Clinton Housing Policy Wrecked Economy, Not 1%
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Election '16: With typical gall, Hillary Clinton in her campaign launch lit into "those at the top" for "stacking" the deck against middle-class families when in fact they are buried under the house of cards built by her husband.
Earth to Hillary: It wasn't the richest 1% or Wall Street bankers who crashed the economy and created the financial wreckage from which working Americans "have fought" to dig themselves out of. No, that path to destruction was set by Bill Clinton and his social housing policies.
The evidence is overwhelming that Clinton was the architect of the financial disaster that wiped out trillions of dollars in household wealth. Under his National Homeownership Strategy, Clinton took more than 100 executive actions to pry bank lending windows wide open.
Through executive order, he marshaled 10 federal agencies under a little-known task force to enforce new "flexible" mortgage underwriting guidelines to boost low-income and minority homeownership.
For the first time, banks were ordered to qualify low-income borrowers with spotty credit. The 1994 policy planted the seeds of the mortgage crisis, as lenders eventually abandoned prudent underwriting altogether.
The next year, Clinton set quotas for lending in high-risk neighborhoods under an overhauled Community Reinvestment Act, while adding several hundred bank examiners to enforce the tougher CRA rules. Banks that came up short had expansion plans put on hold — a slow death sentence in an era of bank mergers and acquisitions.
For the first time, CRA ratings were made public, egging on ACORN and other radical inner-city groups, which used the reports to extort banks for $6 trillion in subprime loan set-asides by 2008.
When bankers resisted being saddled with so many risky loans, Clinton tapped Fannie Mae and Freddie Mac to take them off their books, while freeing bankers to originate more of the political loans. He had the Department of Housing and Urban Development nearly double Fannie's and Freddie's quotas for underwriting "affordable" loans, which remained in force throughout the 2000s.
When the mortgage giants pushed back, complaining that it would be hard to meet the higher targets, Clinton pushed them to load up on subprime loans, while authorizing Fannie and Freddie for the first time to buy subprime securities to earn credits toward the HUD goals. The mortgage giants complied to their great detriment.
So Clinton was also responsible for securitizing these loans which combined bad loans with good loans in packages that were sold to Wall Street institutions, including insurance companies. The mix of these junk loans made it impossible for investors to tell good ones from bad, and the markets eventually seized up and crashed.
Read More At Investor's Business Daily: http://news.investors.com/ibd-edito...of-housing-financial-crisis.htm#ixzz3XZsTURcR
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
113 Comments
Election '16: With typical gall, Hillary Clinton in her campaign launch lit into "those at the top" for "stacking" the deck against middle-class families when in fact they are buried under the house of cards built by her husband.
Earth to Hillary: It wasn't the richest 1% or Wall Street bankers who crashed the economy and created the financial wreckage from which working Americans "have fought" to dig themselves out of. No, that path to destruction was set by Bill Clinton and his social housing policies.
The evidence is overwhelming that Clinton was the architect of the financial disaster that wiped out trillions of dollars in household wealth. Under his National Homeownership Strategy, Clinton took more than 100 executive actions to pry bank lending windows wide open.
Through executive order, he marshaled 10 federal agencies under a little-known task force to enforce new "flexible" mortgage underwriting guidelines to boost low-income and minority homeownership.
For the first time, banks were ordered to qualify low-income borrowers with spotty credit. The 1994 policy planted the seeds of the mortgage crisis, as lenders eventually abandoned prudent underwriting altogether.
The next year, Clinton set quotas for lending in high-risk neighborhoods under an overhauled Community Reinvestment Act, while adding several hundred bank examiners to enforce the tougher CRA rules. Banks that came up short had expansion plans put on hold — a slow death sentence in an era of bank mergers and acquisitions.
For the first time, CRA ratings were made public, egging on ACORN and other radical inner-city groups, which used the reports to extort banks for $6 trillion in subprime loan set-asides by 2008.
When bankers resisted being saddled with so many risky loans, Clinton tapped Fannie Mae and Freddie Mac to take them off their books, while freeing bankers to originate more of the political loans. He had the Department of Housing and Urban Development nearly double Fannie's and Freddie's quotas for underwriting "affordable" loans, which remained in force throughout the 2000s.
When the mortgage giants pushed back, complaining that it would be hard to meet the higher targets, Clinton pushed them to load up on subprime loans, while authorizing Fannie and Freddie for the first time to buy subprime securities to earn credits toward the HUD goals. The mortgage giants complied to their great detriment.
So Clinton was also responsible for securitizing these loans which combined bad loans with good loans in packages that were sold to Wall Street institutions, including insurance companies. The mix of these junk loans made it impossible for investors to tell good ones from bad, and the markets eventually seized up and crashed.
Read More At Investor's Business Daily: http://news.investors.com/ibd-edito...of-housing-financial-crisis.htm#ixzz3XZsTURcR
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
