They say the definition of insanity is doing the same thing over and over again while expecting different results. If that is the case, then the housing reforms reportedly under consideration by President Obama are downright crazy. At last week’s Twitter town hall, William Smith asked Obama, “What mistakes have you made in handling this recession and what would you do differently?” The only policy area Obama would admit fault was in housing: “I think that the continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected. … We’ve had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up.”So what are Obama’s latest ideas for fixing the housing crisis? The Wall Street Journal reported on a slew of them Monday, including “having taxpayer-owned mortgage giants Fannie Mae and Freddie Mac relax their rules for loans to investors.” Has Obama learned nothing from the 2008 financial crisis? Relaxed lending standards at Fannie and Freddie, aided and abetted at every point by Republicans and Democrats in the White House and Congress, caused the nation’s housing meltdown in the first place.
Shortly after James Johnson, Walter Mondale’s 1984 campaign manager, became chairman of Fannie Mae, Fannie began buying subprime mortgage-backed securities in order to boost low-income homeownership. By 2000, Fannie had purchased $18.6 billion of these subprime securities. By 2004, Fannie and Freddie were buying up 44 percent of the entire market for subprime securities. Paralleling these developments, the U.S. Department of Housing and Urban Development applied unremitting pressure on lenders to loosen their loan standards, with the result that millions of buyers who were poor risks got mortgages that would ultimately become foreclosures.
In their book “Reckless Endangerment,” New York Times reporter Gretchen Morgenson and financial analyst Joshua Rosner write of Fannie and Johnson: “Fannie Mae led the way in encouraging loose lending practices among banks whose loans the company bought. … Johnson led both the private and public sectors down a path that led directly to the financial crisis of 2008.”
But such facts don’t fit the politically correct liberal narrative of the housing crisis, which they insist was caused solely by the deregulation advocated by conservatives and greed on Wall Street. The Financial Crisis Inquiry Commission interviewed more than 700 witnesses for its January report on the causes of the financial crisis. Johnson was not one of them even though he made millions as Fannie’s CEO, as did dozens of other former Democratic operatives who found comfortable sinecures at the housing giant during the fat years before the Great Recession of 2008.
In fact, not only was Johnson named by Obama to head his vice presidential search committee, he later raised more than $200,000 for Obama as a campaign bundler. Just as the day never changed for weatherman Phil Connors in “Groundhog Day,” the liberal solution to government failure is always more of the same. (The Examiner)
No comments:
Post a Comment