Facts on the Economic Crisis

Before, I posted an editorial on the housing crisis. Now that the housing crisis has grown into an even larger problem, I will post again. This time, there will be no opinion. This is a factual post. Facts only.

Please note that I link to a few Wikipedia articles here. Although I do not believe Wikipedia is as reliable a source as newspapers and video, I do believe its articles can serve as a good overview of some issues as well as a place to find informative links. So, read the Wikipedia articles at your own discretion.


Facts about the housing crisis

In 2003, George Bush recognized a problem in the mortgage lending industry. In response, he proposed a plan that would have regulated Fannie Mae and Freddie Mac and determined whether the two mortgage lenders were properly managing the risk of their investments. The Bush administration also wanted to eliminate the power of the president to appoint the two companies' directors, since this practice can produce ineffective leadership in the companies.

For the most part, Fannie Mae and Freddie Mac both endorsed Bush's plan. The industry encouraged congress to pass this legislation in a timely manner.

Democrats strongly apposed Bush's plan. Barney Frank said, "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."

New Agency Proposed to Oversee Fannie Mae and Freddie Mac, New York Times, September 11, 2003

Wikipedia explains Bush's proposed changes


In 1995, the Clinton administration enacted legislation that forced lending institutions to prove that they were lending to enough lower-income people. Under this legislation, the government limited the ability of financial institutions to grow if they did not give enough loans in poor communities.

As a compromise, the Republicans tried to reduce the extent to which small- and medium-sized banks were forced to make loans in poor communities. Democrats opposed their attempt.

1993 Clinton press conference

Republicans Seek a Cutback in Lending Rules for Banks, New York Times, March 31, 1995

Wikipedia explains Bill Clinton's changes


Fannie Mae was created by the government in 1938 as a part of Franklin Roosevelt's New Deal.
Wikipedia explains about Fannie Mae


Freddie Mac was created by the government in 1970.
Wikipedia explains about Freddie Mac