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Bill Clinton’s Role in the Crisis Courtesy of the LA Times

John on September 30, 2008 at 10:51 am

As has so often been the case recently, Republican bashing articles in liberal papers have a very different ring to them in light of current events. Case in point, an article by Ronald Brownstein of the LA Times published in 1995 under the fair and balanced title “Assault on Clinton’s Urban Agenda Belies GOP Rhetoric on Aiding Poor” [Note: No link because the article is only available via purchase.]:

With little public attention, President Clinton has launched an integrated series of programs intended to widen the flow of private investment into poor and working-class urban neighborhoods historically parched for capital and credit. Those initiatives try to jump-start development by alternately encouraging and bludgeoning banks, pension funds and private investors into channeling funds toward small businesses and aspiring homeowners in depressed areas.

[...]

The Administration has invigorated enforcement of the laws barring racial discrimination in lending. And earlier this year, the White House unveiled new regulations both streamlining and stiffening application of the Community Reinvestment Act, a 1977 law that requires banks to make credit available in low-income neighborhoods. In the same spirit, the Labor Department has encouraged pension fund managers to invest more assets in “economically targeted investments,” such as affordable housing and urban redevelopment.

[...]

And early results suggest that the banking industry has heard the Administration’s clear signal on the anti-discrimination laws. Federal figures show that the number of home mortgages granted to blacks, Latinos and low-income borrowers all skyrocketed in 1994. Likewise, Leslie thinks the Administration’s focus on the Community Reinvestment Act helps explain why so many commercial banks in Los Angeles have rushed to commit funds to the city’s new community development bank.

But now the Republicans enter this happy story:

Virtually every element of this agenda is now on the congressional chopping block…

The House Economic and Educational Opportunities Committee recently voted to bar the Labor Department from nudging pension managers toward economically targeted investments. The House Banking Committee last month voted to eviscerate enforcement of the Community Reinvestment Act by barring regulators from considering a bank’s low-income lending record when deciding on applications for new branches. And a House Banking subcommittee passed legislation prohibiting the Justice Department from initiating any new investigations under fair lending laws. The full committee later rejected that proposal, but the effort still sent a chilling shot across Justice’s bow.

What explains this offensive? Rep. James M. Talent (R-Mo.), a rising second-termer who’s co-chairing a House GOP task force on minority issues, says that compelling banks to lend in poor neighborhoods is wrong because it amounts to “appropriating private money for state ends.”

Stuart Butler, the chief domestic policy thinker at the Heritage Foundation, says Clinton’s agenda to direct investment into the cities constitutes a form of “industrial policy” that assumes “somewhere in Washington they can . . . figure out what resources should be (allocated) where.”

Except at the level of reflexive opposition to government, these objections don’t hold up. Banks receive a lucrative public subsidy in the form of federal deposit insurance; it hardly qualifies as “appropriation” to ask in return that they serve all communities in their orbit…The fact that most banks loathe the community reinvestment and fair lending laws explains the congressional assault on their enforcement more than these ideological arguments.

[...]

As long as Republicans wage war against Clinton’s various urban investment initiatives, critics will deservedly question the sincerity of the GOP’s mounting rhetorical commitment to the isolated inner-city poor. Andrew Cuomo, an assistant secretary of Housing and Urban Development, says that while Republicans insist they are contesting “the means” of helping the poor, their implacable hostility toward Clinton’s ideas suggests “that they really oppose the end . . . of helping these people and helping these places.”

So far, congressional Republicans seem bent on validating his indictment.

Evil Republicans, their mustaches twirling, were on the side of banks and mortgage lenders trying to fend off Clinton’s racial arm-twisters. But Brownstein wanted us to understand that there could be no real justification for this reticence other than a) desire to deny Clinton his legacy, b) hatred of poor people and c) racism. Meanwhile, a finanicial bomb had just begun ticking. As a sidebar to the article notes:

As the Clinton Administration stiffened enforcement of fair lending and community reinvestment laws, home mortgage commitments to minority and low-income borrowers soared from 1993 to 1994. The increase, argues Allen Fishbein, general counsel of the Center for Community Change, “was a direct result of increased attention to those laws.”

Clinton’s CRA meddling led us directly to the financial scandals at Fannie Mae. A few years later, with the “securitization” of these loans (and resistance to oversight by Democrats in Congress who supported CRA goals), the trouble spread systemwide. We now face the most serious financial mess in a generation and, on a daily basis, Democrats are taking the opportunity to blame the entire thing on Republican policies. It’s not clear to me how this could be further from the truth.

It’s enough to make you twirl you mustache.

Related: The American Thinker has a pretty strong piece about Obama’s role in all this. Apparently he was the lawyer representing ACORN in suits based on the CRA, circa 1995.

Also related: NY Times columnist Bob Herbert blames it all on one party. He gives no convincing history, no specifics at all really, just applause lines aimed at the Times’ liberal readership. I think we can now say the left has learned nothing from it’s mistakes.

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