Robert Scheer: How Clinton Democrats Killed Roosevelt’s Dream of the Affordable Home

[marmar]

from truthdig:


How Clinton Democrats Killed Roosevelt’s Dream of the Affordable Home
Posted on Apr 7, 2016

By Robert Scheer

Editor’s note: The following excerpt from Robert Scheer’s book “The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street” details the perversion of Fannie Mae and Freddie Mac. This is particularly relevant to explain the connection between Clinton “progressives” and the 2008 housing meltdown that impoverished millions. Copyright © 2010. Available from Nation Books, an imprint of Perseus Books, a division of PBG Publishing, LLC, a subsidiary of Hachette Book Group, Inc.

Chapter 7: Poverty Pimps

When the Bush administration was forced in the fall of 2008 to bail out the “government sponsored enterprises” or GSEs, as the mortgage buying companies of Fannie Mae and Freddie Mac are referred to, grateful conservatives finally had what appeared to be a convenient government villain. Working backwards from the GSEs’ founding mandate to support the market for middle- and low-income buyers by buying up mortgages from lenders and then repackaging them as securities, longtime critics were only too excited to blame do-gooder liberalism as the fly in the ointment of capitalism. Specifically, House Financial Services Committee chair Barney Frank was singled out as having pressured the GSEs to make loans to unqualified poor people—especially minorities—who then defaulted and caused the economic downturn.

“Taxpayers are now on the hook for as much as $200 billion to rescue Fannie Mae and Freddie Mac, and if you want to know why, look no further than the rapid response to this bailout from House baron Barney Frank,” wrote the Wall Street Journal in a September 9, 2008, editorial. “Mr. Frank wants you to pick up the tab for its failures, while he still vows to block a reform that might prevent the same disaster from happening again.”

The editorial is worth quoting at length because it summarizes a perspective broadly held and argued by conservatives. It correctly criticizes Frank for statements he made in 2004, when Fannie Mae revealed a “multibillion-dollar financial ‘misstatement.’ ” Frank had said that he felt that despite this, the mortgage lender was not a danger to taxpayers. “I think Wall Street will get over it,” Frank had said. The Journal mocked this response—“Yes they’re certainly ‘over it’ ... now that Uncle Sam is guaranteeing their Fannie paper, and even Fannie’s subordinated debt.” The newspaper then ridiculed Frank for his criticism of conservative economic policies, saying that what really blocked reform was Frank’s insistence that “any reform be watered down and not include any reduction in their MBS [mortgage backed security] holdings.”

Some liberal pundits, most notably the New York Times’ Paul Krugman, attempted to play down the role of Freddie and Fannie, arguing, incorrectly, that they only made proper “conforming” loans. But that was false, for the definition of conforming is whatever Freddie and Fannie approved of, and those turned out to be as disastrously irresponsible as any.

The free-market conservatives are right in criticizing those GSEs, for they were highly culpable, and the grand swindle could not have taken place without them. But they are wrong in describing the GSEs led by Fannie Mae and Freddie Mac as do-gooder public entities; in reality they are privately owned, profit-driven companies that richly reward their executives for stock market success. That is the source of much confusion in this debate; the top executives of the GSEs were compensated as handsomely, and often more so, than any other corporate executives, but because of their original government sponsorship, they made for convenient targets for the wrath of free-market ideologues. ................(more)

http://www.truthdig.com/arts_culture/item/how_the_democrats_killed_roosevelts_dream_of_the_affordable_home_20110217

[merrily]

1. Clinton's laughably vaunted economic policies resulted in the collapsed economy of 2008,

both of the US and other nations. Between repeal of Glass Steagall and the Commodities Futures Modernizaton Act of 2000, we "enjoyed" the mortgage derivative/credit default swap crisis that had had banks paying mortgage broker more for risky loans than for qualified borrowers. (if you have not seen the Big Short, please try to catch it--oh, and just to scare you, the real life genius of investing portrayed in that film in now buying up water.).

So, people not only got foreclosed on but also had to pay deficiency judgments. Meanwhile, no jobs were available to help them re-build their lives and welfare had been "reformed" too.

But, sure, let's keep pretending that that "modest budget surplus" with which he left office made his administration an economic beacon.

Then, under the next New Democrat President, the banks got bailed out AND got off the hook, and borrowers left with no homes, no jobs and a deficiency judgment got the "liar loan" label and nothing else.

And we wonder why Senator Sanders' message is resonating and why 1/4 to 1/3 of his supporters may not vote for Mrs. Clinton?

God Bless America!

[Baobab]

2. WTO GATS deregulation of banks forcing the repeal of Glass-Steagall also was

responsible..

[Avalon Sparks]

5. It's like we're the only two people that know this.

So frustrating!

[Baobab]

6. The issue seems to be one of the ones that sock puppets go out of their way to cover up.

which is in and of itself informative

[Baobab]

7. Lori Wallach certainly does. So does the WTO!

http://www.levyinstitute.org/conferences/minsky2011/presentations/Wallach.pdf

[appalachiablue]

3. "Fannie and Freddie are privately owned, profit driven companies that richly reward their

executives for stock market success" is an understatement. Not only the senior and junior execs but directors were awarded lucrative stock options on top of salaries since the 80s, primarily by furthering MBS, Mortgage Backed Securities F & F, Fraud and Felonies.

[freebrew]

4. We lost the 'Fairness Doctrine' thru Clinton...

that was the worst move ever to affect our democracy.