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Betty Arenson: Don’t blame Republicans for the housing meltdown

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Posted: May 19, 2009 9:49 p.m.
Updated: May 20, 2009 4:55 a.m.
No matter how many times liberals try to tell us the Republicans are to blame for the financial mess we find ourselves in, the claim is false.

The great financial meltdown of 2009 cannot legitimately be laid at the feet of the Bush administration.

Yet liberals persist in trying to do so. A liberal commentary recently stated: "The Bush administration orchestrated and oversaw the destruction of the financial markets" - unfair and inaccurate.

In an article published Sept. 30, 1999, in the liberally biased New York Times, Steven A. Holmes wrote the following:

"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements that it will purchase from banks and other lenders.

"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 felt pressure from stock holders to maintain its phenomenal growth profits."

"‘Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payments requirements,' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer."

Raines went on to say, "‘Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'"

"In moving even tentatively into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times.

"But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."

The Times' Holmes goes on to quote one Peter Wallison, a resident fellow at the American Enterprise Institute: "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."

Here are but a few more examples of the vast responsibility for the present housing-financial crisis resting in the laps of Democrats.
It is no secret that the Bush administration tried to address Fannie's and its sibling's, Freddie's, doomed debacles in 2001, 2002 and 2005.

At the very least, those efforts were ignored by highly positioned Democrats. At the most, the administration and the taxpayers were lied to.

In 2004, the Bush administration got a bill before the Senate Banking and Finance Committee. It was filibustered by Chris Dodd and died.

Chris Dodd was in bed with now-belly-up Countrywide, receiving not one but two sweetheart loans.

The Obamas got a sweetheart loan from Chicago's Northern Trust. Obama got a lower-than-market interest rate and did not have to pay points or origination fees to get it - a savings of $108,000 over the loan's life.

The matter was the subject of an investigation by the Federal Elections Committee, which just recently closed its books on the matter. Naturally, there were no consequences.

Countrywide failed and Northern Trust was a receiver of billions of bailout dollars but gave it back after corporate officials realized the extent of the government's intrusions.

It's the Democrats, not the Republicans, who are responsible for the housing meltdown and subsequent financial disasters.

Betty Arenson is a Valencia resident. Her column reflects her own views and not necessarily those of The Signal.


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