Obamas 5 Phony Claims Debunked: Documenting the One Cause For A Democrat Depression

An important article from John Merline at Investor’s Business Daily, October 3, 2012 went to press just hours before the Romney-Obama debate. This is the miniaturized and concise version of what we’ve all been saying for several years. Merline asks and answers: what caused the economic crisis? Answer: The housing bubble. The meltdown of the mortgage lending scandal rests squarely on the shoulders of Democrats, but there’s more on deregulation, budgets, the ‘Second Great Depression,’ Policy and Bill Clinton. Beyond Merline’s article, see clear documentation through the years of the the irresponsibility of Democratically-controlled Congresses.

• Bush tax cuts and deregulation caused the recession.

It’s a standard Obama talking point. But it’s not true. Bush’s tax cuts did not cause the last recession.

In fact, once they were fully in effect in 2003, they sparked stronger growth — generating more than 8 million new jobs over the next four years, and GDP growth averaging close to 3%.

Those tax cuts didn’t explode the deficit, either, as Obama frequently claims. Deficits steadily declined after 2003, until the recession hit.

Nor was Bush a deregulator. Conservative Heritage Foundation’s regulation expert James Gattuso concluded, after reviewing Bush’s record, that “regulation grew substantially during the Bush years.”

It’s a standard Obama talking point. But it’s not true. Bush’s tax cuts did not cause the last recession.

In fact, once they were fully in effect in 2003, they sparked stronger growth — generating more than 8 million new jobs over the next four years, and GDP growth averaging close to 3%.

Those tax cuts didn’t explode the deficit, either, as Obama frequently claims. Deficits steadily declined after 2003, until the recession hit.

Nor was Bush a deregulator. Conservative Heritage Foundation’s regulation expert James Gattuso concluded, after reviewing Bush’s record, that “regulation grew substantially during the Bush years.”

What did cause the economic crisis? The housing bubble. And that, in turn, was the result of a determined federal effort to boost homeownership by, among other things, pressuring banks to lower lending standards.

 I stopped a second Great Depression.

Another frequent Obama claim is that “we did all the right things to prevent a Great Depression.” But this, too, is false.

The economy had pretty much hit bottom by the time Obama took office, and long before his policies were in place. The worst declines in monthly GDP and employment, in fact, occurred before he was even sworn in.

What’s more, the recovery officially started less than four months after Obama signed the stimulus into effect, when only a small fraction of the stimulus money was actually in the economy. Plus, other Obama economic interventions came either after the recession had ended — including his GM (GM) bailout — or have been widely judged to be failures.

When economists Alan Blinder and Mark Zandi tried to determine what ended the so-called Great Recession, they said President Bush’s TARP program and actions by the Federal Reserve were “substantially more effective” than anything Obama had done.

• My policies are working.

In his recent two-minute campaign ad, Obama claimed that “as a nation we are moving forward again.” But while the overall economy has grown somewhat since Obama’s recovery started more than three years ago, several other important indicators have actually gone backward.

Median household incomes, for example, have dropped $3,000 — a 5.7% decline — since the Obama recovery started. Income inequality has reached new heights.

There are 659,000 more long-term unemployed than there were in June 2009, and the share of people working has dropped to levels not seen in 30 years, according to the Bureau of Labor Statistics.

Meanwhile, there are 11.8 million more people on food stamps and nearly 2.7 million more in poverty than when the Obama recovery started.

And while Obama likes to tout the fact that 4 million net new jobs have been created since February 2010, what he doesn’t say is that most of those are low-wage jobs that replaced better-paying jobs lost during the recession.

• A slow recovery was inevitable.

Obama dismisses the slow and painful recovery by saying that he knew the road would be long. “I always believed that this was a long-term project (and) that it was going to take more than a year,” he has said. “It was going to take more than two years. It was going to take more than one term.”

The reason, Obama argues, is that recoveries from financial crises are always slow. “After a financial crisis, typically there’s a bigger drag on the economy for a longer period of time,” he said. But Obama didn’t trot out this excuse until his own economic policies failed to produce the growth he had promised.

Obama’s first budget, released in February 2009, predicted “rapid growth” that would “push down the unemployment rate to 5.3% by the end of 2013.” In March 2009, Obama boasted that “my long-term projections are highly optimistic.”

