Bush Philosophy Stoked Mortgage Bonfire

[w¡n9Nµ7 §£@¥€r 123]

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president ... was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

...

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow (Secretary of the Treasury, 2003-06) said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”

For much of the Bush presidency, the White House was preoccupied by terrorism and war; on the economic front, its pressing concerns were cutting taxes and privatizing Social Security. The housing market was a bright spot: ever-rising home values kept the economy humming, as owners drew down on their equity to buy consumer goods and pack their children off to college.

Lawrence B. Lindsay, Mr. Bush’s first chief economics adviser, said there was little impetus to raise alarms about the proliferation of easy credit that was helping Mr. Bush meet housing goals.

“No one wanted to stop that bubble,” Mr. Lindsay said. “It would have conflicted with the president’s own policies.”

http://www.nytimes.com/2008/12/21/business/21admin.html

[rocks 494]

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

it's a nice idea but there's the problem.

[rocks 494]

I put this whole idea that every American should own their own home squarely at the foot of BOTH PARTIES. I put the whole idea that markets should regulate themselves squarely at the foot of the Republicans. There have been a few Democrats complicit in de-regulation, but for the most part the so-called "big government" liberals have been right all along about trying to stop the free market from spinning out of control. And now the GOP can't jump on that bandwagon fast enough.

the idea of markets regulating themselves is laughable.

[웃 910]

I put this whole idea that every American should own their own home squarely at the foot of BOTH PARTIES. I put the whole idea that markets should regulate themselves squarely at the foot of the Republicans. There have been a few Democrats complicit in de-regulation, but for the most part the so-called "big government" liberals have been right all along about trying to stop the free market from spinning out of control. And now the GOP can't jump on that bandwagon fast enough.

Funny you say that because it was the GOP calling for the regulations on Fannie/Freddie in 2005, the Democrats didn't see the problem until recent months:

In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it.

http://online.wsj.com/article/SB1224030457...693.html?csp=34

From the same article:

While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector.....The only banking 'deregulation' in recent years was that of Fannie and Freddie.

The cause of this crisis was the collapse of the housing market; The collapse of Fannie/Freddie. The GOP wanted to fix the problem 3 and a half years ago; Democrats didn't see the problem until 3 and a half months ago.

Meanwhile, Obama didn't like to make decisions on the tough issues, so he just squeezed through by voting present.

Edited December 21, 2008 by Confucian

[kaydee457 13]

This is nonsense as it was, and still is, the Democrats that promote low income home ownership and resisted regulation of both Fannie and Freddie by this administration...

Yes, the President championed home ownership for all, but for all that could responsibly afford it and qualify for it.

It was the Democrats that made the market a free for all by threatening Banks with retaliation if they excluded minorities and low income folks....

Barney Frank, Chris Dodd, Chuck Schumer, and Charlie Rangel, all of which except Schumer are under some sort of investigation for ethics violations, Dodd for taking a sweet deal from Country Wide, are the principals in this debacle......

Bush tried to reign in Fannie and Freddie and if successful all wouldn't have fallen apart. The Dems resisted.

[HAL 9000 96]

Funny you say that because it was the GOP calling for the regulations on Fannie/Freddie in 2005, the Democrats didn't see the problem until recent months:

First, you are quoting from an opinion piece, not an actual news article. Second, the vote was a subcommittee vote, not a House or Senate vote. And third, you imply (wrongly) that Obama had anything to do with that subcommittee vote, which he did not.

Can you quote anything that is not an opinion piece that shows where the Bush administration wanted more regulation of the free market?

Must be more of the same idiocy that equates op-Eds with fact. Kind of explains, actually, quite a few things.

This is nonsense as it was, and still is, the Democrats that promote low income home ownership and resisted regulation of both Fannie and Freddie by this administration...

Yes, the President championed home ownership for all, but for all that could responsibly afford it and qualify for it.

It was the Democrats that made the market a free for all by threatening Banks with retaliation if they excluded minorities and low income folks....

Barney Frank, Chris Dodd, Chuck Schumer, and Charlie Rangel, all of which except Schumer are under some sort of investigation for ethics violations, Dodd for taking a sweet deal from Country Wide, are the principals in this debacle......

Bush tried to reign in Fannie and Freddie and if successful all wouldn't have fallen apart. The Dems resisted.

Yay... ain't equal access to housing a b!tch?

Oh wait... that's a lot longer than something done over the last 2 years.

Yes, the President championed home ownership for all, but for all that could responsibly afford it and qualify for it.

LOL! Somebody stop the spin please, I'm getting dizzy.

It was the Democrats that made the market a free for all by threatening Banks with retaliation if they excluded minorities and low income folks....

Barney Frank, Chris Dodd, Chuck Schumer, and Charlie Rangel, all of which except Schumer are under some sort of investigation for ethics violations, Dodd for taking a sweet deal from Country Wide, are the principals in this debacle......

Bush tried to reign in Fannie and Freddie and if successful all wouldn't have fallen apart. The Dems resisted.

If only the Republicans had been able to control both houses of Congress from 1994 until 2006, then they would have been able to stop the mean 'ol Democrats from destroying the economy. Oh, wait.

You mean the Evil Communist Democrats (ECDs) weren't in control of Congress?

[cieloazul 0]

This is nonsense as it was, and still is, the Democrats that promote low income home ownership and resisted regulation of both Fannie and Freddie by this administration...

Yes, the President championed home ownership for all, but for all that could responsibly afford it and qualify for it.

It was the Democrats that made the market a free for all by threatening Banks with retaliation if they excluded minorities and low income folks....

Barney Frank, Chris Dodd, Chuck Schumer, and Charlie Rangel, all of which except Schumer are under some sort of investigation for ethics violations, Dodd for taking a sweet deal from Country Wide, are the principals in this debacle......

Bush tried to reign in Fannie and Freddie and if successful all wouldn't have fallen apart. The Dems resisted.

Alas, a member who doesn't have blinders on and actually knows the facts. Until a majority of voters become well-informed, we'll continue to have the same problems.

[Caladan 19]

I put this whole idea that every American should own their own home squarely at the foot of BOTH PARTIES. I put the whole idea that markets should regulate themselves squarely at the foot of the Republicans. There have been a few Democrats complicit in de-regulation, but for the most part the so-called "big government" liberals have been right all along about trying to stop the free market from spinning out of control. And now the GOP can't jump on that bandwagon fast enough.

I don't have a problem with home ownership; it's by and large a good thing. Home ownership in the absence of regulating the lenders is just asking for trouble. Same thing with credit cards.

[Hilarious Clinton 452]

Nice attempt to blame Bush... again. Get over it!. You won.

Sore-winners are worse than sore losers. At least the losers have a reason to be sore.

[mawilson 2,133]

the idea of markets regulating themselves is laughable.

It's really not. Markets work just fine on their own, but they were never

allowed to work. The government-backed Fannie and Freddie were created

precisely to interfere with the housing and mortgage markets.

Market discipline would have stopped those bad loans if the government didn't

act as an enabler by giving loan guarantees to opportunistic lenders who assumed

they’d be bailed out.