How Clinton caused the current crisis

Investors Business Daily:

As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.
Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.
Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.
In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.
But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.

Raines is an advisor to Barack Obama. The IBD article notes that the Clinton administration injected "steroids" into the 1977 Community Reinvestment Act, a Jimmy Carter-era program to promote homeownership by the poor. Eight years ago, City Journal warned about the effects of the Clinton policy:

The Clinton administration has turned the Community Reinvestment Act . . . into one of the most powerful mandates shaping American cities -- and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government. (Emphasis added.)

Hmmm. Why would the Clinton administration want to funnel a trillion bucks through "left-wing community groups"? Ah, but never mind the loaded questions. Let's talk about the risky mortgages that are bankrupting America's financial services sector.

The original rationale of the CRA was to counteract the old practice of "redlining," which made it difficult for black people in poor neighborhoods to get credit. But, as City Journal explains, redlining was no longer the problem in the 1990s; the problem was people with bad credit histories:

A September 1999 study by Freddie Mac, for instance, confirmed what previous Federal Reserve and Federal Deposit Insurance Corporation studies had found: that African-Americans have disproportionate levels of credit problems, which explains why they have a harder time qualifying for mortgage money. As Freddie Mac found, blacks with incomes of $65,000 to $75,000 a year have on average worse credit records than whites making under $25,000.

Yet, under the "steroid" boost of the Clinton administration's approach to CRA, banks were pressured to make more loans to black people, period -- and credit problems be damned. OK, now we can return our attention to those "left-wing community groups." City Journal:

By intervening -- even just threatening to intervene -- in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do."

In other words, the Clinton administration turned these activist groups into de facto mortage brokers, armed with punitive power over lending institutions, and effectively controlling vast amounts of other people's money.

There were many factors in the mortgage-market meltdown, but the policy instituted by the Clinton administration -- which put financial decision-making under the control of political activists who were unaccountable for the consequences of their decisions -- is the underlying cause of it all.

Don't expect to see this on ABC, NBC or CBS, however. The sad truth is far too politically incorrect for the MSM, which instead is engaged in its usual liberal propaganda of blaming greedy Republican capitalists for the problem.