by Yves Smith
Naked Capitalism
Posted on January 31, 2016
I’m late to correct a Big Lie from the last Democratic debate, in which Hillary astonishingly said went to Wall Street to tell banks to cut our foreclosures in 2007.
I knew this was untrue the minute I heard it because no one in Congress told banks to “cut out” foreclosures even when the crisis got much worse, and least of all, a Blue Dog Democrat who represents Wall Street and became Senator here as opposed to the more logical Illinois with the intent of currying favor with them. Concerned Congressmen were pleading with regulators and making legislative proposals, like for a new Home Owners Loan Corporation, modeled on a successful Depression model. After Obama made it clear he was all in with supporting the banks as of March 2009, there was not much ground for making a case to the banks directly.
But Clinton didn’t simply pretend to do something she didn’t. She abjectly falsified her history. In the debate, she said she went to Wall Street in December 2007. That much she did do. But rather that get tough with financial firms as she claimed, she went with the “everyone’s to blame” line, which of course means no one is to blame….except for those greedy borrowers. (See video at the top of this post.)
And yes, this speech was made in December 2007, at the NASD. She starts by praising Wall Street and saying how important it is that Wall Street remain cutting edge, indeed “the global capital of finance.” But she then suggest that there’s a wee problem, in that not everyone is sharing in the prosperity it creates. This is as strong as she gets in criticizing financiers:
But finally, responsibility also belongs to Wall Street, which not only enabled but often encouraged reckless mortgage lending…..Wall Street may not have created the foreclosure crisis, but Wall Street certainly had a hand in making it worse.
And in the very next line, she started walking it back:
We also must recognize, though, that good things have happened in the housing market. Home ownership is at the heart of the American Dream, and ownership rates rose to a record 69 percent in 2006.
And then she gave bromides about how this was all complicated, and that Big Finance needed to go along voluntarily with some proposals of hers…which had she bothered to investigate how securitizations worked, she would known some could not have been implemented.
There’s nothing remotely critical of the financial services in this speech. All she does is brandish a wet noodle: if all the germane parties don’t go along, she’ll “consider” legislation.
As US Uncut pointed out, Hillary did make some speeches that were more borrower-friendly, such as one in upstate New York in March 2007 to a rural audience at an event organized by a rural development organization. In other words, Hillary was playing to her audience. That’s not a sin per se, but we can see which audiences really mattered to her. US Uncut reminds us:
As the Daily Beast pointed out, Clinton’s tough talk doesn’t jibe with her Senate record. When a sweeping housing reform passed the Senate in 2008, it did so without Clinton’s leadership. Senator Clinton didn’t even vote in favor of a bipartisan bill that would have repealed the carried-interest tax loophole often exploited by hedge fund managers and Wall Street executives, something she’s campaigned on as recently as last year….
Throughout the course of her political career, JP Morgan contributed nearly $700,000 to her campaign war chest, making them her 4th-largest all-time donor. After Clinton left the State Department, she was paid $225,000 by Bank of America for just one speech. Bear Stearns contributed approximately $50,000 to Clinton’s campaign between 1999 and 2004. Merrill Lynch gave over $33,000 in that same time cycle.
It’s not surprising that Hillary hasn’t been willing to take on Big Finance. What is surprising is that she has the temerity to pretend otherwise.
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(Naked Capitalism Publisher Yves Smith has provided written authorization to the diarist to reproduce her blog’s posts in their entirety for the benefit of the Daily Kos community.)
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UPDATE: There are some, farther down in the comments that are claiming this headline is false. That’s bullshit. Yves covers the “wet noodle” Hillary was waving in this speech (which is linked in the post). There was no (as Hillary puts it) “blame to share all-around,” as far as our nation’s mortgage crisis is/was concerned. It’s 100% on the shoulders of the banks. 100% on the shoulders of Wall Street greed. And, any attempt by Hillary to “share the blame” with (former) homeowners is pure, unadulterated Wall-Street-speak. Who’s getting away with murder? Appraisal fraud? Origination fraud? Underwriting malpractice and fraud? Securities fraud? Title fraud? Conveyance fraud? Document fraud? Investor fraud? Graft? Corruption writ large? The list goes on and on. (The lives and futures of millions of homeowners were ruined. People went bankrupt. By the millions, Americans lost their livelihood; their jobs. Our country’s suicide rate has increased significantly since 2008. More pertinent, who’s ignoring what Yves wrote in her post, in which she also provided a link to the speech in her diary? Meanwhile, Wall Street hasn’t missed a meal.) There is no “blame to share,” Hillary. NONE! (That is “the wet noodle.” It is little more than another feeble attempt to obfuscate the truth of the events that occurred in this country in 2007 and 2008, which is the devastation that occurred on Main Street which was a direct result of Wall Street greed. Period.) “Share the blame” my ass!
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UPDATE #2:
My comment in another diary, currently on the Rec List, that claims that then-Senator client was a virtual activist on this issue (totally ignoring her Wall Street overseers). Rinse. Repeat….
Um, yeah...this is why she’s opposing Elizabeth Warren’s 21st Century New Glass-Steagall bill. (Which comprehensively covers shadow banking regulations, despite everyone here, including the diarist, supporting the false meme that Clinton’s been floating, along with her minIons to the contrary. It’s a sad joke, and the diarist is playing along.)
On S.2114….it was little more than a redundant (with current laws), around-the-edges piece of legislation filed and virtually (simultaneously) D.O.A. in the Democratic-controlled Senate (at a time when both the Senate and the House were controlled by Democrats). One could legitimately speculate that it was a weak attempt at building a get-tough-with-Wall-Street rep by a Senator that was spending most of their time positioning for a White House run.
Hillary Clinton’s Home Ownership Preservation and Protection Act (S.2114) ended-up being stalled in committee, and went nowhere fast. See:
https://www.congress.gov/bill/110th-congress/senate-bill/2114/all-actions?overview=closed
https://www.opensecrets.org/lobby/billsum.php?id=s2114-110
http://www.c-span.org/congress/bills/bill/?110/s2114
(Inconvenient Fact: Most Senators have a pretty damn good idea how their legislation’s going to fare before the even file it.) The bill had no other sponsors or co-sponsors. It was filed on September 27, 2007. By then, Senator Clinton was well into her first presidential campaign. And, contrary to what we might hear otherwise, this bill was primarily about the GSE’s: Fannie Mae and Freddie Mac. Just quickly looking at the description, and then quickly doing a once-over of the text, it’s so vague, even a mortgage broker could drive a truck through the loopholes in it. That “real analysis of the borrowers’ ability to repay the loan?” That’s called: UNDERWRITING. (Something the banks are ALWAYS supposed to do, thoroughly, with every loan.)
Per C-Span… The Senate has put forward their subprime bill “The Homeownership Preservation and Protection Act of 2007”, S.2854. The Senate version prohibit brokers from steering prime borrowers to more expensive subprime loans, create a fiduciary duty for mortgage brokers towards borrowers, require a real analysis of the borrowers’ ability to repay the loan, prohibits prepayment penalties and Yield Spread Premiums (YSPs) on subprime loans, and requires that these loans provide a net tangible benefit to the borrower.
Ironically, the GSE’s (Fannie and Freddie) had, in theory anyhow, a relatively small portfolio of subprime loans, compared to the overall size of their portfolio. So, it’s interesting that then-Senator Clinton was “focused” upon this, since it really didn’t address the bulk of the GSE’s portfolios, which virtually (almost always) has been comprised primarily of PRIME, CONFORMING LOANS.
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