Fiscal responsibility

I have long considered it likely that the majority of the blame for the current financial crisis does not rest with the Bush administration. I've read a few things to support this, but until today I hadn't seen it laid out so clearly and completely. As it turns out, the Bush administration tried to do something about the impending collapse, with predictable results:

The credit crisis and the lack of oversight over government-subsidized lenders like Fannie Mae and Freddie Mac occurred on the watch of George Bush, and many blame his economic team for their lack of oversight in the collapse. Barack Obama has made this point one of his major campaign themes, arguing that John McCain would provide more of the same failures that Bush did. However, what many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices — and Democrats blocked it.

So who was responsible for those bad loan practices in the first place? Answer: it's who you think it is:

But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory."

Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.

(Note: The actual name of the legislation passed in 1977 is the Community Reinvestment Act.) The article goes on to detail Clinton administration mismanagement that further contributed to the mess. I recommend reading all of it.

I included the last paragraph in the above exerpt for the sake of fairness because it points out that Wall Street isn't blameless in this disaster. Regulations to prevent that sort of thing may be in order. I'm not an expert, though, which is why I link to people who are. It is increasingly clear, though, that the Bush administration was at least trying to stave off an impending disaster the seeds of which were planted during past Democrat administrations. Big surprise.