White House: 12-22-08 Setting the NYT Straight

Summary

The New York Times Reporters Jo Becker, Sheryl Stolberg, and Stephen Labaton Ignore The Facts And Place Unfounded Blame On President Bush And His Administration Over The Current Housing Crisis, Dana Perino, White House Secretary said “Most people can accept that a news story recounting recent events will be reliant on ‘20-20 hindsight’. Today’s front-page New York Times story relies on hindsight with blinders on and one eye closed. The Times’ ‘reporting’ in this story amounted to finding selected quotes to support a story the reporters fully intended to write from the onset, while disregarding anything that didn’t fit their point of view. To prove the point, when they filed their story, NYT reporters were completely unfamiliar with the President’s prime time address to the Nation where he laid out in detail all of the causes of the housing and financial crises.”

Complete Release here or below.

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1. The New York Times wrongly accuses President Bush and his Administration of disregarding signs of danger from Government Sponsored Enterprises (GSEs) and ignores the President’s prime time address to the Nation where he laid out in detail all of the causes of the housing and financial crises, arguing that “as early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming.” (Jo Becker, Sheryl Gay Stolberg, Stephen Labaton, “White House Philosophy Stoked On Mortgage Bonfire,” New York Times, 12/21/08)

The New York Times completely ignores the fact that while the Administration was pushing for more transparent lending rules and reining in Fannie Mae and Freddie Mac, Congress had for years blocked attempts at stronger regulation and blocked reform of the Federal Housing Administration.

* House Financial Services Committee Chairman Barney Frank (D-MA) criticized the President’s warning saying: “these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” (Stephen Labaton, “New Agency Proposed To Oversee Freddie Mac And Fannie Mae,” New York Times, 9/11/03)

* Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd also ignored the President’s warnings and called on him to “immediately reconsider his ill-advised” position. (Eric Dash, “Fannie Mae’s Offer To Help Ease Credit Squeeze Is Rejected, As Critics Complain Of Opportunism,” New York Times, 8/11/07)

Over the past six years, the President and his Administration have not only warned of the systemic consequences of failure to reform GSEs but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform at least 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems. Many prominent Democrats, including House Finance Chairman Barney Frank, opposed any legislation correcting the risks posed by GSEs.

2. The New York Times notes the political contributions of some banks to Republicans, saying “in the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics.”

The article neglects to acknowledge that political contributions from Fannie Mae and Freddie Mac overwhelmingly supported Democratic officials – in particular members of Democratic leadership:

* Since 1989, Senator Chris Dodd (D-CT) has received $165,400 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org, 9/11/08)

* Since 1989, Senate Majority Leader Harry Reid (D-NV) has received $77,000 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org, 9/11/08)

* Since 1989, House Speaker Nancy Pelosi has received $56,250 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org, 9/11/08)

3. The New York Times wrongly accuses the President of encouraging reckless lending in order to expand the Republican base: “For Mr. Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters.”

The facts show that, throughout his eight years, the President was actually encouraging careful and wise lending and emphasized the obligations and responsibilities that come with homeownership. “We’ve got to be wise about how we deal with the closing documents and all the regulations, but also wise about how we help people understand what it means to own their home and the obligations and the opportunities.” (President George W. Bush, Remarks On Homeownership, Atlanta, GA, 6/17/02)

Experts in this area include:

Editorial Board of FEN Banking & Financial Institutions: Ed Altman, Don Chew, David Cummins, Doug Diamond, Eugene Fama, Stephen Figlewski,Stuart Greenbaum, Jonathan Karpoff, Ken Lehn, Stanley Pliska, Charles Plosser,Katherine Schipper, Alan Schwartz, Bill Schwert, Rene Stulz, Ross Watts

