Clinton rejects blame for financial crisis
By Walter Alarkon
Posted: 09/25/08 11:05 AM [ET]
Former President Bill Clinton isn’t buying the suggestion that the current economic crisis began under his watch.
Clinton on Thursday responded to a remark President Bush made in his address to the nation Wednesday night. Bush argued that the financial system’s problems began more than a decade ago, during the Clinton administration.
“Most economists agree that the problems we’re witnessing today developed over a long period of time,” Bush said. “For more than a decade, a massive amount of money flowed into the United States from investors abroad because our country is an attractive and secure place to do business.”
Clinton took Bush’s remark as criticism of a 1999 bill he signed that allowed commercial banking firms to offer investment services.
“There are some people who believe that that bill enabled them to somehow participate in some of the riskier housing investments,” Clinton said. “I disagree with that. That bill primarily enabled them to, like the Bank of America, to buy Merrill Lynch here without a hitch. And I think that helped to stabilize the situation.”
Clinton, however, said that Democrats weren’t entirely blameless, stating that they should have highlighted problems with Fannie Mae and Freddie Mac and “tried more aggressively to regulate derivatives.”
He also acknowledged that there was possible danger in his administration’s policy of pressing Fannie Mae, the mortgage company, to lower its credit standards for lower- and middle-income families seeking homes.
“I think, through the lens of this, it looks like that was true,” Clinton said. “But let’s go back to where we were at the time. At the time, they had lots of money, were making lots of money, and I thought too much of the money was being given out in value to the shareholders and compensation to the executives. And, at the time, we had a balanced budget and a surplus and a rapidly growing economy in other areas.”
Clinton, however, put some of the blame on Bush’s administration, saying that it was lax in regulating short-selling, a practice criticized for driving down the stock prices of troubled firms.
“[T]his thing really took off when the [Securities and Exchange Commission], under this administration, exercised less oversight and they got rid of something called the uptick rule, which enabled betting down … on housing stocks to go crazy,” Clinton said.
When asked about the debate over debates in the presidential campaign, Clinton sounded reluctant to take sides.
NBC’s Matt Lauer asked Clinton whether the Republican nominee, Sen. John McCain (Ariz.), was playing politics with the economic crisis by suspending his campaign Wednesday and calling for a delay to Friday’s debate. Clinton said that McCain wasn’t.
Clinton noted that McCain has actually called for more debates, a reference to the Republican’s request to hold joint town-hall meetings with his Democratic opponent, Sen. Barack Obama (Ill.).
“I think [McCain is] probably looking for some way of, once again, to say to the American people, ‘Hey, I’m not a traditional Republican. And I do take this seriously,’ ” Clinton said. “Because otherwise this makes it much, much more difficult for him to win because this is associated with lax regulation and the absence of economic activity in this period.”