Paul Revere by Cyrus Dallin, North End, Boston



Sunday, December 21, 2008


Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.”
The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.
“There is no question we did not recognize the severity of the problems,” said Al Hubbard, Mr. Bush’s former chief economics adviser, who left the White House in December 2007. “Had we, we would have attacked them.”

Looking back, Keith B. Hennessey, Mr. Bush’s current chief economics adviser, says he and his colleagues did the best they could “with the information we had at the time.” But Mr. Hennessey did say he regretted that the administration did not pay more heed to the dangers of easy lending practices. And both Mr. Paulson and his predecessor, John W. Snow, say the housing push went too far.

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”



Ruth said...

The cretin in chief will be calling his policy study group/collaborators "The Freedom Institute" at the Lie-bury at SMU. Freedom from rational thought, definitely.

dmarks said...

That's by any account a balanced and reasonable post. Too bad the first comment flew off the handle. Ruth seems to have the Limbaugh-speak down pat, even if the targets of the rants are in the opposite party from Limbaugh's targets.

Dave Miller said...

Shaw, I will look forward to forthcoming parts, hopefully with more personal analysis.

The Griper said...

mmm, are you implying that this housing problem is due to the fact that minorities took out loans that they could not afford?

dmarks said...

It can also be added that the policy started with Andrew Cuomo before Bush was in office.

Anonymous said...

You could 'add' whatever you seem to pluck out of the air dmark.

Doesn't change the source of the fundamental problems we are facing. Reaganomics and the products of the 'free market' have reached their logical conclusion.

Andrew Cuomo is merely another squashed bug on a bigger windshield.

GWB was actually driving the car.

dmarks said...

"You could 'add' whatever you seem to pluck out of the air dmark."

I plucked it from the New York Times, actually. Please read the artlce about how the policy began in 1999.

I guess you think that the New York Times is thin air.

"Reaganomics and the products of the 'free market' have reached their logical conclusion."

By 1999, Reagan had been out of office 10 years. And the fact of government agencies having policies (as directed by the Federal Government) to explicitly act as a black hole to absorb bad mortgages have nothing to do with the free market.

So you can't refer to Reaganomics and the free market, since neither were involved. "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"
"Andrew Cuomo is merely another squashed bug on a bigger windshield."

I thought he was gum on someone's shoe. Or a leaf on the cupboard? Not that any of the three analogies hae anything to do with anything.

"GWB was actually driving the car."

Clinton started the car and drove it aways, Bush continued driving it, and Democrats were among those who told Bush to floor it.

As per Shaw's article, the Bush administration has a lot of blame. The Clinton administration started this, and has a lot of blame. Reagan is long since out of the picture. To blame Reagan and Bush while ignoring Clinton's role only shows a bias of "D after name good, R after name bad. no matter what the facts are"

Gordon Scott said...

What DMarks wrote!