Was The Bush Administration Responsible for the 2008 Housing Crisis? by Gregory Hilton

A major theme of this year’s campaign is that housing caused the 2008 financial crisis, and the Bush administration is responsible for the economic problems we have today. The item below was posted by Bush’s Chairman of the Council on Economic Advisers, and emphasizes that in 2003 the administration was seriously concerned about what was happening at Fannie Mae and Freddie Mac.
Bush tried to create a new agency to supervise the mortgage giants. Republicans had a Congressional majority back then, but delaying tactics used by the Democrats were successful in stopping the reform efforts. Rep. Barney Frank (D-MA), the current Chairman of the Financial Services Committee, responded by saying: ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” Frank said they were “fundamentally sound, financially,” and “the federal government doesn’t bail [Fannie Mae and Freddie Mac] out.” But of course, that is exactly what happened.
In February of 2010, Frank said “I did not see a crisis. Of course, I will tell you, I didn’t see a crisis with Lehman Brothers or AIG. I did not perceive the crisis as much as it was. I think it was encouraged and brought about by sub-prime lending.” Barney Frank is not the important part of this story. Many of other lawmakers are responsible for blocking increased supervision of Fannie and Freddie. The link below has quotes from many of them.
“What They Said About Fannie and Freddie”, Wall Street Journal, October 2, 2008
http://online.wsj.com/article/SB122290574391296381.html
“Barney Frank, Then and Now” by Greg Mankiw
http://gregmankiw.blogspot.com/2010/10/barney-frank-then-and-now.html