2008 mortgage crisis/Clinton

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Bill Clinton has frequently been accused of being complicit in the 2008 mortgage crisis – a major contributing factor to the 2008 financial meltdown – and that therefore Clinton (and Democratic economic policy) bears responsibility for both the mortgage crisis and subsequent financial meltdown.

The basic argument seems to be that Clinton put pressure on Fannie Mae and Freddie Mac (FM/FM) to expand mortgage loans among low and moderate income people, which led to an increased number of risky loans, thus increasing the number of eventual foreclosures – a problem which was at the heart of the 2008 mortgage crisis.

Articles frequently cited as evidence include:

  • A 1999 article in the New York Times (NYT)
  • A 2008 article in the Wall Street Journal (WSJ) – despite not mentioning Clinton at all, and the fact that it assigns blame primarily to the Democrats for failing to support a 2005 Senate Banking Committee reform bill, as well as some events in 2003-4 (FM/FM "accounting scandals") which might arguably have had their roots in events during the Clinton administration, but there doesn't seem to be any connection between those scandals and the claim that Clinton put pressure on FM/FM to accept more loans.

One of the authors of the WSJ article, Peter Wallison (a resident fellow at the American Enterprise Institute) is quoted in the 1999 article as warning that "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry." In this, he seems to have been quite accurate, though in context it's not clear if he was talking about FM/FM specifically or subprime loans in general.

A 2008-09-25 interview with Clinton on the Today Show has been interpreted as Clinton admitting the blame as accused, although the context of the entire interview makes it clear that he firmly rejects the blame while admitting that the Democrats should have more aggressively regulated derivatives (going in the exact opposite direction of that advocated by Republicans), and argues that what was a manageable problem escalated to alarming proportions only when the SEC (under George W. Bush) removed the "uptick rule".

Citations were especially heavy during the closing weeks of the 2008 US presidential race, where criticism of Clinton (and his administration) was being used as criticism of Democratic policies and, by implication, of Barack Obama.