Another Hillary Falsehood: She Didn't Tell Banks to "Cut It Out" Pre-Crisis; She Blamed Homeowners
Monday, 01 February 2016 00:00 By Yves Smith, Naked Capitalism | Op-Ed- font size
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Presidential candidate Hillary Clinton speaks at a campaign rally in Las Vegas, Nevada, on October 14, 2015. (Photo: Joseph Sohm / Shutterstock.com)
I'm late to correct a Big Lie from the last Democratic debate, in which Hillary astonishingly said went to Wall Street to tell banks to cut our foreclosures in 2007.
I knew this was untrue the minute I heard it because no one in Congress told banks to "cut out" foreclosures even when the crisis got much worse, and least of all, a Blue Dog Democrat who represents Wall Street and became Senator here as opposed to the more logical Illinois with the intent of currying favor with them. Concerned Congressmen were pleading with regulators and making legislative proposals, like for a new Home Owners Loan Corporation, modeled on a successful Depression model. After Obama made it clear he was all in with supporting the banks as of March 2009, there was not much ground for making a case to the banks directly.
But Clinton didn't simply pretend to do something she didn't. She abjectly falsified her history. In the debate, she said she went to Wall Street in December 2007. That much she did do. But rather that get tough with financial firms as she claimed, she went with the "everyone's to blame" line, which of course means no one is to blame….except for those greedy borrowers:
And yes, this speech was made in December 2007, at the NASD. She starts by praising Wall Street and saying how important it is that Wall Street remain cutting edge, indeed "the global capital of finance." But she then suggest that there's a wee problem, in that not everyone is sharing in the prosperity it creates. This is as strong as she gets in criticizing financiers:
But finally, responsibility also belongs to Wall Street, which not only enabled but often encouraged reckless mortgage lending…..Wall Street may not have created the foreclosure crisis, but Wall Street certainly had a hand in making it worse.
And in the very next line, she started walking it back:
We also must recognize, though, that good things have happened in the housing market. Home ownership is at the heart of the American Dream, and ownership rates rose to a record 69 percent in 2006.
And then she gave bromides about how this was all complicated, and that Big Finance needed to go along voluntarily with some proposals of hers…which had she bothered to investigate how securitizations worked, she would known some could not have been implemented.
There's nothing remotely critical of the financial services in this speech. All she does is brandish a wet noodle: if all the germane parties don't go along, she'll "consider" legislation.
As US Uncut pointed out, Hillary did make some speeches that were more borrower-friendly, such as one in upstate New York in March 2007 to a rural audience at an event organized by a rural development organization. In other words, Hillary was playing to her audience. That's not a sin per se, but we can see which audiences really mattered to her. US Uncut reminds us:
As the Daily Beast pointed out, Clinton's tough talk doesn't jibe with her Senate record. When a sweeping housing reform passed the Senate in 2008, it did so without Clinton's leadership. Senator Clinton didn't even vote in favor of a bipartisan bill that would have repealed the carried-interest tax loophole often exploited by hedge fund managers and Wall Street executives, something she's campaigned on as recently as last year….Throughout the course of her political career, JP Morgan contributed nearly $700,000 to her campaign war chest, making them her 4th-largest all-time donor. After Clinton left the State Department, she was paid $225,000 by Bank of America for just one speech. Bear Stearns contributed approximately $50,000 to Clinton's campaign between 1999 and 2004. Merrill Lynch gave over $33,000 in that same time cycle.
It's not surprising that Hillary hasn't been willing to take on Big Finance. What is surprising is that she has the arrogance to think that voters will believe otherwise.
YVES SMITH
Yves Smith has been in and around finance for more than 30 years as an investment banker, management consultant to financial institutions across a large range of wholesale banking and trading markets businesses and a corporate finance adviser. She has also written for The New York Times, Al Jazeera, the New Republic, Salon, the Conference Board Review, the Australian Financial Review and other financial publications. Her TV appearances include NBC News, CNBC, Fox Business, PBS, Bill Moyers, Real News Network, Democracy Now!, Russia TV, ABC (Australia), Al Jazeera, and BNN (Canada). Follow her on Twitter at @yvessmith.
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