Our guest blogger is David Abromowitz, a Senior Fellow at the Center for American Progress Action Fund.
Compassion, it seems, is easier in boom times.
Arizona now has the fourth-highest foreclosure rate in America, with 9,540 foreclosures in February, up 210 percent from 2007. So maybe it’s natural that Sen. John Kyl (R-AZ) would want to revise history by shifting blame for the crash in home prices plaguing Arizonans and millions of homeowners onto the Democrats, as he did on ABC’s This Week yesterday:
It wasn’t the Bush administration as much as it was Democrats in Congress who were pushing the lending institutions to get out there and lend more money, even to unqualified buyers — to the minorities, to the poor, to the young — so that everyone could own a home.
Blaming Democrats for the market meltdown ranks high on the disingenuous scale, right up with Karl Rove’s outlandish claim that the Democratic Congress pushed a reluctant, peace-loving President Bush to invade Iraq.
Under the Bush administration, former Fed Chairman Alan Greenspan and other Bush financial officials promoted easy money, low interest rate polices together with underregulation of virtually anything that could be called a free market financial “innovation.” During this time, regulatory powers to police the rise of non-bank mortgage originators pushing high cost loans without reserve or risk-retention requirements were put into mothballs. Fueled by this high octane mix, the subprime market exploded from 2001 until 2006, making up perhaps as much as 50 percent of the increase in homeownership during that period.
If only Sen. Kyl had aired his criticisms of unfettered lending practices in 2003, when he stood with Sen. John McCain (R-AZ) at a Phoenix fundraiser and listened to President Bush extol the virtues of an “ownership society.” At that time, the president said:
A compassionate society must promote opportunity for everyone, including the independence and dignity from ownership. My administration will constantly strive to promote an ownership society in America. We want more people owning their own home. We have a minority home-ownership-gap in America. I proposed a plan to the Congress to close that gap….This administration understands that when a person owns something, he or she has a vital stake in the future of this country.
When it was popular to stand for expanding homeownership, Sen. Kyl was there in 2006 to praise federal aid for minority and low income families in Phoenix:
Habitat’s work, including the partnership with HUD, has produced great results and made a truly positive impact in the Phoenix neighborhoods. The SHOP grants announced today will help make it possible for many more Arizona families to realize the dream of homeownership.
Certainly advocates for low- and moderate-income families fought for greater access to home mortgage loans for Americans historically frozen out of the Great American Dream. Some argued for nothing-down mortgages and flexible underwriting standards. But by and large, these groups also advocated full lending disclosure, extensive homebuying counseling, and other protections for consumers. The record of affordable homeownership approaches such as those promoted by community development corporations, community land trusts, and similar efforts shows a low foreclosure rate and great stability even among buyers whose income is below the median.
But with millions in foreclosure and financial markets quaking at the massive debt piled on top of “difficult to value” pools of mortgages, pointing the finger at Democrats — or blaming “minorities,” “poor,” and “young” Americans who bought houses to join the ownership society — is certainly convenient. With millions of them foreclosed on, they might not be watching Sunday morning news shows to set the record straight.