Bill Clinton’s Democratic Convention speech tonight will no doubt be loaded with references to his great economic achievements as president, plus warnings that a vote for Mitt Romney will be a vote to return to the economic disaster of the Bush era.
In other words, Clinton won’t mention a whole bunch of inconvenient facts — about what brought the prosperity of the 1990s, and how he himself helped put America on the path to the 2008 financial crisis.
He’ll tell us that a vote for President Obama will bring back the glory days of the 1990s — but those days weren’t so great until Republicans won control of Congress in the 1994 elections. That’s when Clinton turned right, and joined the GOP to put a hold on spending and lower taxes — allowing the technology boom to sustain the US economy through the Clinton years.
It’s an absurd distortion of reality that the Bush-era tax cuts or spending on Iraq were even remotely responsible for the 2008 banking collapse and the Great Recession — though both claims are now core to the left’s talking points in defense of President Obama’s failures as president (and largely unchallenged by a sympathetic media).
Yet the reality of what caused the banking collapse has the fingerprints of tonight’s keynote speaker all over it. Consider two Bubba boo-boos that trace straight to the housing bubble and the 2008 financial crisis.
The first is his obsession with pushing homeownership to new highs via government coercion. The second is his unleashing of Wall Street risk-taking.
Clinton charged his Housing secretaries, Henry Cisneros and Andrew Cuomo, with driving homeownership rates up to about 70 percent of households from around 64 percent in the early ’90s.
How did they do this? Through rigorous enforcement of housing mandates such as theCommunity Reinvestment Act, and by prodding mortgage giants Fannie Mae and Freddie Mac to make loans to people with lower credit scores (and to buy loans that had been made by banks and, later, “innovators” like Countrywide).
The Housing Department was Fannie and Freddie’s top regulator — and under Cuomo the mortgage giants were forced to start ramping up programs to issue more subprime loans to the riskiest of borrowers.
We know how that turned out: Fannie and Freddie help stoke a housing bubble that actually made homeownership less affordable unless borrowers took out ever-more-risky loans. Eventually, both agencies imploded (along with the housing market); bailing them out since 2008 has already cost taxpayers more than $100 billion
