- Jan 16, 2003
- Reaction score
“The housing bubble that burst in 2007 and led to a financial crisis can be traced back to the federal government intervention in the U.S. housing market intended to help provide home ownership opportunities for more Americans,” declares the first sentence of the GOP Oversight and Government Reform report.
The report tries to center debate on government involvement, rather than Wall Street.
“In recent months, it has been impossible to watch a television news program without seeing a Member of Congress or an Administration official put forward a new recovery proposal or engage in a public flogging of a financial company official whose poor decisions, and perhaps greed, resulted in huge losses and great suffering,” the report states.
“Ironically, some of these same Washington officials were, all too recently, advocates of the very mortgage lending policies that led to the economic turmoil.”
The report continues the theme of Republicans seeking to pin the housing crisis on Fannie and Freddie, now completely owned by the government. The GOP sees the two mortgage giants as having pumped air into the housing bubble by offering and subsidizing high-risk loans in an effort driven by Democrats and the Clinton administration to increase homeownership, particularly among minorities and low-income households.
Democrats have defended Fannie and Freddie for trying to increase homeownership, while criticizing various polices at the two firms. They’ve put more of the blame for the housing crisis on poorly regulated Wall Street banks.
House Financial Services Committee Chairman Barney Frank (D-Mass.), who comes under some criticism in the GOP report, has said more foreclosures were caused by unregulated entities rather than Fannie and Freddie. He has also noted that Republicans were in control of Congress from 1995 to 2007, when the housing bubble was created.
The GOP staff report ties the Obama administration to Fannie and Freddie by noting its connections to former Fannie Mae President Jim Johnson, who was involved in President Obama’s search for a vice president, as well as White House Chief of Staff Rahm Emanuel’s appointment to Freddie Mac’s boa