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Bachmann Blames President Clinton, ‘Blacks,’ And ‘Other Minorities’ For Current Financial Crisis

By Amanda Terkel  

"Bachmann Blames President Clinton, ‘Blacks,’ And ‘Other Minorities’ For Current Financial Crisis"

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Yesterday in a House hearing on the financial crisis, Rep. Michele Bachmann (R-MN) spoke on what caused the situation. To make her point, she read from an article called “How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable,” written by Terry Jones in the right-wing publication Investor’s Business Daily.

The article criticizes the Community Reinvestment Act (CRA) for pushing “Fannie and Freddie to aggressively lend to minority communities.” Jones goes on to say that Clinton was misguided to push “homeownership as a way to open the door for blacks and other minorities to enter the middle class.”

Rep. Keith Ellison (D-MN) sharply criticized Bachmann and other conservatives who have been trying to pin the economic crisis on minorities:

I personally am not going to just sit by and let people trash programs that helped folks get into housing who have been struggling to get in.

Fannie and Freddie — I don’t think are failed models. CRA certainly isn’t a failed program. These are important and good programs and should be protected. And If you want to find blame somewhere, let’s look at Gramm-Leach-Bliley. Let’s look at the very deregulation that so many people called for and clamor for and now we see what deregulation, lack of corporate responsibility put together with flat declining wages for the American people will bring about. It’s brought about this.

Watch it:


Blaming the CRA is one of conservatives’ favorite talking points and has been peddled by Charles Krauthammer, Fox News, FreeRepublic.com, the Wall Street Journal, Washington Times, and the National Review.

But as the Center for American Progress’s Robert Gordon noted in the American Prospect, lenders did not approve bad loans to comply with CRA; they did so to make money: 1) Subprime loans intensified “at the very time when activity under CRA had slowed and the law had weakened,” 2) CRA doesn’t even apply to many of the loans behind the mortgage meltdown, and 3) The “lenders subject to CRA have engaged in less, not more, of the most dangerous lending.”

Transcript:

ELLISON: One of the things that I am concerned about is that housing financing efforts that have resulted in giving moderate to low-income people opportunities to be able to get into housing have come under attack this last week and been blamed for being the problem. I want to very soundly reject that idea. I plan on asking you about that, Mr. Director. I was hoping to ask about that yesterday, but I didn’t get a chance to.

I even heard things like the Community Reinvestment Act is the cause of this current crisis, even though the Community Reinvestment Act applies only to commercial banks. It does not apply to mortgage originators, who were the ones who originated the overwhelming number of these subprime loans. The fact is, CRAs probably reduced the impact of this problem because they limited the ability for a subprime loan to be issued through banks because they were regulated.

Also today we’ve heard quite of bit of criticism of the Fannie and Freddie model. I want to remind my friends that Fannie Mae and Freddie Mac were pretty late to the game of accepting, as part of their assets, these more illiquid — what we’re calling illiquid assets today. The subprime — the subprime model, which has been going on for a number of years, but Fannie and Freddie really, really added this as part of there business in 2005, 2006, 2007, which is late in the game.

And so I just want to make it clear that part of what I want to make sure to do is to protect programs for low- and moderate-income people to be able to gain housing. I personally am not going to just sit by and let people trash programs that helped folks get into housing who have been struggling to get in.

Fannie and Freddie — I don’t think are failed models. CRA certainly isn’t a failed program. These are important and good programs and should be protected. And If you want to find blame somewhere, let’s look at Gramm-Leach-Bliley. Let’s look at the very deregulation that so many people called for and clamor for and now we see what deregulation, lack of corporate responsibility put together with flat declining wages for the American people will bring about. It’s brought about this. So I look forward to the debate.

Update

The National Review wonders whether Washington Mutual failed because it had a diverse staff.

‹ Ted Kennedy hospitalized.

Presidential Debate Live-Blogging ›

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