Thursday, July 9, 2009
How we got into this mess.
At yesterday’s Bloggers Briefing at Heritage, Rep. Darrell Issa (R-CA), ranking member on the House Oversight and Government Reform Committee, touted a 26-page report that holds the government accountable for the housing crisis through its unsustainable drive to increase homeownership.
The report sheds light on the unnecessary interference of government in the housing market. It singles out Fannie Mae and Freddie Mac to show how the U.S. entered an economic downturn that rippled around the world.
According to Issa, the potential for a crisis in the housing market is not a new phenomenon. The seed was planted with President Bill Clinton’s misguided eagerness to increase homeownership. Issa referenced a Clinton administration document from 1995, “The National Homeownership Strategy: Partners in the American Dream.”
The document states, “The Clinton administration should support efforts to increase local lender awareness and use of flexible underwriting criteria established by secondary market investors such as Fannie Mae and Freddie Mac. Many households may qualify (for mortgage lending) if local lenders are encouraged to more flexibly interpret secondary market requirements.”
Issa called this the smoking gun. He said the situation we now find ourselves in came from the humble beginnings that everyone should have the opportunity to own a home. The Bush administration, too, must shoulder some of the blame, Issa said. Bush continued these practices through its own programs.
“The housing bubble that burst in 2007 and led to a financial crisis can be traced back to the federal government intervention in the U.S. housing market intended to help provide home ownership opportunities for more Americans,” declares Issa’s report.
Uh, would that "federal government intervention" be anything like what we're seeing now?