Hard times? Blame Clinton!

Anglachel shames me. She has already addressed a topic I had hoped to write about, but she did a much smarter job of it than I could have. Permit me to offer a humble link, a summary, some fuller explanations, and a few wisecracks.

Both the right and (especially) the left blame Bill Clinton for the current financial crisis, though for very different reasons. Of course, both progs and reactionaries blame Clinton for everything -- up to and including the Chernobyl disaster, the 1972 remake of Lost Horizon, Britney's "haircut moment" and your aching back.

As you know, the progressives have decided that the best way of winning over the PUMAs is to insult them into compliance. The prog party line -- as explicated by this unconscionable piece of filth, written by a liar named Ralph Brauer -- holds that Bill Clinton set the crisis in motion when he (supposedly) replaced the FDR-era Glass-Steigel Act. That act disallowed banks from getting involved with insurance and stock brokerage services.

Banks grew to dislike this "separation of powers." Why? Because in boom times, people put their money in stocks, while in hard times, people put cash into savings accounts. Banks wanted to get in on both rackets.

In 1998, Travelers (a really big insurance and financial services company) bought Citibank (a really big bank). This was not legal. A lot of helpful people in Congress decided to change the law. You may decide for yourself whether campaign contributions affected that decision.

Thus was born the Gramm-Leach-Bliley Act, which replaced Glass-Steagall. A growing number of economists believe that this Act helped to create the current subprime crisis, because it allowed bad loans to be packaged and sold in a global game of three-card monte.

Here's the part that the the progs won't tell you about: The Gramm-Leach-Bliley Act passed by a veto-proof majority in a Republican-controlled Congress.

In spite of that inconvenient fact of history, Brauer writes:

Bill Clinton repealed Glass-Steagall.

See? This proves what I've said for months -- the difference between liberals (such as myself) and progressives is that progressives lie. Progressives cannot say "Hi!" without lying.

When forced to confront the inconvenient fact that I have just now put into boldfaced letters, the progs retreat to a more weasle-like position: "Yeah, well, Bill Clinton did nothing to fight it." Anglachel digs up contemporary reports to demonstrate that, in fact, he did. Here's the bottom line:

So what do we see in this contemporaneous report? That the White House had been pushing back on this act for months. That certain Congressional Dems, Dodd and Schumer foremost, explicitly wanted to kill Glass-Steagall. That the White House fought them as well as Gramm on this issue. That the White House rallied Democrats to present a solid front to the measure, requiring that the CRA be protected, which some Congressional Dems were just as happy to toss out along with all other protections.

"CRA" stands for Community Reinvestment Act, a 1977 law which helped minorities get home loans. Clinton fought to get the best deal that he could, but gale-force political winds were against him.

Yes, you can blame the repeal of Glass-Steagall on Democrats -- not all of them, perhaps not the majority of 'em, but a good number of 'em. But you can't blame Bill Clinton. Blaming Bill Clinton is like blaming Raoul Wallenberg for not defeating the Wehrmacht single-handed.

(Of course, the Kossack left will find strained rationalizations for doing just that. There's always a rationalization, isn't there?)

Oh, and let's not forget another inconvenient fact about the Gramm-Leach-Bliley Act:

After all, one of its authors is the enthusiastic Obama-supporting Republicans, Jim Leach. Repeat - GLBA was written by an Obama supporter.

And, yes, Gramm is behind McCain. Either way, we're hosed -- unless the winner of the election has big enough balls to strike an independent course.

Let's get back to that CRA business. Now we confront the right-wing attempt to blame Bill Clinton for our current mess. The execrable Neil Boortz offers a succinct version of this line of attack:

Twenty years ago the buzz-word in the media was “redlining.” Newspapers across the country were filled with hard-hitting investigative reports about evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods. There I was closing these loans in the afternoons, and in the mornings offering a counter-argument on the radio to these absurd “redlining” claims.

Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank’s efforts to grow if that bank didn’t make loans to unqualified borrowers. Enter, stage left, the “subprime” mortgage. These lenders knew that a very high percentage of these loans would turn to garbage – but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won’t mention his name so as to avoid politicizing this column.

The jibe at Obama does not encourage me to embrace this misleading reconstruction of history. Redlining was real. Moreover, it was codified in the FDR era by the Home Owners' Loan Corporation, which drew actual red lines on maps, telling banks where the "no go" zones were. (Hillary wants to institute a new version of HOLC, but I'm sure she does not want a return to redlining.)

Although the Fair Housing Act of 1968 formally prohibited the practice, it informally continued. Hence, the previously-mentioned Community Reinvestment Act of 1977, which Bill Clinton -- that racist bastard! -- fought so hard to keep, and which a GOP-led Congress fought so hard to destroy.

Guys like Boortz are not only trying to blame the crisis on Clinton, they want to point the finger at black people in general. In Boortz-vision, here's how it went down: The First Black President launched a free giveaway scheme to benefit "his" constituents with houses they didn't really deserve, resulting in bad paper that got traded round and round by innocent financial houses.

Anglachel delivers the proper response:

No one forced any lender to throw all of their underwriting practices out the window. Second, as Tanta of Calculated Risk tirelessly reminds us the subprime crisis is nothing compared to the Alt-A and prime crisis entering the market now.

This cute animation, to which I've linked in an earlier post, demonstrates that the subprimes were the tip of the financial iceberg.

I'd add that one hell of a lot of white people got subprime loans during the Insane Years. The CRA did not force Jeb Bush's Florida to hand out mortgage licenses to coke dealers, con artists and other crooks. And the CRA did not force the great financial houses to trade those bad home loans as though they were sure-to-pay-off assets.

This is from the official CRA guidelines:

"CRA activities should be undertaken in a safe and sound manner" (and)"avoid lending activities that may be abusive or otherwise unsuitable" (to) "provide small, unsecured consumer loans in a safe and sound manner (i.e., based on the borrower’s ability to repay) and with reasonable terms" (and) "consistent with safe and sound lending practices."

The problem was not CRA. The problem was not the effort to combat redlining.

The problem was the lack of regulation under George Bush. Regulation could have forced the economy to inhabit that sane, safe place between redlining and ruination.

But, hey, if you'd rather blame Clinton for all of your problems, knock yourself out.

On second thought, you don't need to knock yourself out -- because you're already unconscious.