From the Investor’s Business Daily:
“Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system…”
At least he finally admitted it.
Fortunately IBD knows the real culprits:
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
But it wasn’t just stupid government regulations. They had help from corrupt Democrats.
As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.
Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.
Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.
In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.
The Community Redevelopment act was unsustainable and it would have failed eventually no matter what. The corruption and mismanagement of Raines and Gorelick just made the inevitable happen quicker.
Obama thinks more like this is the answer.
I don’t think so.