More Americans – 49 percent – still blame the economic situation on the recession that began during the Bush administration, but the ranks are swelling of those who say the nation's economic problems are the consequence of President Obama's policies, to 45 percent in the latest Rasmussen survey. Just last month, only 37 percent looked askance at Obama's policies.
This doesn't mean that Bush is becoming more popular, but it does mean that citizens are becoming impatient with Obama. Just one month ago, 55 percent blamed Bush, while 37 percent looked askance at Obama.
But even blaming Bush and Obama misses the point. The epicenter of the economic crisis was in the housing market, which was distorted by government intervention. These policies have their roots going back 30 years. As Peter Schweizer notes in an early October Forbes piece:
According to the National Community Reinvestment Coalition, in the first 20 years of the act, up to 1997, commitments totaled approximately $200 billion. But from 1997 to 2007, commitments exploded to more than $4.2 trillion. (Keep in mind this is more than four times the size of the current health bill being debated in Congress.) The burdens on individual banks can be enormous. Washington Mutual, for example, pledged $1 trillion in mortgages to those with credit histories that “fall outside typical credit, income or debt constraints,” and was awarded the 2003 CRA Community Impact Award for its Community Access program. Four years later it was taken over by the Office of Thrift Supervision. In 2004 Bank of America agreed to provide $750 billion in CRA loans to applicants with poor credit who had previous difficulty obtaining a mortgage. By 2008 Bank of America was reporting that CRA loans represented only 7% of its portfolio but 29% of its losses. Numerous large banks are now in the middle of enormous CRA commitments. In 2004 J.P. Morgan Chase agreed to provide $800 billion of such loans over the course of 10 years.
If only 7 percent of your portfolio is making up for nearly a third of your losses, you might want to make some changes. But a Boston Federal Reserve study in 2008 found that foreclosures were highly concentrated in urban minority neighborhoods. Borrowers in these areas were seven times more likely to be foreclosed on than the general population. In other words, denying loans had legal and political implications.
While much of this went on under Bush, at least he try to enlarge the problem. Obama, on the other hand, wants to remove enforcement of CRA from the Federal Reserve and the FDIC, whose very job is to ensure bank safety, and turn it over to a new agency. Schweizer writes, “This agency's core concerns would not be safety and soundness but, in the words of the Obama administration, “promoting access to financial services,” which is really code for forcing banks to lend to those who would not ordinarily qualify.”
In other words, when it gets worse, much of the blame will lie on Obama's own policies.