Bill Clinton To Blame For Current Housing Crisis

Bill Clinton helped in TWO major ways to cause the current housing/mortgage crisis

1. Firstly, he signed the law that repealed the Glass-Steagall Act which separated insurance and banking activities. Essentially, the Glass Steagall Act "separated investment and commercial banking". It was a law created to prevent another 1929 market crash. It led to the investment houses taking on large risks using leverage to create mortgage derivatives.

In the background of the go-go economy, the feeling grew among some economists and the financial community that Glass-Steagall hampered America’s financial competitiveness. Among the many voices favoring this was Alan Greenspan along with former Goldman Sachs partner Robert Rubin, Bill Clinton’s Treasury Secretary. In a 1995 speech and testimony to Congress Rubin signaled the Clinton Administration was ready to repeal Glass-Steagall:

“The banking industry is fundamentally different from what it was two decades ago, let alone in 1933.” He said the industry has been transformed into a global business of facilitating capital formation through diverse new products, services and markets. “U.S. banks generally engage in a broader range of securities activities abroad than is permitted domestically,” said the Treasury secretary. “Even domestically, the separation of investment banking and commercial banking envisioned by Glass-Steagall has eroded significantly.”

Glass-Steagall Act was created to keep banks from taking on too much risks and to protect the banking industry and taxpayers. Anyone who thinks the repeal of Glass-Steagall was forced on an unwilling Bill Clinton need only read Rubin’s testimony.
2.The Clinton administration made it an ideological priority that loans should be extended to minorities, regardless of their credit worthiness. As early as 1994 the New York Times was complacently reporting: "Clinton Administration officials have repeatedly urged banks, savings and loan associations and mortgage companies to examine their lending procedures to avoid any unfairness toward people in low-income neighborhoods or minority groups." It reported that "the number of mortgages issued to black and Hispanic borrowers rose sharply last year".

Capitalists have traditionally looked at the colour of people's money and judge any loan on its merits, i.e. a costs/benefits analysis, not of their skin. In 1999, under pressure from the Clinton administration, Fannie Mae started a program for extensive expansion of loans to people with low to moderate credit. The share of subprime mortgages to total origination was 5 per cent ($35 billion) in 1994; it had risen to 20 per cent ($600 billion) by 2006. The impetus originated with Bill Clinton. This madness included "Ninja" (No income, no job, no assets) loans.

Under legal penalties, Clinton's Federal Reserve compelled banks to accept welfare cheques and unemployment benefit as income sources to qualify for a mortgage. The affirmative action ideology so invaded the market that brokers advised people to claim they were 1 per cent Native American to benefit. In one extravagant instance a $480,000 mortgage was awarded to an illegal alien from Mexico.

This insanity had nothing to do with capitalism and everything to do with sub-Marxist social engineering. Capitalism was in a strait-jacket of political correctness - no wonder it imploded. If you lose your house, place the responsibility where it belongs - blame Bill Clinton

Lastly, there is this of course: Democrats defending Fannie Mae and Freddie Mac: http://www.youtube.com/watch?v=YL36nwCSYUM