Matt Apuzzo explains an AP Fact Check found that in his address to the Democratic National Convention, former President Bill Clinton’s portrayal of President Barack Obama as a pragmatic compromiser left out the roles of Obama and Democrats in Washington gridlock.
Associated Press investigative reporter Matt Apuzzo reports that Clinton’s administration enjoyed a great economic boom, and that hopefully — for the Obama campaign — the American people will remember Clinton’s statement, “by 1996 the economy was roaring, everybody felt it, and we were half way through the longest peacetime expansion in the history of the United States.” However, Apuzzo states that what Clinton omitted was that during his second term there were bad signs of financial problems at the beginning of 2000 with responsive policies established that some experts believe brought the meltdown of 2008.
The burst of the housing bubble was predicted by a handful of political and economic analysts, such as G. Edward Griffinin in his 1994 book, “The Creature from Jekyll Island” — a critique of much modern economic theory and practice, specifically the Federal Reserve System. The book’s title refers to the November 1910 meeting at Jekyll Island, Georgia, of six bankers and economic policymakers, who represented the financial elite of the Western world. Griffin says that the United Nations, the Council on Foreign Relations, and the World Bank are working to destroy American sovereignty through a system of world military and financial control, and he advocates for United States withdrawal from the United Nations.
In 2003, the Bush administration proposed a new agency to oversee Fannie Mae and Freddie Mac as they knew the agencies had not properly hedged it’s $1.5 trillion in debt holdings against interest rate increases. Democrat Congressman Barney Frank, the Financial Services Committee, responded stating, “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.” Barney Frank benefitted personally and financially from both Fannie Mae and Freddie Mac. He was in a gay relationship with Herb Moses, an executive for the government controlled Fannie Mae. Barney Frank also received $40,100 in campaign cash going back to 1989 from the government-sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac.
An unprecedented increase in house prices between 1997 and 2005 before the housing price peak of 2006 had people believing the economy was moving along just fine. Real estate agents were making money, mortgage ‘specialists’ a-dime-a-dozen were raking it in, builders were profiting, and stores like Home Depot had great sales. In September 1999, Fannie Mae eased the credit requirements to encourage banks to extend home mortgages to individuals whose credit was not good enough to qualify for conventional loans. However, soon the mortgage and credit crisis was caused by the inability of a large number of homeowners to pay their mortgages when their low introductory balloon-rate mortgages reverted to higher regular interest rates. By October 2007, the U.S. Secretary of the Treasury called the bursting housing bubble “the most significant risk to our economy.”
The underlying troubles were brewing before February 2000, when Clinton spoke about the U.S. economy breaking the record for the longest uninterrupted economic expansion in U.S. history, and which began during George H. W. Bush’s presidency.
After Republicans won control of Congress in 1994, Clinton vehemently fought their proposed tax cuts. President Clinton believed that tax cuts favored the wealthy and would weaken economic growth. In August 1997, however, Clinton and Congressional Republicans were finally able to reach a compromise on a bill that reduced capital gain and estate taxes and gave taxpayers a credit of $500 per child and tax credits for college tuition and expenses. The underlying causes of the housing bubble are believed to include a tax policy of exemption of housing from capital gains, historically low interest rates, lax lending standards, failure of regulators to intervene, and speculative fever — when the buyers and sellers have no intention of ever occupying houses, only purchasing them for the sole reason of selling them off for a profit (Remember the signs on the corner: “WE BUY UGLY HOUSES”).
With all those mortgage specialists, real estate agents, builders, construction workers, carpenters, building materials sales people, etc. employed; overall unemployment dropped to the lowest level in more than 30 years during the Clinton administration — 4.0% in January 2001, the month that George W. Bush was inaugurated. During Clinton’s administration, the unemployment rate was below 5% for 40 consecutive months, unemployment for African Americans fell from 14.2% in 1992 to 7.3% in 2000. The unemployment rate for African Americans is the lowest rate on record.
At the DNC Wednesday night, former President Bill Clinton was eager to gloat about the apparently healthy economic results during his administration. But he didn’t tell the whole story about the economy.
Coming in Fall 2012, The Bubble asks the experts who predicted the current recession, “What happened and why?” Diving deep into the true causes of the financial crisis, renowned economists, investors and business leaders explain what America is facing if we don’t learn from our past mistakes. The film poses the question: “Is the economy really improving or are we just blowing up another Bubble?”
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