Dissecting the GOP's new "minorities and Clinton caused the credit crisis" theory

As we listen to blowhards such as Richard Fuld from Lehman or the former AIG CEOs testify in Washington, there's also an active push by the Republicans to blame today's crisis not on the hotshots from Wall Street who made hundreds of millions, but on Clinton (as they always do) and naturally, poor minorities. What else should we expect from those who set in place this Wild West, unregulated system that allowed people like O'Neal, Prince and Mozilo to walk away with wads of cash despite selling trash? There is no doubt there are plenty of people on all sides of this problem who deserve blame, but to promote the theory that it's all the fault of Clinton and the poor is too much. Larry Kudlow floated this half-baked idea a few months ago but now that the credit crisis is getting worse, they're all piling on to move the blame away from themselves. It's beyond sickening.

Here's a small piece of a well done Newsweek article on why the GOP story is false but read the whole thing. We will all be hearing more of Republican nasty lie in the days to come as they launch their racist attack against Democrats and the poor.

The thesis is laid out almost daily on The Wall Street Journal editorial page and in the National Review. Washington Post columnist Charles Krauthammer provides an excellent example, writing that "much of this crisis was brought upon us by the good intentions of good people." He continues: "For decades, starting with Jimmy Carter's Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac—which in turn pressured banks and other lenders—to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity." The subtext: if only Congress didn't force banks to lend money to poor minorities, the Dow would be well on its way to 36,000. Or, as Fox Business Channel's Neil Cavuto put it: "I don't remember a clarion call that said: Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster."

Let me get this straight. Investment banks and insurance companies run by centimillionaires blow up, and it's the fault of Jimmy Carter, Bill Clinton, and poor minorities?

These arguments are generally made by people who read the editorial page of The Wall Street Journal, and ignore the rest of the paper—economic know-nothings whose opinions are informed mostly by ideology and, occasionally, by prejudice. Let's be honest. Fannie and Freddie, which didn't make subprime loans but did buy subprime loans made by others, were part of the problem. Poor congressional oversight was part of the problem. Banks that sought to meet CRA requirements by indiscriminately doling out loans to minorities may have been part of the problem. But none of these issues is the cause of the problem. Not by a long shot. From the beginning, subprime has been a symptom, not a cause. And the notion that the Community Reinvestment Act is somehow responsible for poor lending decisions is absurd.

Click on the link and read the rest. You can't make this stuff up.