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Bill Clinton's drive to increase homeownership went way too far - BusinessWeek
Add President Clinton to the long list of people who deserve a share of the blame for the housing bubble and bust. A recently re-exposed document shows that his administration went to ridiculous lengths to increase the national homeownership rate. It promoted paper-thin downpayments and pushed for ways to get lenders to give mortgage loans to first-time buyers with shaky financing and incomes. Its clear now that the erosion of lending standards pushed prices up by increasing demand, and later led to waves of defaults by people who never should have bought a home in the first place.
President Bush continued the practices because they dovetailed with his Ownership Society goals, and of course Congress was strongly behind the push. But Clinton and his administration must shoulder some of the blame.
In writing this blog entry, Im following the lead of Joseph R. Mason, who is a finance professor at Drexel Universitys LeBow College of Business, a senior fellow at the University of Pennsylvanias Wharton School, and a consultant at Criterion Economics. Here is a link to a piece that he wrote on Feb. 26.
The Clinton-era document that Mason citesThe National Homeownership Strategy: Partners in the American Dreamwas hiding in plain sight
on the website of the Department of Housing & Urban Development until last year, when according to Mason it was removed (probably because the housing bust made it seem embarrassing to the department). Mason credits Joshua Rosner of Graham Fisher & Co. with saving a copy of it before it was expunged.
The National Homeownership Strategy began in 1994 when Clinton directed HUD Secretary Henry Cisneros to come up with a plan, and Cisneros convened what HUD called a "historic meeting" of private and public housing-industry organizations in August 1994. The group eventually produced a plan, of which Mason sent me a PDF of Chapter 4, the one that argues for creative measures to promote homeownership.
The very worst idea in the plan, which fortunately never gained approval, was to let first-time homebuyers freely tap their IRA and 401(k) retirement-savings plans with no penalty to scrounge up a downpayment. That, HUD estimated, would have "benefited" 600,000 families in the first five years.
Plenty of other ideas in the plan did become reality, though. Knowing what we know now about the housing bust, the earnest language in the document seems faintly ridiculous. Here's an excerpt. Read it closely and you can see the seeds of disaster being planted:
For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership.
Both parties and the federal reserve can take full responsibility for the financial collapse. The repeal Clinton instilled was done to push the National Homeownership Strategy: Partners in the American Dream.
Yet, many still blame wall st. for the meltdown. It's totally misplaced blame.
Are you saying that the greedy on Wall Street didn't take advantage of the changes to the demise of the country? No harm to them they were bailed out, but the people, the average Joe?
Bill Clinton's drive to increase homeownership went way too far - BusinessWeek
Both parties and the federal reserve can take full responsibility for the financial collapse. The repeal Clinton instilled was done to push the National Homeownership Strategy: Partners in the American Dream.
Yet, many still blame wall st. for the meltdown. It's totally misplaced blame.
Yup and it wasn't all Bush's fault.
Sure it was.
Yup and it wasn't all Bush's fault.
Sure it was.
No, it wasn't. He played his part too. But if you actually can take off your partisan blinders, you'll see that both parties, in both administrations are to blame.
And a Republican controlled congress.
The vote was bi-partisan or did you miss that point in your fail of a comeback?
That's how corporatism works. The most well intended intervention is always met with unseen consequences. These people, all doped up on voodoo economic theories, actually believed that they could get their idea of everyone owning a home to work, and as usual it backfired. So instead of committing political suicide and ownign their awful mistakes and being upfront with the maerican people, they scape goat wall st., minus any real consequences to cover up their root cause participation in the 2008 crisis.
Mean while, most people run around blaming everyone except the main culprits. I find it rather perplexing.
Bill Clinton's drive to increase homeownership went way too far - BusinessWeek
Both parties and the federal reserve can take full responsibility for the financial collapse. The repeal Clinton instilled was done to push the National Homeownership Strategy: Partners in the American Dream.
Yet, many still blame wall st. for the meltdown. It's totally misplaced blame.
Are you saying that the greedy on Wall Street didn't take advantage of the changes to the demise of the country? No harm to them they were bailed out, but the people, the average Joe?
