply with involvement would have not only local and national community groups threatening to sue you, but HUD, FNMA, FHLMC contacting you and “encouraging” you to make better efforts.
Not all of these programs put the industry down the tube – a lot of them actually achieved some dreams of good, credit worthy folks. But there was a lot of fraud out there, the community programs in cooperation with FNMA, FHLMC, HUD, etc. depended on less than stellar underwriting guidelines. We know the result of many of these. And – they weren’t considered subprime necessarily!
When an underwriter is presented with the credit information of a potential borrower, that underwriter is looking for the ability to repay based on a number of factors. When some of these programs above and subprime loans entered the market, we knew as lenders that the consequences would eventually be severe. There was NOTHING we could do about it as individuals. Yes, there was the company bottom line, but even moreso, the regulators wouldn’t take action over what they clearly saw coming down the pike.
My two cents anyway.
Obama has taken $1,180,103 from the top issuers of subprime loans:
$266,907 from Lehman
$5395 from GMAC
$150,850 from Credit Suisse First Boston
$11,250 from Countrywide
$9052 from Washington Mutual
$161,850 from Citigroup
$4600 from CBASS
$170,050 from Morgan Stanley
$1150 from Centex
$351,900 from Goldman Sachs
Learning how to be a Chicago thug community
organizeragitator, has helped him learn how to shake down lenders. But it’s for the people, right?/or is it…for the children…it’s tough to keep it straight
Also, B-HO has taken more money from Fannie Mae in the past three years, than all others, except for donk Chris Dodd.
At last, something is being done about those b*stard shorters.
Don’t get me wrong, it takes balls of steel to short a stock in todays market, but this has been going on for years and it drives me crazy.
You see a dip in a particualr equity so the shorters pounce on it with their tens of thousands of pounds – it goes up a couple of pennies and it’s sold for moderate gain. Good for them but it doesn’t help the long term investor.
Even worse is the buy backs.
It’s a bit late, but it’s good to see both sides of the Atlantic are finally taking this seriously.
Jonny
This is true, but the same article in Investors Business Daily (which is often right-tilted in spite of its robust name) even has to admit
“Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street.”
Suze Orman on CNN blames the greed and corruption on the part of the lenders.
When I was in the market for a house, I contacted one of those internet companies. They told me they could approve me within minutes for an interest-only loan with no credit check. I said Thanks but No Thanks to that Loan from Nowhere.
This cannot be blamed on mortgage companies being forced to give loans to minorities (or poor people, but the reference to Clinton’s “obsession with multiculturalism” makes clear what this article is about). Rather this was a greedy company looking to get me in trouble, but they don’t care as long as they get paid.
It seems like Clinton is partly to blame, but let’s at least try to be honest here – the blame cannot be entirely rested on Clinton’s shoulders.