President Bush Tried to Rein In Fan and Fred

Democrats and the media have the housing story wrong

Mythmaking is in full swing as the Bush administration prepares to leave town. Among the more prominent is the assertion that the housing meltdown resulted from unbridled capitalism under a president opposed to all regulation.

The facts are that the Bush administration warned in the budget it issued in April 2001 that Fannie and Freddie were too large and overleveraged. Their failure "could cause strong repercussions in financial markets, affecting federally insured entities and economic activity" well beyond housing.

Mr. Bush wanted to limit systemic risk by raising the GSEs' capital requirements, compelling preapproval of new activities, and limiting the size of their portfolios. Why should government regulate banks, credit unions and savings and loans, but not GSEs? Mr. Bush wanted the GSEs to be treated just like their private-sector competitors... [snip]

... again pushed for comprehensive GSE reform in 2005, Democrat Sen. Chris Dodd of Connecticut successfully threatened a filibuster ... Rep. Barney Frank of Massachusetts defended Fannie and Freddie as "fundamentally sound" and labeled the president's proposals as "inane"... [snip]

That's why some mythmakers are so intent on denying that Mr. Bush worked to rein in the GSEs. But facts are stubborn things, as Ronald Reagan used to say, and in this instance, the facts support Mr. Bush and offer a harsh judgment on key Democrats. Perhaps that explains why so many in the media haven't told the real story.

[Recommended > ]

READ MORE