Obama's complicity in two financial crises?

Stanley Kurtz has this interesting piece linking Obama to ACORN to the financial crisis. The article is available here.

As America teeters on the brink of a second financial crisis, I think back to 2008, and the irony of a suprime mortgage fiasco propelling to the presidency a man who’d spent a career abetting the folks who’d caused the crisis to begin with. Despite releasing an Internet ad on ACORN, Obama, and the subprime meltdown, the McCain campaign was unwilling or unable to pursue the issue. The Clinton administration’s gutting of credit standards in the name of fair housing, in close cooperation with ACORN and Fannie Mae, laid the foundations of the mortgage crisis of 2008. Yet in the second presidential debate, McCain did nothing to combat Obama’s claims that the crisis was strictly a product of under-regulation. In the third debate, Obama flat-out lied about his longstanding ties to ACORN. The media, of course, let him get away with it.

While many conservatives know the real story well, the country as a whole has still barely heard it. The important new book by Gretchen Morgenson and Joshua Rosner has begun to break the fuller truth about the 2008 financial meltdown into public awareness, yet even there the focus is on Fannie Mae, while the ACORN connection is given short shrift. Fannie Mae would never have gone south if ACORN hadn’t pulled it into the subprime business in the first place. ACORN’s national banking campaign was coordinated by Obama’s close political allies at the group’s Chicago office, which Obama was heavily funding through two foundations at the time. . . .

I think of Bell Federal’s naive and noble–but doomed–resistance to ACORN, and Fannie Mae’s equally bitter battle to hold ACORN at bay–well before the horror story recounted by Morgenson and Rosner played out. It took a lot of heavy lifting by ACORN and its supporters to break down years of prudent business practice, embodied in the credit standards all sane bankers once rightly insisted on. Only after those standards were compromised did we reap the whirlwind. . . .

Obama was intimately familiar with the battle to undermine America’s credit standards, and in full philosophical sympathy with it. It took a one-two punch of Alinskyite intimidation and federal regulatory pressure to create the preconditions for the subprime crisis of 2008, and Obama was on board for all of it. . . .

Now we are flirting with a second crisis, brought on by overspending, debt, and excessive regulation. Dodd-Frank, a banking bill named for Barney Frank, another abettor of the Fannie Mae fiasco, depresses business. . . . .

Kurtz has this information here linking Obama to ACORN.

Gretchen Morgenson and Joshua Rosner's new book extensively discusses Jim Johnson's role in creating the mortgage crisis, but they also mention Obama's close ties with Johnson (e.g., see page 11, 54, 187). Many of Obama's important appointees had big roles in creating the financial crisis (e.g., Timothy Geithner, Tom Donilon).

"Greenspan - US Can Pay Any Debt It Has Because We Can Always Print Money"

"The US can pay any debt it has because we can always print money." This sound like something a third world country would do. Who is going to want to invest in US bonds if they risk the government destroying the value of those bonds through inflation? What does this talk by itself do to the risk of hold US bonds?

S&P head points to cutting entitlements

This will offset what some were reading into the S&P report on the downgrade. From Fox News:

David Beers, global head of sovereign and international public finance ratings at S&P, told "Fox News Sunday" that governments and Congresses come and go, but spending on entitlements persistently drags U.S. debt further into the red.
"The key thing is, yes, entitlement reform is important because entitlements are the biggest component of spending, and the part of spending where the cost pressures are greatest," Beers said.
Beers said he faults both Congress and the Obama administration for "the difficulty of all sides in finding a consensus around fiscal policy choices," but any agreement must command the support from both political parties in order to be durable. . . .Though the announcement noted that S&P "takes no position on the mix of spending and revenue measures that Congress and the administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing," several reports suggested that the credit ratings group had argued tax hikes may be necessary.
Beers drew no such conclusion on Sunday, though John Chambers, managing director of S&P, told ABC's "This Week" that President Obama's fiscal commission last year "had plenty of sensible recommendations" for reducing U.S. debt. Those recommendations, which included cutting spending and increasing revenues on a 3-1 ratio, were ignored.
"It was a pity that those really weren't followed through on," Chambers said.
Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said he's not surprised by S&P's decision since even with the select committee's recommendations, the debt will continue to climb. . . .

Copy of Standard & Poor's explanation for Downgrading US Bonds

A copy of S&P's report is available here. The report warns of further possible downgrades. S&P is basically calling for tax hikes. I am not sure how they reach this conclusion as opposed to calling for more spending cuts. No real explanation is given on this point.

Newest Fox News piece: The S&P Downgrade Is a Wake Call for All Americans

My newest piece at Fox News starts this way:

When Standard & Poors downgraded Spain's bonds from AAA to AA+ in January 2009, its interest rates increased from 4.1 to 4.3 percent.
When the same ratings agency downgraded Ireland's from AAA to AA+ in March 2009, their interest rate rose by about 0.4 percentage points.
So what does that mean for Standard & Poors in terms of downgrading the U.S. bond rating?
With our $14.6 trillion in national debt, raising the U.S. government interest rates by the same amounts would eventually add about $29 to $58 billion a year in increased interest costs -- small change when we are already facing a $1.63 trillion deficit this year. And not all of that increase would be immediately felt since we only face the higher interest rate on newly issued bonds.
The problem with these downgrades is that they have a tendency to quickly spiral out of control. . . .

UPDATE: From The Hill newspaper:

Treasury Secretary Tim Geithner said Tuesday there is "no risk" the U.S. will lose its top credit rating amid a new analysis that revised its outlook on American debt to "negative."

Geithner took to the airwaves of financial news networks to push back against a report Monday by Standard & Poor's that lowered its outlook on U.S. debt to "negative," reflecting political uncertainty over whether lawmakers will reach an agreement to address long-term debt.


There is no chance that the U.S. will lose its top credit rating, Geithner said, forcefully disputing the notion that S&P or other ratings services might downgrade U.S. bonds from their current AAA rating.

"No risk of that, no risk," Geithner said on the Fox Business Network. . . .

Obama got what he wanted on the length of the deal to raise the debt ceiling, but we still got the downgrade of the credit rating.



Transcript from Obama's July 25, 2011 address to nation:

First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result. We know what we have to do to reduce our deficits; there’s no point in putting the economy at risk by kicking the can further down the road. . . .