When economists and other experts address who is at fault for the
housing and financial crisis, the emerging consensus is that irresponsible
practices by lenders and investors and lax oversight by government regulators
are to blame. However, many in the media
have told a different story.
As recently as February 17, in a Hardball
discussion of who was to blame for the financial crisis, CNBC's David
Faber said to host Chris Matthews that he was "sure" there were
plenty of Hardball viewers
"who want to go back to the Community Reinvestment Act, and say that Bill
Clinton was certainly one of the engines behind tightening that act, make an
even stronger case for banks to be lending to minorities."
Indeed, Media Matters for America has
documented numerous media figures attempting to lay the blame for the crisis on
the proponents of the expansion of affordable housing, attacking the Community
Reinvestment Act (CRA) and congressional Democrats. On the day that President
Obama announces his plan to stabilize the housing market, Media Matters thought it would be helpful
to bring to your attention our research refuting these attacks.
CLAIMING THAT THE 1977 COMMUNITY
REINVESTMENT ACT FORCED LENDERS INTO IRRESPONSIBLE LENDING
Media Matters has
documented media figures claiming that the CRA and efforts to expand affordable
housing to minorities and low-income people are at least in part to blame for
the home foreclosure crisis. However, this argument has been refuted by former
Federal Reserve chairman Ben Bernanke, who stated in a letter to Sen. Robert
Menendez:
"Our own experience
with CRA over more than 30 years and recent analysis of available data,
including data on subprime loan performance, runs counter to the charge that
CRA was at the root of, or otherwise contributed in any substantive way to, the
current mortgage difficulties."
In addition, countering the argument that CRA forced banks into making "risky" subprime
loans, experts have said that approximately 80 percent of subprime loans were
offered by financial institutions that are not subject to the CRA, and, in
Bernanke's words, "The CRA statute and regulations have always
emphasized that" the lending activities it encourages "be
'consistent with safe and sound operation.' " Additionally,
Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco
stated that "studies have shown that the
CRA has increased the volume of responsible lending to low- and
moderate-income households."
On
Fox, Barnes, Krauthammer echoed conservative claim that CRA played key role in
subprime crisis
Faced
with economic turmoil, media conservatives turn to class warfare
Hannity
baselessly blamed Democrats, CRA for financial crisis
Fox
News' Baier advanced conservative attacks on CRA, repeated falsehood about Rep.
Frank
Media
conservatives baselessly blame Community Reinvestment Act for foreclosure spike
ACCUSING CONGRESSIONAL DEMOCRATS OF
OPPOSING STRENGTHENING OVERSIGHT OF FANNIE AND FREDDIE
Several media figures have blamed the mortgage crisis on congressional Democrats and
Rep. Barney Frank, in particular, accusing them of opposing stricter oversight
of mortgage giants Fannie Mae and Freddie Mac. In fact, a New York Times article on how "the
story of" the mortgage crisis "is partly one of [former President
George W.] Bush's own making" reports that it was Bush who "insisted that
Fannie Mae and Freddie Mac meet ambitious new goals for low-income
lending." Frank, the senior Democrat and now chairman of the Financial
Services Committee, has repeatedly supported legislation to strengthen
oversight over Fannie and Freddie. After Democrats retook control of Congress,
they passed a bill that strengthened oversight of Fannie and Freddie in 2008.
Scarborough
falsely suggested Frank is only "now ...
saying some people should just rent"
Bloomberg's
Baum falsely claimed that Frank "consistently opposed stricter regulation
of Fannie Mae and Freddie Mac"
O'Reilly
falsely claimed Frank "wanted to give mortgages to everybody"
Special Report falsely
suggested Fannie and Freddie chief perpetrators of "financial mess,"
Rep. Frank opposed stricter oversight
O'Reilly
falsely claimed that Rep. Frank "sat by" while "Freddie Mac and
Fannie Mae made bad loans"
For more
information on the media's coverage of the housing crisis, please visit www.mediamatters.org
(Graphic: Reuters/Ipsos)