From the GOP’s new “A Pledge to America” out this morning:
“End Government Control of Fannie Mae and Freddie Mac— Since taking over Fannie Mae and Freddie Mac, the mortgage companies that triggered the financial meltdown by giving too many high risk loans to people who couldn’t afford them, taxpayers were billed more than $145 billion to save the two companies. We will reform Fannie Mae and Freddie Mac by ending their government takeover, shrinking their portfolios, and establishing minimum capital standards. This will save taxpayers as much as $30 billion.”
Well pardon me, but what got Fannie and Freddie in so much trouble in the first place? I guess the GOP is counting on short-memory syndrome amongst the electorate. But some of us pay attention. It was GOP programs and initiatives that promoted home ownership for low income families who couldn’t afford to buy homes in the first place, and it was Fannie/Freddie which buy mortgages from banks who ended up having to take on unnecessary risk when the GOP-dominated congress passed the American Dream Down Payment Initiative, and President Bush promptly signed it. Here’s the facts:
“We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — President Bush, Oct. 15, 2002
From the 2000 GOP Platform:
“Implement the “American Dream Down Payment” program, which will allow a half million families who currently draw federal rental assistance to become homeowners, and allow families receiving federal rental payments to apply one year’s worth of their existing assistance money toward the purchase of their own first home, thus becoming independent of any further government housing assistance. This approach builds upon our long standing commitment to resident management of public housing and other initiatives.”
Passed: December 16, 2003 — American Dream Down Payment Initiative (ADDI)
ADDI aims to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. ADDI will help first-time homebuyers with the biggest hurdle to homeownership: downpayment and closing costs. The program was created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for downpayment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase.
President: George W. Bush (R)
US House: Rep. Dennis Hastert (R)
US Senate: Sen. Bill Frist (R)
Because of the passing of ADDI, Fannie May and Freddie Mac, which were at the core of the housing meltdown, were forced to take on more and more risk. Fannie and Freddie don’t make actual loans to consumers, instead, they buy loans from banks, and at the height of the housing market boom, they’d bought up 44% of the subprime market loans. With the help of ADDI, people who normally wouldn’t be able to afford to buy homes, were suddenly buying homes … homes they would ultimately realize, they indeed couldn’t afford.
From the 2004 GOP Platform:
“The African Growth and Opportunity Act (AGOA) is bringing hundreds of thousands of jobs and investment opportunity to sub-Saharan Africa. Under President Bush’s leadership, Congress has extended AGOA beyond 2008 – an achievement that will help give businesses the confidence to make long-term investments in Africa … We also applaud the efforts of the Bush Administration to strengthen and broaden capital markets on the continent. With the ability to borrow money to buy homes and to start businesses, more Africans will have the tools to achieve their dreams. “
President Bush was not only focused on increasing home ownership in America, but in other countries as well.
“The role of government is not to control or dominate the lives of our citizens. The role of government is to help our citizens gain the time and the tools to make their own choices and improve their own lives. That’s why I will continue to work to usher in a new era of ownership and opportunity in America.” — President George W. Bush
“Ownership gives citizens a vital stake in their communities and their country. By expanding ownership, we will help turn economic growth into lasting prosperity. As Republicans, we trust people to make decisions about how to spend, save, and invest their own money. We want individuals to own and control their income. We want people to have a tangible asset that they can build and rely on, making their own choices and directing their own future. Ownership should not be the preserve of the wealthy or the privileged. As Republicans who believe in the power of ownership to create better lives, we want more people to own a home.”
The Bush administration had warnings that something was amiss in the housing market, but this was Bush’s baby, and his pride in the “dream” of home ownership for low-income families (and getting them off the public housing assistance roles) apparently overcame any better judgment, and they doubled down. Then pre-occupied by the prospects of terrorism and pre-emptive wars in two foreign countries, they totally forgot to pay attention to what their initiative was doing to the country’s economy.
From the 2008 GOP Platform:
“Two major Republican initiatives — a first-time D.C. homebuyers credit and a landmark school choice initiative — have pointed the way toward a civic resurgence, and a third piece of GOP legislation now guarantees young D.C. residents significant assistance in affording higher education.”
“Homeownership remains key to creating an opportunity society. We support timely and carefully targeted aid to those hurt by the housing crisis so that affected individuals can have a chance to trade a burdensome mortgage for a manageable loan that reflects their home’s market value. At the same time, government action must not implicitly encourage anyone to borrow more than they can afford to repay. We support energetic federal investigation and, where appropriate, prosecution of criminal wrongdoing in the mortgage industry and investment sector. We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all. We encourage potential buyers to work in concert with the lending community to educate themselves about the responsibilities of purchasing a home, condo, or land.”
“Republican policy aims to make owning a home more accessible through enforcement of open housing laws, voucher programs, urban homesteading and — what is most important — a strong economy with low interest rates. Because affordable housing is in the national interest, any simplified tax system should continue to encourage homeownership, recognizing the tremendous social value that the home mortgage interest deduction has had for decades. In addition, sound housing policy should recognize the needs of renters so that apartments and multi-family homes remain important components of the housing stock.”
Excuse me, it was “government interference” in the housing market via the GOP’s “American Dream Down Payment Initiative” that started that downward spiral. Check out the second paragraph taken from the 2008 GOP Platform, “Homeownership remains key to creating an opportunity society.” Have we become nothing more than an “opportunity” or a “mark” from whom the Republican’s base can make money.
The current Democratically-controlled Congress is seriously trying to remedy the damage done by the previous administration, but have been obstructed from doing so time and time again, filibuster after filibuster. Breaking the filibuster cycle by putting the GOP back in charge is not the answer. Get out the votes folks.
- New York Times: White House Philosophy Stoked Mortgage Bonfire