How the Democrats created the mortgage mess that led to Wall Street mess

Hans Bader:

The current mortgage crisis came about in large part because of Clinton-era government pressure on lenders to make risky loans in order to “make homeownership more affordable for lower-income Americans and those with a poor credit history,” the DC Examiner notes today. “Those steps encouraged riskier mortgage lending by minimizing the role of credit histories in lending decisions, loosening required debt-to-equity ratios to allow borrowers to make small or even no down payments at all, and encouraging lenders the use of floating or adjustable interest-rate mortgages, including those with low ‘teasers.’”

The liberal Village Voice previously chronicled how Clinton Administration housing secretary Andrew Cuomo helped spawn the mortgage crisis through his pressure on lenders to promote affordable housing and diversity. “Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments.

He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded ‘kickbacks’ to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.” (See Wayne Barrett, “Andrew Cuomo and Fannie and Freddie: How the Youngest Housing and Urban Development Secretary in History Gave Birth to the Mortgage Crisis,” Village Voice, August 5, 2008).

Investors Business Daily had an editorial yesterday about how another federal “law designed to encourage minority homeownership” also contributed to the mortgage crisis by pressuring lenders to make risky loans.

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No wonder Harold Raines was calling Barack Obama family.

Republicans need to get this message out there and so far it does not look like McCain is on board. He is too busy with his populist rant against Wall Street and not focusing on the root cause of the problem which is the Democrat housing policy. He and Palin are missing a golden opportunity.

This election can be turned into a landslide for McCain if he focuses on Democrat corruption which caused this debacle. There is no need for Republicans to be defensive about this. The Bush administration, contrary to the statements of Pelosi and others, tried to do something about the corruption at Fannie Mae and Freddy Mac and was thwarted by Chris Dodd and the Democrats who were on the receiving end of contributions from those responsible for the problem. The second largest beneficiary was Barack Obama. The ad that needs to be out there almost writes itself and if McCain doesn't produce it some independent group should be doing it today.