Karl Rove’s Revisionism: Lying Liars and the Bush Legacy Rollout

Even before the current occupant leaves White House next week, we’re already seeing the historical revisionism being rolled out in an attempt to rescue the Bush economic legacy. Last week, Karl Rove tried to portray W as pushing for regulatory reform — in the seventh year of his administration. The facts say otherwise.

This from Media Matters:

In a January 8 Wall Street Journal column, Fox News contributor Karl Rove falsely claimed that Rep. Barney Frank (D-MA) “labeled” President George W. Bush’s “proposals” for reform of the former government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac as “inane.” Rove’s assertion echoed a similar mischaracterization of Frank’s comment in a September 12, 2008, Washington Post op-ed by two former members of the Bush administration. In fact, as Frank wrote in a letter to the editor responding to the false claim in the Post op-ed, his “reference to the president’s inanity” came in response to Bush’s assertion at an August 2007 press conference that “Congress needs to get [Fannie Mae and Freddie Mac] reformed” by passing Bush’s “robust reform package” before the GSEs could expand their mortgage portfolios. In his letter, Frank wrote that he had called that comment “inane” because the House had already “passed a bill giving the Bush administration everything it asked for in increased regulatory powers over Fannie and Freddie,” which, according to Frank, Senate Republicans were “blocking.”

You can read the rest here.

Of course, this is all part of the discredited right-wing meme that Fannie Mae and Freddie Mac were the central cause of the stock market and credit market meltdown. McClatchy debunked that early on:

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

Fannie and Freddie, however, didn’t pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

(see Private sector loans, not Fannie or Freddie, triggered crisis).

And see also Barry Riholtz at The Big Picture.


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