In August 2009, his economists predicted economic growth rates above 4% this year and next. In April 2010, Vice President Biden predicted job growth of “between 250,000 and 500,000 a month.”

It was only after the actual results starting coming in far below expectations that Obama started laying blame on the financial crisis and asking for more time.

And his claim that financial crises inevitably lead to sluggish recoveries is at least open to debate.

While some economists make that claim, others dispute it. A November 2011 paper by economists at Rutgers University and the Cleveland Fed, for example, concluded that “recessions associated with financial crises are generally followed by rapid recoveries.”

• Nobody could have done any better. (read it all at Investor’s Business Daily and pass it on to your Liberal Uncle Louie)

We can begin documentation in May 1999, “Black and Latino homeownership surges – the number of African American…nearly three times as fast as whites:” The LA Times – Ronald Brownstein:

These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. By this spring, those figures had jumped to 46.9% of blacks and 46.2% of Latinos.

All of this suggests that Clinton’s efforts to increase minority access to loans and capital also have spurred this decade’s gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws.

The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains.

It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.

4) In 2006, Senator John McCain signed a letter calling for “regulatory reform legislation” to clean up Fannie Mae and Freddie Mac.

The letter, addressed to the Senate Majority Leader, and the Chairman of the Banking, Housing and Urban Affairs Committee, was signed by nineteen other Senators. It DID NOT contain a single Democrat name.

The letter said that it was “…vitally important that Congress take the necessary steps to ensure the [Fannie Mae and Freddie Mac]…operate in a safe and sound manner.”

The letter asks: “…who would actually pay this debt if Fannie or Freddie could not?

Read the article accompanying Senator John McCain’s letter at Human Events.

More from Tracking the Mess of Freddie and Fannie:

5) On September 11, 2003, The New York Times reported that the Bush Administration was recommending “significant regulatory overhaul in the housing finance industry…”.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

The NYT reports the deep Democrat unrest at any attempts to regulate the mortgage giants:

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats…

”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.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed:

I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,’ Mr. Watt said.

After the statements of Frank and Watt at a Congressional hearing on Sept. 11, 2003, Rep. Michael Oxley (R-OH), Chairman of the Financial Services Committee commented:

We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,” the independent agency that now regulates the companies.

These irregularities, which have been going on for several years, should have been detected earlier by the regulator, he added.

Treasury Secretary John Snow was unhappy about Presidential powers granted in the plan:

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

Today, it is apparent why President Bush was concerned about taking the blame for the bald corruption at these.

The NYT opined:

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

6) On May 25, 2006, McCain gave this speech on the Senate floor in support of S. 190: Federal Housing enterprise Regulatory Reform Act of 2005 – which died in Committee in January 2007.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

7) Then there’s the money. What about the money? Who got what from Fannie Mae, Freddie Mac and their employees?

From 1989-2008, OpenSecrets.org lists Senator Obama as the No. 2 recipient, receiving $126,349.00 total. Keep in mind that Obama has only been in the Senate three years. John McCain has received a total of $21,500.00 in all the many years he has been in the House [1982] and Senate [1986]. McCain’s PAC has received $0. The entire $21,500 was donated by employees. Senator Chris Dodd (D-CT) chairs the Senate Banking, Housing and Urban Affairs Committee. He is the No. 1 recipient of campaign donations totaling $165,400.00.

8) President Bill Clinton signed a bill to promote low-income home ownership – a bill which Business Week called “a creative measure,” to allow people who could not afford a mortgage, to have one anyway.

How much of the blame for the Mortgage Crisis belongs to the Government and NOT Wall Street? Answer: 71%

The housing bubble, mortgage meltdown/crises, whatever you want to call it, is the Democrat Community Reinvestment Act which forced lenders to give mortgages to persons who could not qualify, who had no jobs in some instances,  who had no down payment. The Bush administration went to Congress 17 times in 8 years, asking that something be done about the CRA. On October 12, 2008 those visits were chronicled on the WhiteHouse.gov website. They disappeared when Obama moved in. Nothing was done. Maybe your neighborhood is still suffering the consequences. Oh but wait, someone grabbed Bush efforts and printed them:

The [Bush] White House released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001. Unfortunately, Congress did not act on the president’s warnings:

** 2001

April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

** 2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

** 2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

** 2004

February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

** 2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)

** 2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)

** 2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

“Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)

“[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

“Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

In 2005– Senator John McCain partnered with three other Senate Republicans to reform the government’s involvement in lendingDemocrats blocked this reform, too.

