Former vice president Dick Cheney was on CNN’s State of the Union today, and he absolved himself, the Bush administration, and the Republican Party of any blame for the economic crisis. Instead, he blamed Barney Frank, and Chris Dodd, but press releases from the Bush administration say otherwise. In their own words, here is why Cheney and Bush should be blamed for the economy.
Host John King asked Cheney if the Bush administration left Obama with an economic mess. Cheney answered, “Well, I don’t follow the news quite as closely as I once did. But there’s no question that what the economic circumstances that he inherited are difficult ones. You know, we said that before we left. I don’t think you can blame the Bush administration for the creation of those circumstances. It’s a global financial problem. We had, in fact, tried to deal with the Fannie Mae and Freddie Mac problem some years before with major reforms and were blocked by Democrats on the Hill, Barney Frank and Chris Dodd.”
Later on the interview Cheney continued the Republican mantra of blame the Democrats, “I do remember, and I mentioned earlier, Fannie Mae and Freddie Mac. As best I can tell, from looking at the evidence, the failure of Fannie Mae and Freddie Mac was one of the key ingredients that caused the subsequent financial problem and economic recession. We did try, earlier in the administration, to impose reforms on Fannie Mae and Freddie Mac, and we ran into a stone wall on Capitol Hill in the form of the chairmen and — of the Banking Committee in the House and the Senate, Barney Frank and Chris Dodd. The Democrats absolutely opposed any effort to reform those two institutions, and I think the collapse of those two institutions, as much as anything, contributed to the financial difficulties we’ve been living with since.”
Cheney’s view point is interesting because he seems to have forgotten that it was his administration who as early as 2004 was encouraging sub-prime lending through their having a federally government sponsored “zero down payment” mortgage plan. I think it is self explanatory what a zero down payment mortgage is. Other sponsored Bush government mortgage programs allowed people to buy a home without a down payment, and financed mortgages that had no monthly payments for the first two years. One Bush mortgage program did not even require the borrower to verify their identity.
In a October 2004 speech to the National Homebuilders Association Bush was the Cheerleader in Chief for the housing bubble, “We’ve doubled funding for education and counseling services to help first-time homebuyers navigate the lending process, understand the fine print, and avoid predatory lenders. Homeownership rates are an alltime high in America, nearly 70 percent. I love that statistic. [Laughter] Think about that. More and more people own a home in America. More and more people have a chance to realize the great dream of our country. Minority homeownership is at record levels as well. In 2002, I set a clear goal, 5.5 million new minority homeowners by the end of the decade. And in just 2 years, more than 1.6 million minorities have become homeowners. America is a stronger country every single time a family moves into a house of their own.”
The Bush administration made it their policy to encourage and not regulate sub-prime lending. It is a flat out lie for Congressional Republicans and Cheney to blame the Democrats, who did not even take control of Congress until January 2007. The pieces were put in place for a collapse by the Bush administration years before the Democrats took power. The problem for Democrats is that this easy lending mortgage idea started with President Bill Clinton, and Congressional Democrats did not even provide token opposition to the Republican plans that allowed the housing bubble.
This should be painful for members of both parties to hear, but they all are to blame. Instead of contemplating the long term effects of risky lending and a lack of regulation, everyone saw a political advantage in riding the housing bubble wave, so they stayed quiet. The Bush administration encouraged sub-prime lending and cut regulation, so they deserve most of the blame, but Congressional Democrats and Republicans aren’t blameless because they put the pieces in place for a crisis years before the collapse came.