The Washington Post reports today that in 2008 Michele Bachmann and her husband took out a $417,000 loan from Fannie Mae or Freddie Mac only days before she called for the end of Fannie and Freddie.
Just a few weeks before Bachmann called for dismantling the programs during a House Financial Services Committee hearing, she and her husband signed for a $417,000 home loan to help finance their move to a 5,200-square-foot golf-course home, public records show. Experts who examined the loan documents for The Washington Post say that they are confident the loan was backed by Fannie Mae or Freddie Mac.
Bachmann quickly sought to blame Fannie and Freddie as the financial crisis, driven by the bursting of the housing bubble, unfolded in 2008. Not shockingly, she thought Fannie and Freddie were lending to, you know, the wrong type of people. And just so there wasn’t any confusion, Bachmann made clear that she means poor people of color made it harder for deserving people (it turns out she means herself) to get loans from the GSEs. At a hearing on September 25, 2008, Bachmann said:
While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was President Clinton who supercharged the process. After he entered office in 1993, he extensively rewrote Fannie’s and Freddie’s rules, and in doing so he turned the two quasi-private mortgage funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democrat voting blocks, and handed favors, jobs, and money to political allies.
The HUD Secretary at that time was Andrew Cuomo. He made a series of decisions, reported the Village Voice newspaper, between 1997 and 2001 that gave birth to the country’s current crisis. These were changes that led Freddie and Fannie to get into the subprime loan market in a big way.
Between campaign donations and between the changes in the rules of the Community Reinvestment Act, we have seen a dramatic impact on the current subprime mortgage meltdown. It is important that minorities have access to money. It is important that communities of color have access to homeownership; however, we need to have strong lending rules that have served our Nation so well. This has hurt, unfortunately, the minority community and communities of color even more than other communities.
This was a well-intentioned law. I firmly believe that the Community Reinvestment Act was well-intentioned and meant to put more minorities and people of color into homes. This is a good, positive movement; however, the final event of this Act was to, in fact, remove communities of color from true homeownership and subject other communities to a more difficult time to receive the loans that they so desperately need to be able to get into homeownership. Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the early 1990’s era.
In Bachmann’s telling, the expansive lending policies of the GSEs to poor communities of color, created the risk that was shaking the housing and financial markets in the fall of 2008. Bachmann says Fannie and Freddie’s relaxed lending rules gave poor people of color loans they didn’t deserve and this is the cause to all of our economic problems. As a result, she wants to tear the programs down.
On September 28, 2008, she praised Bush administration efforts to stabilize the GSEs, while simultaneously saying that they shouldn’t be given government support without instituting big changes to these institutions.
Many financial experts predicted this day would come as the GSEs grew in size and scope. Out (sic) government must not shore them up this time and fail to put in place the necessary reforms that will keep us from reaching this point again down the road.
What sort of reforms did Bachmann want? On September 24th, 2008, at a House Financial Services Committee hearing, Bachmann endorsed a plan by the Republican Study Committee that sought to address the financial crisis by, among other things, breaking apart Fannie and Freddie. Speaking approvingly of the RSC plan, Bachmann said:
“It breaks up Fannie Mae and Freddie Mac — who are, after all, at the heart of all of this — so that the encumbered taxpayer no longer backs them — implicitly or explicitly — and so that they do not artificially grow larger than the market will allow.”
So, to be clear, Bachmann blamed Fannie and Freddie for giving too much money to poor communities of color, which fueled a housing bubble, which while bursting put the whole economy at risk, and therefore requires the GSEs to be broken apart and privatized. While there is plenty of non-demagogic literature which shows that GSEs were a real part of inflating the housing bubble, Bachmann was putting forward a racist, reductive account of what had happened in the housing market. She utterly fails to account for the lack of understanding of executives at Wall Street banks of the financial instruments they were using to leverage themselves out into eventual oblivion. She doesn’t account for fraud perpetrated by banksters. She doesn’t account for the nature of the bubble nor the drive by shorts to keep inflating it so there would be more dangerous instruments for them to place bets on. She just wasn’t interested in understanding the whole picture of the housing crisis, for she already new it was the fault of poor minorities and the GSEs that gave them loans. Oh and she was simultaneously taking out the largest loan she could possibly get from a GSE.
In the annals of political hypocrisy, this is pretty outrageous. It’s not just hypocrisy. Bachmann went to the government and got the largest-possible government backed loan she could possibly get and then turned right around and said other Americans should not be able to get similar loans. She tried to pull the ladder to home ownership up behind her, all while questioning the sort of people Fannie and Freddie gave loans to and attacking homeowners for taking on more house than they can afford. Even for Bachmann and her regular habit of sucking dollars from the federal government’s teat, this is pretty outrageous.