More… Not only did democrats not act on these warnings but Barack Obama put one of the major Sub-Prime Slime players on his campaign as finance chairperson.

 Here’s more background:

Obama Sued Citibank for Mortgage Discrimination: Of 186 Obama Client Homeowners, Only 19 Still Own Homes – Multiple Bankruptcies

71% of Bad Mortgages Were Government Loans

Bad Government: Credit Score of 810, Downpayment of $100,000 – Still Foreclosed On!

 

  • A.Men

    President Kardashian is a lousy actor. His head bobs to left then right reading a teleprompter written and loaded by others.

    Moochelle and The First Gay President-In-Name-Only are a losers.

    They will be voted off the island in Nov.

    Romney/Ryan 2012.

  • Questionman

    John Sununu is an example of the worst the US has to offer i the way of anyone calling themselves public servants! Racist & bogotted..actually that fits the entire racist right to a freaking T!

    Their sad, pathetic attempt to diminish three years and still going of right-wing racism with ONE-DAY left-wing racism is Retarded at best!

    The Republican Cancervative Party is an institutionally, structurally racist entity.

    Bigots are their bread and butter, Homophobes are their eggs, extremists are their coffee and the racists are that sweet, sweet bacon slices……bacon..

    Sorry. the point is

    The right has meetings before Obama was sworn in office and agreed to stop Obama from getting a second term. They didn’t want a black man to get a second term. It wasn’t the policies because he hadn’t even been sworn in or have his cabinet picked. They were racist bastards who were going to destroy the country just to prevent a black man from getting a second term.

    Your hate is obvious and your bias outweighs your political comments here 99% of the time……
    But, that’s the way you want to roll and we all know where you stand…..

    Neither ME or Barack Obama are racists. He had a white mother he loved. YOU a-holes are the racists.

    After ‘Barack The Magic Negro’, pictures of watermelons on the WH lawn, coon jokes, referring the President as “President Karashian” thanks to the head racist Rush Limbaugh dimishing President to an untalented whore and Sean Isanity calling him “President Crybaby” for stating obvious things, referring to the First Lady as ‘Moochelle’….they’ve settled on an “I know you are, but what am I?” response when they get called on their racism.

    Was Laura Bush racially insulted, vilified, compared to a monkey like Michelle Obama? NO! in fact. most left-wing people didn’t like Bush but STILL loved and respected the hell out of Laura Bush, you racists insult, smear, and attack Michelle Obama for every little thing.

    President Obama has made a better argument, he’s proven himself over four years to be competent, capable and honest. Obama took a -15% GDP and grew it to today’s $15T GDP the highest ever representing 40% Growth http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=current+gdp+us .

    The President cut spending from Bush’s $12.3T to $2.5T and CBO says as of Jan 1, 2013 Obama will have cut the National Deficit in half. Exports have increased 50% in Obama’s first term due to an increase in domestic oil production and a focus on Green Energy that has pushed America to number one in Natural Gas, Solar and battery operated vehicles.

    Keep those vile tweets coming, Racists!

    • Questionman, this has nothing to do with racism. Many, many of us wanted Obama to have only one term in office because we knew about his past. If you don’t believe that, just look at my posts leading up to the 2008 election. Nothing that has happened has surprised me, including Obama’s racism about Whites and Christians.

      Your analysis is warped and talk about biased – that would be you. I share the disappointment that the first Black to gain the presidency (because Whites trusted him) was Barack Obama. So many Black could have done the job so well.

      About being No. one in natural gas – we’ve always been No. 1 in natural gas. About solar and battery operated vehicles – get real. What a joke.

      Try as hard as you want, but we ALL know this has nothing to do with racism or White Mothers.

    • montanaconserv

      I suggest that you stop drinking the grape koolaid… what a bunch of bull…just the statement of “he’s proven himself over four years to be competent, capable and honest” lost all credibility with anything you said.

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