These guys make Hunter seem clean.
Joe Biden’s White House chief of staff will be a revolving-door lobbyist for bailout barons, fraudster drug companies, and major health insurers, all while Biden claims to be taking Washington back from the special interests.
Ron Klain served in the Clinton and Obama administrations, and in between, he was a lobbyist for K Street firm O’Melveny & Myers. His clients included Fannie Mae, the government-backed housing-bubble inflator that failed and required a taxpayer bailout. Klain lobbied for Fannie Mae from 2002 through 2005, the period when Fannie Mae successfully fought off stricter oversight from lawmakers concerned about taxpayer exposure.
In the Bush years, half the purpose of Fannie Mae seemed to be enriching politically connected Democrats, and Klain didn’t miss out.
Beyond the general sliminess, you can expect the usual return of the same disastrous policies if Democrats get back in the White House. (Then again some conservatives are so invested in the workers’ party narrative, that they’re starting to huff the same socialist glue.)
After his election, President Clinton tapped Labor Secretary Robert Reich to lead the effort to extract, as Mr. Reich put it in 1994 congressional testimony, “social, ancillary, economic benefits” from private pension investments. Mr. Reich called on pension funds to join the administration’s “Economically Targeted Investment” effort. Housing and Urban Development Secretary Henry Cisneros assured participants that “pension investments in affordable housing are as safe as pension investments in stocks and bonds.”
Had they gotten away with this, they would have nuked pensions the way that California Democrats have nuked the CalPERS system. But they did plenty of damage anyway.
Effective in January 1993, the 1992 housing bill required Fannie and Freddie to make 30% of their mortgage purchases affordable-housing loans. The quota was raised to 40% in 1996, 42% in 1997, and in 2000 the Department of Housing and Urban Development ordered the quota raised to 50%. The Bush administration continued to raise the affordable-housing goals. Freddie and Fannie dutifully met those goals each and every year until the subprime crisis erupted. By 2008, when both government-sponsored enterprises collapsed, the quota had reached 56%. An internal Fannie document made public after the financial crisis (“HUD Housing Goals,” March 2003) clearly shows that by 2002 Fannie officials knew perfectly well that these quotas were promoting irresponsible policy: “The challenge freaked out the business side of the house [Fannie] . . . the tenseness around meeting the goals meant that we . . . did deals at risks and prices we would not have otherwise done.”
The mortgage market shows the dramatic results of this shift in policy. According to the nonprofit National Community Reinvestment Coalition, total CRA lending rose to $4.5 trillion in 2007 from $8 billion in 1991. The American Enterprise Institute’s Ed Pinto found that in 1990 80% of the residential mortgage loans acquired by Fannie and Freddie were solid prime loans with healthy down payments and a well-documented capacity by borrowers to make mortgage payments. By 1999 only 45% of their acquisitions met this standard. That number fell to 15% by 2007. By 2008, roughly half of all outstanding mortgages in America were high-risk loans. In 1990, very few subprime loans were securitized. By 2007 almost all of them were.
Now Biden wants to make the guy who was lobbying for Fannie Mae his chief of staff, and he’s proposed bringing in Cuomo, who was working at HUD, and also helped set the stage for this disaster, as AG.
Side note. Democrats caused the economic disaster, but managed to blame it on Republicans. Media messaging was obviously the means, but Republican top officials failed to make a loud public case for blaming Democrats. We’re now seeing the same thing with the pandemic.
And this sort of thing has huge political consensus.