The “Bush’s Failed Economic Policies” is incredibly pervasive. Of course, blaming the president for the economy is a knee-jerk, if intellectually lazy, thing to do but you can’t say that the practice is not encouraged by presidential candidate’s promises to “fix” the economy. Nevertheless, it’s interesting that Bush is taking so much heat for the economy, even in light of this from 2003:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
. . .
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Oh those brilliant financial minds on the left… what would our country do without them? (Answer: Prosper)
(Via: Ken)
September 18th, 2008 at 8:40 pm
That’s a very good point Pete. I agree that this could have been avoided if the overhaul occurred.
However, it seems to me that those “brilliant” financial minds on the left were joined by cheerleading executives from the right. I think the blame needs to be spread around to everyone: Democrats, Republicans, states, etc. As more and more Americans were buying homes and the housing industry was skyrocketing, Bush encouraged those conditions and lending practices by the lending industry. He took the news and ran with it…
President’s Radio Address from March 27, 2004
THE PRESIDENT: Good morning. This week brought good news about homeownership in America. The Census Bureau reported that new home sales in February rose to an annual pace of 1.16 million homes, a 24 percent increase over the past year. This success follows one of the most impressive years in America’s housing industry. More homes were sold in 2003 than ever before. Housing starts last year were at their highest level in a quarter century. Rising home values have helped take the wealth of American households to a new record level.
In our growing economy, more Americans can afford a new home. Incomes are rising. The unemployment rate is falling. Mortgage rates are low. And because of tax relief, Americans have more to save, spend and invest — and that means millions of American families have moved into their first homes.
Our nation’s 68 percent homeownership rate is the highest ever, and our government is taking steps to make owning a home a reality for more Americans, especially minorities and those with low incomes. In June 2002, I set the goal of adding 5.5 million new minority home owners in America by the end of this decade. Since then, more than 1.5 million minority families have moved into houses of their own. And for the first time, most minorities own their own home.
We are building on this progress. I have signed into law the American Dream Down Payment Act, which will help low-income Americans to afford the down payment and closing costs on their first home. I’m asking Congress to provide an annual $200 million for this program. That additional money would help an estimated 40,000 low-income families every year become first-time homeowners. I’m proposing that we make zero down payment loans available to first-time buyers whose mortgages are guaranteed by the Federal Housing Administration. And this will help about 150,000 families buy homes in the first year alone.
Another obstacle to homeownership is the often complicated process of buying a home and getting a loan. My budget for 2005 would more than double funding for housing counseling services from 2001 levels.
A house and a mortgage represent a big personal commitment, and we want to prepare more Americans to make that commitment with confidence. To make homeownership attainable for more of our citizens, I have asked Congress to create a tax credit to encourage the construction of affordable homes. Under my proposal, builders will have an incentive to provide an additional 200,000 affordable homes over five years for families with low incomes.
And finally, we are encouraging the real estate and mortgage finance industry to join in our efforts in closing the homeownership gap. More than two dozen major companies and organizations have committed to extending more loans to low-income families, financing the construction of more affordable homes, and providing financial counseling to potential buyers. These policies will make a difference in the lives of millions of Americans.
This week, I met with Lori Benavidez, a single mom living in Albuquerque, New Mexico. Last November, with the help of a federal homeownership program, she moved into her first home. Here’s what Lori says: “I never thought the day would happen when my girls and I would be sitting in our own home. It is a miracle.”
Every time a family moves into a home of their own, it fulfills a dream and it shows faith in the future, and that faith is well-placed because America’s economy is strong and it is getting stronger.
Thank you for listening.
Bush took credit for:
1. Tax reliefs that helped Americans get into homes.
2. The good news of an economy that is growing stronger.
3. Taking steps to make homeownership a reality. (even for minorities!)
4. The American Dream Downpayment Act
5. And my personal favorite: Encouraging the real estate and mortgage finance industry to close the homeownership gap. By how? Oh yes, more loans to low-income families (through sub-prime loans).
Obviously, the failure of getting his “recommendation” to overhaul regulation wasn’t a top priorty of his or else he’d be very wary of all the growth that was occurring. But, he decided to take the good news, run with it, and encourage more of it.
Who does Bush expect to put low income people into homes? Who does he expect to help close the homeownership gap and help “minorities” gain homeownership status? Why Freddie Mac and Fannie Mae, of course. Knowing that Freddie Mac and Fannie Mae had problems, he still pushed the issue of homeownership harder.
My point is that we can point fingers every which way, but it was a lot of factors that contributed to this mess.
September 19th, 2008 at 8:42 am
Funny how that works. The democrats do something stupid and you think it’s everybody’s fault… I’m sure you take the same approach when the republicans do something stupid, right?
Also? Bush didn’t “take credit” for anything in that address, but the claim was a cute diversionary tactic.
I am curious as to how the address, which is really one of those “let’s all feel good about the US” type things, is any different from Obama’s “OMGHOPEHOPEHOPECHANGE” platform… it’s all just politics and campaigning… except that I can’t pay my rent with “hope”.
September 19th, 2008 at 11:32 am
There’s nothing wrong with wanting to encourage ownership on one hand, and increasing regulation so that loans are made responsibly on the other. You might even call that a sensible, balanced approach in handling the housing market.
September 19th, 2008 at 2:41 pm
The simple problem and fact is that not everyone at every time is in the right position to be a homeowner.
Saying “everyone should be a homeowner” is like saying “everyone should go to college.” Both of them sound nice and make for great stump speeches. But really, neither is true. Everyone should have the chance to pursue home ownership and a college education, to be sure, but not everyone is cut out, fiscally or otherwise, for the responsibilities of either.
Robert is right in saying there is plenty of blame to go around. The left wanted feel-good stories about everyone being homeowners. The banks realized this was a chance to make a lot of money from interest rates and fees. So an unholy union was formed. Both sides knew many of these people could not afford homes (if they could have afforded them in the first place, there would have not been any need for the expansion of subprime loans).
Plus, a lot of the blame must be placed on the homeowners themselves. They signed the papework. They agreed to the terms. If they were too stupid/rushed/didn’t care to read the paperwork… well, even more of a reason that they are not suitable to be homeowners.
So now, I have a choice to make:
1) Support an incredulous buyout plan that saves these people, whom should not have owned in the first place, from being foreclosed upon. This involves spending tax money on things that it should not be spent upon, in a time when there are already large deficits.
or
2) Don’t support it. Foreclosures continue to skyrocket, values of homes (including mine) continue to plummet. I lose value in my house, not because of something I did, but because some idiot next door can’t pay their mortgage.
And the worst part is the people who just don’t care, who can afford their mortgages, but walk away anyways because they have negative equity. Apparently the fact that they would not be able to get credit for 7 years does not scare them. And since most mortgages are non-recourse debt, you can’t go after them for the difference.
September 19th, 2008 at 2:51 pm
Well sure… there’s scarcely a difference between the politicians and political parties these days, no matter how much the partisans might disagree, so there’s ALWAYS blame to go around. The problem is that the only time you get said partisans to acknowledge that fact is when their party has done or said something demonstrably foolish.
Frankly, and I don’t have a home so my view on this might be skewed, I’d prefer the government NOT bail them out. They deserve not to get credit for the next 7 years. Is it going to hurt home values now? Sure… but it’s a blip. It’ll get better. If it doesn’t, the government buy-out probably wouldn’t have helped anyway.
I don’t feel sorry for people who have spent years living above their means and now want me to bail them out. Sure thing.