Clinton's Legacy: The Financial and Housing Meltdown - Clinton sowed the seeds of the Great Recession by helping to inflate the housing bubble.

[Ubiquitous]

Bill Clinton is certainly full of himself these days. That might have
something to do with the fact that no one is likely to ask why he
hasn't owned up to his share of the blame for the housing and financial
bust.

The former president is treated like an elder statesman whose tenure in
office was so good that even some Republicans look back fondly on it.
On the surface his economic record looks good, but it would be rash to
credit Clinton. During his time in office the information revolution
took off, boosting productivity and economic growth. And when his
Democratic Party lost control of Congress in 1992, Clinton had to
accept spending restraints, which meant less government obstruction to
economic growth.

Clinton, however, sowed the seeds of the Great Recession by helping to
inflate the housing bubble, a key part of the financial debacle of
2007. But this wasn't because he (not George W. Bush) signed two
financial deregulation bills. Although Clinton legalized interstate
banking in 1994 and commercial/investment banking combinations in 1999,
that had nothing to do with the meltdown.

Then why is Clinton culpable? Because his secretary of housing and
urban development, Andrew Cuomo, current governor of New York and a
likely 2016 presidential aspirant, accelerated easy-housing policies
and inflated the housing bubble, setting the stage for its collapse.

The meltdown was the consequence of a combination of the easy money and
low interest rates engineered by the Federal Reserve and the easy
housing engineered by a variety of government agencies and policies.
Those agencies include the Department of Housing and Urban Development
(HUD) and two nominally private "government-sponsored enterprises"
(GSEs), Fannie Mae and Freddie Mac. The agencies — along with laws such
as the Community Reinvestment Act (passed in the 1970s, then fortified
in the Clinton years), which required banks to make loans to people
with poor and nonexistent credit histories — made widespread
homeownership a national goal. This all led to a home-buying frenzy and
an explosion of subprime and other non-prime mortgages, which banks and
GSEs bundled into dubious securities and peddled to investors
worldwide. Hovering in the background was the knowledge that the
federal government would bail out troubled "too-big-to-fail" financial
corporations, including Fannie and Freddie.

The housing boom could last for a while, but the bust was inevitable.
When the Fed raised interest rates, things went kaboom. The Great
Recession was on; we're still suffering its effects. Without these
government housing and monetary policies, the crisis would never have
occurred.

Clinton's contribution to the crisis lay in his appointment of Cuomo to
HUD. Cuomo became HUD secretary in 1997 after becoming assistant
secretary in 1993. In a heavily researched 2008 article in the Village
Voice, Wayne Barrett writes,

Andrew Cuomo, the youngest Housing and Urban Development
secretary in history, made a series of decisions between 1997
and 2001 that gave birth to the country's current crisis. He
took actions that — in combination with many other factors —
helped plunge Fannie and Freddie into the subprime markets
without putting in place the means to monitor their
increasingly risky investments. He turned the Federal Housing
Administration mortgage program into a sweetheart lender with
sky-high loan ceilings and no money down, and he legalized what
a federal judge has branded 'kickbacks' to brokers that have
fueled the sale of overpriced and unsupportable loans. Three
to four million families are now facing foreclosure, and Cuomo
is one of the reasons why.

Barrett continues,

Perhaps the only domestic issue George Bush and Bill Clinton
were in complete agreement about was maximizing home ownership,
each trying to lay claim to a record percentage of homeowners,
and both describing their efforts as a boon to blacks and
Hispanics. HUD, Fannie, and Freddie were their instruments,
and, as is now apparent, the more unsavory the means, the
greater the growth.…

Cuomo ... _did more to set these forces of unregulated
expansion in motion than any other secretary and then boasted
about it_, presenting his initiatives as crusades for racial
and social justice. [Emphasis added.]

Bill Clinton gave Cuomo that power and backed his aggressive policies
to the hilt. Bill Clinton, then, shares responsibility for the Great
Recession. When will he be held accountable?

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Let's go Brandon!