Letters to the Editor

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HOUSING: Here’s what really caused the bubble

Letter by Randall Hiner, Vashon on Sep. 21, 2010 at 10:11 am | 14 Comments »
September 21, 2010 10:12 am

Re: “Tea party, now for some facts” (letter, 9-17).

The writer states that the elections of 2006 and subsequent committee chairmanships of Barney Frank and Chris Dodd (Financial Services/Banking) led to the economic collapse 15 months later and that President Bush requested that Fannie Mae and Freddie Mac “stop” because “it’s” too risky.

On Jan. 20, 2004, President Bush, at a speech at the Home Builders Convention in Las Vegas, asked Congress to eliminate the down payment requirement for FHA loans. That same day, Bush’s Federal Housing Committee Chairman John Weicher said that “these proposed changes will extend the loans to people with blemished credit.”

Three years later, all 50 states’ attorneys general, led by Eliot Spitzer, penned an editorial to the Washington Post demanding that the federal government police these predatory lenders. The Bush administration’s response was to involve an obscure agency in the Department of the Treasury: the comptroller of the currency. This agency invoked a law from the 1863 National Bank Act, to preempt state predatory lending laws and prevented the states from protecting their citizens from these practices.

When Spitzer opened an investigation into these practices in New York, the OCC filed a federal lawsuit to stop the investigation.

The policies of the Bush administration in conjunction with the largest banks created the housing bubble, then worked tirelessly to ensure the states could do nothing about it or even investigate these practices.

Frank and Dodd could do little about this in the face of a committed administration.

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