Myths/Bill Clinton helped cause the 2008 mortgage crisis
Myth
Bill Clinton has frequently been accused of being complicit in the 2008 mortgage crisis – a major contributing factor to the 2008 financial meltdown – and that therefore Clinton (and Democratic economic policy) bears responsibility for both the mortgage crisis and subsequent financial meltdown.
The basic argument seems to be that Clinton put pressure on Fannie Mae and Freddie Mac (FM/FM) to expand mortgage loans among low and moderate income people under the Community Reinvestment Act (CRA), which led to an increased number of risky loans, thus increasing the number of eventual foreclosures – a problem which was at the heart of the 2008 mortgage crisis.
This claim was especially popular during the closing weeks of the 2008 US presidential race, where criticism of Clinton (and his administration) was being used as criticism of Democratic Party policies and, by implication, of Barack Obama.
Numerous examples of this claim are on Issuepedia.
Reality
- First: Congress passed the CRA in 1977; Bush started weakening enforcement in 2004. Which act do you think was more likely to have been the cause of a crisis in 2008?
- Second: Republicans were aware of the developing housing bubble, and yet blocked any action to help reduce the effects of the crisis that would inevitably result when the bubble popped, including:
- efforts to curb predatory lending
- efforts to improve investigation of fraud in the banking industry
- Third: Most of the housing loans that failed were not CRA loans, and CRA lenders engaged in less dangerous lending overall.
Related
- Issuepedia: 2008 mortgage crisis/Clinton: more details and notes
- Myths/Bill Clinton helped cause the 2008 financial meltdown