They most certainly did. But the moral hazard was created by congress, the CLinton.Bush administrations and the federal reserves monetary policies. Wall St. only did what most capitalists do; went for maximum profit while mitigating losses/hedging bets.
The blame goes to the root of the problem, or the house in the card game, not the other players.
The effects of the Gramm-Leach-Bliley Act were felt early into the Bush administration with the Arthur Anderson debacle. Bush could have easily made the case that this was detrimental to the economy as a whole. Instead, he watched financial after financial collapse and helped cobble together deals that ultimately cost the average tax payer big. And the final collapse was the culmination of one of the biggest examples of vulture capitalism or the fleecing of the middle class.
It all happened, spectacularly, on Bush's watch..who used his acumen as a CEO to gain office.
Sound familar?
Actually the President doesn't make law. The disaster happened under democrat control. Bush warned them, they did nothing. Not that they were looking the other way they were just too incompetent and too stuck to ideology to see the dangers. If you want I will post the video of the things that the democrats said to the regulators as the house of cards was starting to fall. And I am not even saying that if it were a Republican controlled congress things would have happened differently. They may have because Republicans saw the dangers but who knows? All we can know is what actually happened and when.
The idiocy of the position held by people like Obama was that it wasn't that they were at risk it was merely that they were black. I wonder how many poor white people ACORN represented or Obama. They knew that folks would default yet did it any way. I posted a thread the other day with the numbers that showed that out of 189 families that Obama forced the banks to give loans to only 19 were still in their homes, good for those 19.
Keynes economic theories are voodoo and have no place in real world dynamics. These are failed theories and ideas, even when you mash them up with Friedman's ideas.
Are you saying that the greedy on Wall Street didn't take advantage of the changes to the demise of the country? No harm to them they were bailed out, but the people, the average Joe?
They most certainly did. But the moral hazard was created by congress, the CLinton.Bush administrations and the federal reserves monetary policies. Wall St. only did what most capitalists do; went for maximum profit while mitigating losses/hedging bets.
The blame goes to the root of the problem, or the house in the card game, not the other players.
Sorry, I don't buy it. Just because someone finds an legal way to cheat doesn't make it right. Wall Street should have been made to pay, they were not.
Keynes economic theories are voodoo and have no place in real world dynamics. These are failed theories and ideas, even when you mash them up with Friedman's ideas.
What evidence points you to that conclusion? Do you believe our government and Fed have been following a Keynesian script in the past 30 years?
They most certainly did. But the moral hazard was created by congress, the CLinton.Bush administrations and the federal reserves monetary policies. Wall St. only did what most capitalists do; went for maximum profit while mitigating losses/hedging bets.
The blame goes to the root of the problem, or the house in the card game, not the other players.
Sorry, I don't buy it. Just because someone finds an legal way to cheat doesn't make it right. Wall Street should have been made to pay, they were not.
Don't buy it then. it doe4sn't change the fact that what Wall St. did was within the rules of the game handed to them by the legislators and the monetary authorities. When do we punish congress and the federal reserve board for their cheating the american people? Should these people get off free while we blame the investors for playing along?
Do you realize how silly this sounds?
Keynes economic theories are voodoo and have no place in real world dynamics. These are failed theories and ideas, even when you mash them up with Friedman's ideas.
What evidence points you to that conclusion? Do you believe our government and Fed have been following a Keynesian script in the past 30 years?
They have been following a mash up of authoritarian/central planning policies for longer than that. Keynes ideas are just more prevelant today than Friedman's. Just ask helicopter Ben.
Clinton's term was good economic times because the US was in the middle of two huge bubble booms (which later busrt). The NASDAQ bubble and the housing bubble. Of course, there was also the biggest bubble of them all which has still yet to pop, but it will.
Keynes economic theories are voodoo and have no place in real world dynamics. These are failed theories and ideas, even when you mash them up with Friedman's ideas. So, yes, really. Clinton push LOLberal policies the same as Bush. Only he rode the bubbles until he was done, when Bush came in in 2000, he had the NASDAQ bubble to contend with. When dealing with it, he advanced the burst of the housing bubble. Luckily for him, he left that one for Obama to run clean up crew. But the federal reserve is out of ammo now. So we're just expanding M1 adn M2, along witht he federal reserves balance sheet to cover it up. QE3 is right around the corner.
