The sub-prime mortgage mess has a lot of finger prints on it. There is plenty of blame to go around. However, despite claims to the contrary, some of those finger prints are George W. Bush’s.


In 2002 Bush said:
“One of the barriers to homeownership is the inability to make a down payment. And if one of the goals is to increase homeownership, it makes sense to help people pay that down payment.
... And let me talk about some of the progress which we have made to date, as an example for others to follow. First of all, government sponsored corporations that help create our mortgage system -- I introduced two of the leaders here today -- they call those people Fannie May and Freddie Mac, as well as the federal home loan banks, will increase their commitment to minority markets by more than $440 billion. (Applause.) I want to thank Leland and Franklin for that commitment. It's a commitment that conforms to their charters, as well, and also conforms to their hearts.

This means they will purchase more loans made by banks after Americans, Hispanics and other minorities, which will encourage homeownership. Freddie Mac will launch 25 initiatives to eliminate homeownership barriers. Under one of these, consumers with poor credit will be able to get a mortgage with an interest rate that automatically goes down after a period of consistent payments.”
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Fannie Mae issued their support for Bush’s initiative in 2002.
http://findarticles.com/p/articles/mi_m0EIN/is_2002_Oct_15/ai...

In 2003 Bush signed the American Dream Down Payment act… (part of the problem!)
http://www.americandreamdownpaymentassistance.com/whsp1216200...

This act made money available for aiding low income home buyers with their down payments. Bush said:
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“Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we're making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.) And there's more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way.

Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. So this legislation will authorize $200 million per year in down payment assistance to at least 40,000 low-income families. These funds will help American families achieve their goals, and at the same time, strengthen our communities.”



As a result, the numbers of 3, 5 and 7 year sub-prime ARM loans jumped significantly. Many of these became the problematic loans which started adjusting in 2007. Hence, our crisis.




Source:
http://www.frbsf.org/publications/federalreserve/annual/2007/...

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In 2005, 2 bills were introduced as an effort to reform the existing GSE regulatory structure in light of the recent accounting problems and questionable management actions leading to considerable income restatements by the GSE's. Basically, the people in charge had managed the books for maximizing their bonuses.

In 2005 the Bush administration did not push for Bill S.190 and actually opposed HR 1461. S.190 was dead in 2005 and was a bill to address the regulation of secondary mortgage market enterprises, and for other purposes. John McCain didn’t sign on as a cosponsor of S.190 until mid 2006.

(H.R. 1461 - Federal Housing Finance Reform Act of 2005). This bill passed the house in Oct 2005 and the Senate decided not to pick up S.190 so the effort died. Yes, Barney Frank was wrong, but the bill passed the House without him.


http://www.answers.com/topic/federal-national-mortgage-associ...

As I said in the beginning, there are finger prints on this from both sides. In 1999, the securitization standards were modified at the insistence of President Clinton. Basically, this decreased the amount of money people needed for getting a sub-prime mortgage loan. This coupled with the Gramm-Leach-Bailey Act of 1999 which allowed for banks to take on new services, created the environment which Bush used for his initiatives.

http://piggington.com/thank_you_clinton_for_the_subprime_boom...