Editoral Board of the Journal of Money, Credit and Banking: Pok-Sang Lam, Deborah Lucas, Masao Ogaki, Kenneth D. West, Allen N. Berger, Ben Bernanke, Olivier Blanchard, John Y. Campbell, Stephen G. Cecchetti, Douglas W. Diamond, Mark J. Flannery, Benjamin W. Friedman, Bennett T. McCallum, Maureen O’Hara, Raghuram Rajan, Anthony Saunders, Andrew Atkeson, Orazio Attanasio, Luca Benati, George J Benston, R. Anton Braun, Craig Burnside, Mark Carey, Menzie D Chinn, Lawrence J Christiano, Todd Clark, Dean Croushore, Harris Dellas, Wouter den Haan, Robert DeYoung, William Dupor, Martin Eichenbaum, Martin Ellison, Benjamin Esty, Charles L Evans, Martin Evans, Eric Fisher, Robert P Flood, Timothy S Fuerst, Jeffrey C Fuhrer, Oded Galor, Michelle R Garfinkel,Marc Giannoni,Marvin Goodfriend, Jan J.J. Groen, James D Hamilton, Lars Peter Hansen, Iftekhar Hasan, Fumio Hayashi, John Heaton, Donald D Hester, Joel F Houston, Peter Howitt, Peter N Ireland, Takatoshi Ito, George C Kaufman, Patrick Kehoe, Miles Kimball, Kenneth N Kuttner, Eric Leeper, Karen K Lewis, Nelson C Mark, Antoine Martin Loretta J Mester, Federic S Mishkin, Tommaso Monacelli, Donald P Morgan, Charles R Nelson, Edward Nelson, David H Papell, Jonathan A Parker, Joe Peek, George Pennacchi, Paolo Pesenti, Manju Puri, Garey Ramey, Valerie Ramey, Ricardo Reis, David Romer, Andrew Rose, Julio Rotemberg, Stephanie Schmitt-Grohe, Anna J Schwartz, Philip E Strahan, Stephen J Turnovsky, Gregory F Udell, Martin Uribe, Jürgen von Hagen, Christopher Waller, Carl Walsh, Philippe Weil, Noah Williams, Alexander Wolman

Editoral Board of the Journal of Banking and Finance: Ike Mathur, Dave Cummins, Chris James, F Moshirian, Andrei Schleifer, R Uppal, R. Engle, Ken French, Richard Roll, A Demiquc-Kunt, M. Kwast, LF Ackert, Gordon Alexander, T Bali, J Batten, H Beladi, YS Chan, Doug Diamond, Richard Eisenbeis, M Gordy, Cam Harvey, I Hasan, D B Humphrey, S A Johnson, G A Karolyi, M Levis, T H McInish, A Metrick, W R M Perraudin, M Peterson, R G Rajan, A Ravid, K Rydqvist, O Sarig, Joe Sinkey, A Subrahmanyam, S J Taylor, A V Thakor, D L Thornton, Peter Tufano, Larry Wall, Y Yafeh

Others: Martin Feldstein, Michael Jensen, Marianne Baxter, Barry Eichengreen, Kenneth Froot, Paul Krugman, Karen Lewis, Torsten Persson, Kenneth Rogoff, Olivier Blanchard, John Campbell, Stephen Cecchetti, Benjamin Friedman, Robert Hall, Bob Lucas, Benett McCallum, Alan Meltzer, Frederic Mishkin, Paul Romer, Julio Rotemberg, Matthew Shapiro, Bob Schiller, Christopher Sims, John Taylor, Gregg Jarrell, Sanjai Bhagat, Charles Cox, David Denis, Frances Longstaff, Eric Neis, Sanjay Mithal, Darrell Duffie, John Hull, Alan White, Robert Jarrow, Don Chance, Ed Altman, Don Chew, David Cummins, Doug Diamond, Eugene Fama, Stephen Figlewski,Stuart I. Greenbaum, Jonathan Karpoff, Ken Lehn, Stanley Pliska, Charles Plosser,Katherine Schipper, Alan Schwartz, Bill Schwert, Rene Stulz, Ross Watts, Dave Brown, Larry Harris, Dave Kidwell, Jim Brickley, Sanjai Baghat, Eugene Fama, Michael Gibbs, Ed Lazear, Steve Kaplan, Kevin Murphy, Pay Oyer, Scott Schaefer, Lucian Bebchuk, Robert Comment, Gregg Jarrell, Annette Paulson, Ken Lehn, Jeffry Netter, Robert Monks, Nell Minow, George Baker, Bengt Holmstrom, Jean Tirole, Patrick Bolton, Bernie Black,