Fannie, Freddie Loom as Liabilities for Clinton Amid Fears of Another Bailout
Fannie Mae and Freddie Mac are hurtling toward another possible taxpayer bailout, a development that could put an uncomfortable election light on the Clintons’ record of enabling the government-backed mortgage giants to engage in risky practices that led to the 2007 financial crisis.
There is growing consensus in financial circles that the seeds of the mortgage market collapse were sown during Bill Clinton’s presidency in the mid-1990s. That was when he helped push through changes that empowered Fannie and Freddie to give more mortgages to minorities and lower-income Americans, often at below-prime interest rates and with little down payments.
When the Federal Reserve and other respected voices began warning a decade ago that those changes were threatening the mortgage markets, Hillary Rodham Clinton joined fellow Democratic senators, including Barack Obama and John F. Kerry, in providing the votes to block Republican reforms designed to stave off a collapse.
The one-two punch could prove a political liability for Mrs. Clinton’s presidential bid, portraying her and her husband as facilitators for highly compensated mortgage brokers and undercutting her argument that she has been a longtime champion of the middle class.
“I certainly think we’re going down the path of another bailout of the mortgage market. If we keep on this path, it’s inevitable. It’s a concern people have,” said Mark Calabria, director of financial regulation studies at the Cato Institute. “It’s going to be a tough needle for her to thread — people on the left still believe Fannie and Freddie was a good model and that the housing crisis was all about Wall Street greed. She’s got a tough road to walk on this.” (Read more from “Fannie, Freddie Loom as Liabilities for Clinton Amid Fears of Another Bailout” HERE)
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