Why Democratic economic policies caused the crisis

I still believe that everyone has some part of the responsibility for our current economic crisis, but the more I have looked into it, the more I have come to realize that Democratic economic policies are one of the fundamental causes of this problem.  As much as they try to blame the Bush Administration, it is their own policies and regulations that pushed banks to make these risky loans to people who could not afford them.  Some would say the government forced banks to take on more of these loans.  It can get somewhat complicated, but this video which someone sent to me explains some of the history.

Check out this U-Tube Video on the Financial Crisis

To break down what they are saying.  Democrats over the last 3 decades have been pushing for more loans for mid to low-income families.  Basically loans to people who could not really afford them and would not qualify for them under normal circumstances.  These are the people who have now defaulted and whose foreclosures caused our current crisis.

You cannot change the fact that some people do not have enough money to qualify for a loan.  What you can do is change the structure of the loan and make the requirements to qualify for these loans more lax.  And that is exactly what Democrats have done.  These are the sub-prime loans you have been hearing about in the news.  It makes them look good in the short term for creating “affordable housing”, but in reality it does the exact opposite.  It was setting these people up for failure while lining the pockets of their executive friends.

In the video, there are many articles and facts that it says you should look up to verify what they are saying is true.  To make things easier, I have gone through the video and found links to these articles.

The first thing is the Community Reinvestment Act.  It was passed under the Jimmy Carter Administration in 1977.  Then in 1995 under the Clinton Administration the real problems were created with new provisions for sub-prime loans.  The problems these provisions created were basically ignored by Democrats in Congress during the Bush Administration despite the fact that Republicans tried to pass legislation twice to address them.

Check out the Community Reinvestment Act

And the Policy Link article from the video

The following are other articles referenced in the video that have talked about the dangers of what was done with the Community Reinvestment Act and how the problems were ignored.

CityJournal.org - The trillion dollar bank shakedown that bodes ill for cities

CSRwire - Article from October of 2000 about Fannie Mae

This article above shows exactly how they created this problem.  If you go to the csrwire website and search for news on Fannie Mae, you will find many others that show the same thing.

Washington Post -  Fannie’s perilous pursuit of subprime loans

Bloomberg -  Regulators spin public to boost Fannie, Freddie

The following is an article on how the Bush Administration wanted to try to fix the problems they saw coming and how the Democrats blocked the measure.  This 2003 article comes from the NY Times of all places.

NYtimes - New agency proposed to oversee Freddie Mac and Fannie Mae

Here is a link that shows John McCain pushing S.109 in 2005 in order to try to bring it to a vote in the Senate.  As I wrote before, Senate Democrats blocked this legislation from a vote.

theminorityreportblog.com - John McCain warned of Mortgage collapse in 2005

I know the video really shot through some of these items to include the quotes from Democratic leaders during this timeframe so here are the two quotes from the video.  The only that could be worse for Democrats is if Barack Obama had said it himself, but he still believes in these type of programs so it is his economic policies that have done this and not Bush’s.

Barney Frank (D-MA)  “the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing”

Melvin Watt (D-NC) “and in the process weakeninng the bargaining power of poorer families and their ability to get affordable housing”

These Democrats were playing a very dangerous shell game. The houses were not getting more affordable so this was a lie, all it did was make sub-prime loans easier for them to get when they should not have qualified.  They were setting people up for failure.  Personally, I still believe that each one of these home buyers holds the responsibility for their actions, but I do understand the situation they found themselves in.

Barack Obama has several connections to this crisis.  The first is Jim Johnson, who Obama chose to vet his VP candidates  He was forced to quit because of his association with these loan entities.

Los Angelos Times - Barack Obama advisor quits under fire

Another connection is with another person directly responsible for the crisis we are in.  This is the man Franklin Raines mentioned in the video.  This is an actual adviser to Obama on housing issues and a believer in the same type policies as Obama.  He was responsible for implementing the provisions under Clinton and cooking the books at Fannie Mae.

Washington Post - Obama Advisor Franklin Raines

Besides these associations with those involved, Obama also has received more money from Fannie Mae than any other Senator minus Christopher Dodd.  But considering the short amount of time Obama has been in office, this makes him the biggest benefactor from these GSEs in 20 years.  Combine this with his work with organizations such as ACORN, his record of earmarking money to contractors for subsidized housing, and his work as a lawyer suing banks for not following the CRA provisions and we have ourselves one scary candidate for President.  Like the video says, his heart is probably in the right place, but the fact that he doesn’t understand the consequences is very scary indeed.

Tagged as: bush, financial crisis, johnson, mccain, Obama, raines