The White House is pushing back hard against a New York Times article that essentially blamed President Bush for the sub-prime mortgage mess and the Wall Street collapse by linking those crises to a policy goal he stated more than six years ago. That goal?
"We want more people owning their own home," as Bush said in December 2003.
But a 5,000-word article in the Times on Sunday, under the headline, "White House Philosophy Stoked Mortgage Bonfire," said Bush was also encouraging a "hands-off approach" to regulation that encouraged "lax" standards on behalf of lenders.
"He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent -- and with the business interests of some of his biggest donors," the article said.
"That's about as myopic as you can get," White House spokesman Tony Fratto said in response.
White House counselor Ed Gillespie lashed out at the Times for its interpretation of Bush's housing policies. "They've had to mortgage their building in Manhattan to help make ends meet, and they've been reduced to junk-bond status. I don't know if the New York Times' shoddy reporting is the result of being in junk-bond status, or if their junk-bond status is what's resulting in their shoddy reporting," Gillespie said.
In fact, the Times' article ignored a wealth of its own reporting, dating back to the era of Bill Clinton, whom the article mentioned only once, in passing.
For example, in September 1999, the Times noted that, "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stockholders to maintain its phenomenal growth in profits."
The 1999 piece went even further:
"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times," the Times noted presciently. "But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."
Likewise, the Times made no mention over the weekend of President Clinton's aggressive deregulation of the financial services industry, which empowered banks, brokerage firms and insurance companies to engage in some of the very practices -- such as credit default swaps -- that contributed most to the current fiscal crisis.
While the Times mentioned that mortgage bankers and brokers donated almost $850,000 to President Bush's 2004 re-election campaign, the newspaper omitted the fact that the top three recipients of campaign contributions from Fannie Mae and its sister organization Freddie Mac over the last two decades were all Democrats.
Connecticut Sen. Chris Dodd, head of the Senate Committee on Banking, Housing and Urban Affairs; President-elect Barack Obama; and Bush's 2004 opponent John Kerry all benefited from Fannie and Freddie.
Asked to respond to the White House criticism, Times Executive Editor Bill Keller said Sunday's article "was based on on-the-record interviews with dozens of current and former (Bush administration) officials."
"It is part of an ongoing series that examines in-depth the accountability of numerous players in the economic meltdown, including Congress, rating agencies, brokerage houses and the Fed," Keller said.