The economic catastrophe before us was a bipartisn job and pumped by the media. However all that video does is show posturing not mechanism. By mechanism I mean a means which to pump up prices this was done in two ways.
1) Repealing of the glass-segall act. Allowed commercial and investment banks to merge allowing the securitization of MBS to be sold on wall street. This was repealed in 1999 by phil gramm and signed into law by bill clinton. See what happens when republicans and democrats work together
John McCain and Barack Obama's presidential campaigns are pointing fingers at each other's political camps over who were the architects of a 1999 banking deregulation bill many cite as reasons for the current financial and mortgage lending mess on Wall Street.
The 1999 Gramm-Leach-Bliley Act broke down barriers between banks, securities firms, mortgage lenders and insurance companies. That deregulation repealed Great Depression-era bank regulations with the approval of former president Bill Clinton.
The Gramm bill encouraged lending during the strong housing market but has put banks, investment houses and insurance companies in peril since the housing bust which started two years ago. The measure allowed those lending money to sell off those loan portfolios to other companies, thus disconnecting the lending risk.
2) And most importantly lending guideline loosening. OFHEO sets the guidelines and this was done 2002-2003ish by Bush appointee.
<i>OFHEO does have the power to control the GSEs underwriting standards:
Commenting on the OFHEO Safety and Soundness regulation (12 CFR part 1720), MICA stated that OFHEO should,
[[Page 19986]]
by regulation, bar the Enterprises from purchase of mortgages or mortgage-backed securities that exceed the 80% LTV. However, the Enterprises are already limited to the purchase of mortgages and
mortgage-backed securities that are similar in risk to those with an 80% LTV. Further, this proposal would not reduce regulatory burden,
which was the subject of this document.
http://edocket.access.gpo.gov/2006/06-37...<i>
3)However, while the bill above may have opened the loophole, it looks like it was Bush who exploited it and certainly played a major role in the housing debacle:
# Expanding Homeownership. The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security. In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade. Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent. Minority homeownership set a new record of 51 percent in the second quarter, up 0.2 percentage point from the first quarter and up 2.1 percentage points from a year ago. President Bush's initiative to dismantle the barriers to homeownership includes:
* American Dream Downpayment Initiative, which provides down payment assistance to approximately 40,000 low-income families;
* Affordable Housing. The President has proposed the Single-Family Affordable Housing Tax Credit, which would increase the supply of affordable homes;
* Helping Families Help Themselves. The President has proposed increasing support for the Self-Help Homeownership Opportunities Program; and
* Simplifying Homebuying and Increasing Education. The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners.
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It's interesting that the housing bubble started at about the same time that Bush issued his America's Homeownership Challenge. I suppose that is just a coincidence?
Anyhoo, I see the clip mentioned above as nothing more than a bunch of Congresspeople blowing hot air (they have no real power because the Presidentially-appointed director of the OFHEO is the only body that has the power to regulate the GSEs). It makes for great political theatre and it allows those Congressfolks to go back to their representatives and say "hey look, I stood up for you and tried to make it easier for you to get a mortgage." But in reality, the Congresspeople have no real power as it was OFHEO (who's director was appointed by the President) who implemented the very lax underwriting standards of the GSEs.
Now, I've done some real research that shows how Bush was mostly responsible for this housing bubble and crash. I look forward to responses from the Bush apologists that show me where I'm wrong. And no, I don't want to see another Rush-Limbaugh-featured YouTube clip that shows a bunch of politicians with no power who were quoted out-of-context.
Now to prove me wrong you must show a mechanism. The law that the Democrats passed that allowed the GSEs to go crazy with loose underwriting, thus causing the housing bubble. If you don't have that you don't have squat...