I received a copy of a letter that was sent to the “Letters to the Editor” in The Record some time ago. After reading it, I felt it an excellent letter and that the information should be shared with the good readers of the Lodi News-Sentinel. The letter covered a 30-year period regarding things that caused the burst in the housing bubble. After verifying the information in the letter, I wanted to give a brief history of why the housing bubble burst and the causes.
In 1977, Democrat Jimmy Carter signed the Community Reinvestment Act, guaranteeing home loans to low-income families.
In 1999, Democrat Bill Clinton put the CRA on steroids by pushing Fannie Mae and Freddie Mac to increase the number of sub-prime loans. In September 1999, The New York Times published an article headlined “Fannie Mae Eases Credit to Aid Mortgage Lending,” which warned of the coming crisis due to lax lending policies of the Clinton administration.
In 2003, The White House called Fannie and Freddie a “systemic risk” and the Republican Bush administration pushed Congress to enact new regulations. Also in 2003, Rep. Barney Frank, D-Mass., said Fannie and Freddie are “not in a crisis,” and bashed Republican-sponsored regulation legislation.
In 2005, Federal Reserve Chairman Alan Greenspan voiced warning over F&F accounting, saying, “We are placing the total financial system of the future at a substantial risk.” In addition in 2005, Sen. Charles Schumer, D-N.Y., said he thinks F&F “over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world.”
In 2006, Sen. John McCain, R-Ariz., again called for reform of the regulatory structure that governs F&F. And again Democrats blocked reform legislation.
In 2008, the housing market collapsed; Democrats blamed the Republicans.
Yup, the Republicans caused it — or did they? What do you think?