Republican Michele Bachmann thinks Jimmy Carter is responsible for the 2008 financial recession and the state of today’s economy. In a recent interview with the Wall Street Journal, the 2012 presidential hopeful was asked to explain the 2008 financial meltdown, to which she said;
“There were a lot of bad actors involved, but it started with the Community Reinvestment Act under Jimmy Carter and then the enhanced amendments that Bill Clinton made to force, in effect, banks to make loans to people who lacked creditworthiness. If you want to come down to a bottom line of ‘How did we get in the mess?’ I think it was a reduction in standards.”
Just for reference, Jimmy Carter was the 39th President of the United States, and served from 1977 to 1981 when he was succeeded by Ronald Reagan. Bill Clinton was the 42nd President – who, when he left office had created over 22 million jobs during his eight years and left a budget surplus of $127 billion, – served from 1993 to 2001 when George Bush took over. Both Jimmy Carter and Bill Clinton were Democratic presidents, and Ronald Reagan and George Bush were Republicans.
So not surprisingly, Mrs. Bachmann’s blame will be placed on last the two Democratic presidents over the last 35 years. She didn’t include Barack Obama, because he was sworn in in 2009. But are there any truths to this claim? According to an article written on Bloomberg’s Business Week back in 2008, the answer is “no”. Bachmann’s claim of putting the blame of the 2008 economic mess on Carter and Clinton and the Community Reinvestment Act is totally inaccurate. In fact, Bloomberg’s article called Bachmann’s claim, “silly.”
The Community Reinvestment Act (CRA), passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly. But it’s even more ridiculous when you consider that most subprime loans were made by firms that aren’t subject to the CRA. University of Michigan law professor Michael Barr testified back in February before the House Committee on Financial Services that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations. As former Fed Governor Ned Gramlich said in an August, 2007, speech shortly before he passed away: “In the subprime market where we badly need supervision, a majority of loans are made with very little supervision. It is like a city with a murder law, but no cops on the beat.”
No surprise here. Bachmann is still pushing false statements that were debunked over 3 years ago. And the fact that she didn’t include Ronald Reagan and George Bush in her blame game shows the true meaning of her claim – politics as usual.
Not only is Ronald Reagan’s trickle down economics one direct reason for what this economy is going through today, but consider the video below, George Bush’s interpretation of the Community Reinvestment Act, where he asked, in fact demanded, that home ownership be increased by millions “by the end of this decade.” George Bush even went as far as to say that everyone, regardless of their income, should be able to own a home no matter the price, saying “the first time home buyers, the low income home buyer can have just as nice a house as anybody else.”
Bachmann is trying to get your vote. She is interested in running for President of the United States in 2012. Shouldn’t Americans stand up and demand that these candidates tell the truth, no matter what the politics of the moment dictates?
