Mortgage Crisis: History and Hypocrisy

It's interesting when President Bush comes on radio or TV with a sad tone, speaking about the dire economy. 

What Bush doesn't tell you -- is his role in aiding the predatory lenders.

In 1994, President Clinton had the good intention of raising home ownership. He sponsored regulations to increase mortgage lending to low- and moderate-income families. The banks complied and increased their lending to these families...

States tried to Halt the Looming Crisis

People began to notice the troubling predatory lending and its potential for disaster.  State Governors attempted to introduce legislation to curb the offenders, but look at what happened....

The following warning was sounded by Eliott Spitzer in Feb 2008:

"Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders...

For 140 years, the  Office of the Comptroller of the Currency or  OCC  examined the books of national banks to make sure they were balanced, an important but uncontroversial function.  But a few years ago,

for the first time in its history, the OCC was used as a tool against consumers."

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to 'preempt' all state predatory lending laws, thereby rendering them inoperative.

"the OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks."  This was so outrageous that all 50 state attorney generals fought the ruling.

"But the unanimous opposition of the 50 states

did not deter, or even slow, the Bush administration in its goal of protecting the banks.

In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks,

the OCC filed a federal lawsuit to stop the investigation.

When history tells the story of the sub-prime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. " (2/14/2008 Washington Post)

lnteresting...don't believe Bush's sad, long face.  Hypocrites.

Comments

[truthynesslover]

Let me see if I got this{for a novice}.You had CEOs whith golden parachuts which they get regardless of the businesss sucess{man would we all like that}.And they get bonuses when the profits go up.So they all had no incentive to care about the long term health of their business just get as much cash coming in as possible.Which everyone did.And every one disreguarded rules and regulations{if there were any}in the housing market.More money was pumped in by people betting on the market{derivitives ect.}all making everyone happy for awhile{homeowners got their loans,sellers got their money,agents got their fees up the chain}especially the execs who didnt care if their company collapsed because they were gonna make out big time anyway.What have i got wrong?

[Gary R]

Hearing this less than accurate and wholly partisan rant from a presumably intelligent person is just garbage. Anyone who has "read' their history understands this all started with the S&L's followed by Carter's ineptitude and Volcker. You might want to ask why lloyd Bensen owned a few S&L's and still ran for president. That adn Clinton and the Democratic Senate passing laws to force banks to lend money to those who could not afford a home. Finally, it was regulation not de-regulation that created this fiasco., check your history and you might want to start wth FDR.

[Will]

I find it intersting that many put the Democrats in the hot seat for the current economic situation. It seems the Republicans maintained a majority in congress for the better part of the last decade, and half of the Clinton administraion. There was also a republican president for the last 8 years. I guess the Republicans can't do anything for themselves except let the Democrats ruin everything, right? People need to get off thier partisanship band wagons and do some real research. Fox news and CNN dont count.

[Athy]

Also, just a thought Nancy, but what kind of a bank would see profit in a losing investment? What kind of a bank would be predatory enough to chew off their own leg in profit by lending to people who were given hardly any requirements for mortgage loans? It makes no sense. They didn't have a choice but to offer these high risk bail outs.

[Athy]

Also, just a thought Nancy, but what kind of a bank would see profit in a losing investment? What kind of a bank would be predatory enough to chew off their own leg in profit by lending to people who were given hardly any requirements for mortgage loans? It makes no sense. They didn't have a choice but to offer these high risk bail outs.

[Athy]

Google it, you'll find plenty.

[Nancy Mehegan]

Please be specific. What bills did the Dems support that were in favor of predatory lending? (after the CRA) Thanks.

[Bob]

What the h.... are you talking about? This Bush bashing rhetoric is like your brain locked in the dumb position. Get off it! Study your histopry and read what occured in the late 1980's, the early Clinton years, the warnings in the early 2000's and the attempts to rein in Freddie Mac and Sallie Mae by both parties, which the vast majority of Democrats opposed. It was the Dem resistence to regulation that put the lobbying efforts squarely on the Republicans. Had the Dems not been so myopic and power greedy, they would have done what was best for the country and not what was best for themselves. The finger pointing by the Dems is the worse grammer school playground trick ever played on the American public and you bought it..hook, line and sinker!

[Nancy Mehegan]

50 percent of sub-prime lending was completely outside the CRA, and another 25-30 percent was only partially involved with CRA regulation. Clearly, it was the banks, themselves, who enthusiastically sub-primed their way well-past any legitimate incentives of the CRA (Community Reinvestment Act).

[Nancy Mehegan]

It is a lesson about government interference. Yet you seem to "glaze over" th federal government's ultimate protection of the predatory banks. Also isn't the Bailout government interference??

[Joe Sixpack]

"In 1994, President Clinton had the good intention of raising home ownership."

We all know what they say about "good intentions". Anyway, as much as I hate to say it, the fact is President Clinton also had a lot to do with this current financial fiasco and he's admitted as much on national television. Personally I'm not nearly as upset with him (or President Bush) as I am those that benefitted financially from letting this happen.

I don't really agree with the claims you make in your post since as early as 2001 Bush was warning us about this. If I fault him for anything (at least in this matter) it's that he didn't make enough ruckus about it. Though I guess this is what we should expect when the government interferes too much with the free market and forces banks to make affirmative action loans.