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Hillary Clinton’s Fannie and Freddie Problem

Democratic presidential candidate endorsed risky mortgage lending that led to financial crisis

AP
• July 21, 2015 12:09 pm

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Hillary Clinton’s previous support for lower mortgage lending standards—a significant contributor to the 2008 financial crisis—could come back to haunt her in the upcoming presidential race, the Washington Times reports.

During Bill Clinton’s administration, new affordable housing mandates required mortgage giants Fannie Mae and Freddie Mac to underwrite more loans for low-income borrowers. Those mortgages defaulted in large numbers in 2008, dramatically depressing home prices. As a senator for New York, Hillary Clinton also backed no down payment loans and filibustered efforts to reform the housing market.

The Times reports:

The one-two punch could prove a political liability for Mrs. Clinton's presidential bid, portraying her and her husband as facilitators for highly compensated mortgage brokers and undercutting her argument that she has been a longtime champion of the middle class.

"I certainly think we're going down the path of another bailout of the mortgage market. If we keep on this path, it's inevitable. It's a concern people have," said Mark Calabria, director of financial regulation studies at the Cato Institute. "It's going to be a tough needle for her to thread—people on the left still believe Fannie and Freddie was a good model and that the housing crisis was all about Wall Street greed. She's got a tough road to walk on this."

Clinton also received tens of thousands of dollars in campaign donations from Fannie and Freddie’s political action committee:

Mrs. Clinton met with credit union leaders across New York in 2006 to congratulate them for making more than $180 million worth of first mortgage loans in underserved areas, exceeding their goal of $150 million. Encouraged, the credit union leaders committed to another $180 million the following year.

During this same period, Freddie Mac and Fannie Mae's political action committee and individuals linked to the companies donated $75,500 to Mrs. Clinton's senatorial campaign—making her the fourth-largest recipient in Congress of the mortgage firms' total donations in the years 1989 to 2008 behind Mr. Obama, Mr. Kerry, now secretary of state, and Mr. Dodd, according to the Center for Responsive Politics, a nonpartisan group that studies campaign finance and political influence in Washington.

Freddie Mac also gave the Clinton Foundation a $50,000 to $100,000 donation.