Former US President Bill Clinton Crashed the Housing Market

Former US President Bill Clinton Crashed the Housing Market

Former US President Bill Clinton Crashed the Housing Market

The way to trading and business riches is simple “Buy low, Sell high.”

Donald Trump has been very good at buying low and selling high, and it helps account for his success in business.

Last week the Democratic front-runner, Hillary Clinton painted that a crime.

While campaigning in California last week she shrieked that Donald Trump said he was hoping for the crash that caused hard working families in California and across America to lose their homes, all because he thought he could take advantage of it to make some money for himself.

In doing so, Mrs. Clinton assailed Donald Trump for being a good businessman something she virtually knows nothing about because she’s never actually run a business, though she once turn $1,000 into $1-M in the livestock futures market many years ago, with some help from her “friends”.

Crooked Hillary’s new TV ads say that Donald Trump predicted the real estate crash in Y 2006 and then bought real estate at low prices when the housing crash came in Y 2008 that few others foresaw.

Many builders went out of business during the crash, but Mr. Trump read the market right.

What is so hypocritical about that attack is that Hillary’s husband, then President Bill Clinton, and many of her biggest supporters who were the real menace to the US economy and they crashed the housing market causing the financial crisis and the Great Recession, from which the nation is still recovering.

Below is how Bill Clinton and his government sidekicks  contributed to the Great Recession (I wrote about it then and here it is again), as follows:

  1. The seeds of the mortgage meltdown were planted during Bill Clinton’s presidency.
  2. Under Clinton’s HUD secretary Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in “credit-deprived” areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. If banks did not comply with these rules, regulators reined in their ability to expand lending and deposits.
  3. The new HUD rules lowered down payments from the traditional 20% to 3% by Y 1995 and Zero down payments by 2000. What’s more, in the Clinton push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. The phrase “subprime” was the watchword.
  4. Next the Clinton administration’s rules ordered the taxpayer-backed Fannie Mae and Freddie Mac to expand their quotas of risky loans from 30% of portfolio to 50% as part of a big push to expand home ownership. Fannie & Freddie were securitizing these home loans and offering 100% taxpayer guarantees of repayment. The US taxpayers were now on the hook for these risky, low down payment loans.
  5. When prices fell, lower income people who could not afford these mortgages under normal credit standards, suffered massive foreclosures and personal bankruptcies. Many will never get credit again. This is a perfect example of liberals using government allegedly to help the poor, but the ultimate consequences were disastrous for them and our nation.
  6. The ultra-easy money from the US Fed also played a Key role. Rates were held too low for too long in Y’s 2002-2005, which created asset price bubbles in housing, commodities, Gold, Crude Ooil, and elsewhere. When the Fed finally tightened, prices collapsed. So did home mortgage collateral and mortgage bonds that depended on that collateral. Many bond packages were written to please Fannie & Freddie, based on the nutty notion that home prices would never fall. Fannie & Freddie cost the US taxpayers $187-B.

The grim story get grimmer

Then US Senators Hillary Clinton (D-NY), and Senator Barack Hussein Obama (D-IL) voted to filibuster a Republican effort to roll back Fannie & Freddie. And on top of all this, while Crooked Hillary was propping up Fannie & Freddie, she was taking contributions from their foundations.

This is how a Washington Times investigative report concluded: Freddie Mac & Fannie Mae’s political action committee and individuals linked to the companies donated $75,500 to Mrs. Clinton’s Senatorial campaign. And the embattled Clinton Foundation received a $50,000 contribution from Freddie Mac, according to the Times.

It is a really grim American financial failure story with liberal progressives government lawmakers and officials to blame all around.

Notably: The Fannie & Freddie mess is still not cleaned up. It now includes profit sweeping from shareholders to the government, thereby ending any chance to sell the 2 quasi-government mortgage agencies back to the private sector.

Crooked Hillary’s attempt to blame Donald Trump is a deflector. Buying low and selling high is not against the law. In fact, Donald Trump’s investment savvy may well serve America well in the not too distant future, when he becomes the 45th President of the United States of America.

Have a terrific Memorial Day.

Paul Ebeling

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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