Hillary Blamed Home Buyers for Their Bad Loans — but for a Good Cause! Just Not Good Enough.

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As soon as Hillary quotes herself as having told Wall Street to “cut it out,” Bernie starts to laugh.  (At 0:12 in the video.)

So this just came out from the organization “US Uncut.”  (Ignore the group’s odd name; it’s legit, if a little prone to exaggerate, and these videos appear to be real.)  I’ll start with the video they present:

The first quote to note is from the first Democratic Presidential Debate:

“I represented Wall Street as a Senator from New York and I went to Wall Street in December of 2007, before the big crash that we had, and I basically said ‘Cut it out. Quit foreclosing on homes!”

The second is from that December 2007 speech that she mentions:

“Homebuyers who paid extra fees to avoid documenting their income should have known they were getting in over their heads.”

Of course, she said and did some better things as well.  In the interest in fairness, the accompanying article notes that:

To her credit, Hillary Clinton did indeed give several detailed speeches criticizing Wall Street for the dishonest practices that led to the boom and burst of the subprime mortgage bubble. She also put forth a concrete proposal to crack down on predatory lending, although that bill died before even going to a committee vote.

The juxtaposition of her speeches shown in the video is, of course, startling — but it’s not what really represents the problem here. You need to read the attached article that gives one concrete example of an apparently widely-held practice among lenders: telling people that overstating their income was a standard (and non-dangerous) practice with which they had to go along with to get loans.  From the same article:

In one instance, a JP Morgan home loan officer admitted to making up an applicant’s income level to make the income-to-loan ratio work. One applicant emailed Marc Bristol, a senior home loan officer for JP Morgan, telling him he had “concern” about the applicant’s income listed on the official mortgage loan application:

I do not make $34,000 a month or anything close to this figure. I am not comfortable signing a document with a number I can not document in some form.

Bristol responded by acting as if inflating the applicant’s income was standard procedure:

This is a stated-income deal. We had to state an amount that will be consistent through each deal. There are certain ratios that have to be met for income to debt. With [property 1] AND [property 2] AND taxes and insurance on your current, this is the figure that made the ratios fit.

Besides, nobody forced the banks to make those loans in the first place:

People shouldn’t be sympathetic to banks that effectively say: “Hey, we knew the applicants were lying and wouldn’t be able to repay the loans. We didn’t care because we didn’t hold onto the loans. We offloaded the risk to investors through the securitization process. But so what? Blame the deadbeat borrowers for the volume of foreclosures today.”

Let’s be honest here: people without expertise will tend to take the advice of professionals in a field who assure them that bending (and breaking) the rules is just how things are done, so if they wanted the benefits of the system they had better do it.

I’m pretty confident that Hillary knows this. And that means that Hillary’s comments to NASDAQ in December 2007, even if they were part of a larger pitch to get them to “cut it out” when it came to foreclosures, were egregious.

“They should have known better” implied “they should not have relied on information provided by you and your employees and associates” — and without that is was improperly exculpatory. She chose to downplay the role of elites and professionals in causing these bad loans because she wanted to win them over to do something mildly generous — letting people stay in their foreclosed homes.  Thanks, Hillary — to an extent.

This approach epitomizes her relationship with power (and bear in mind that JP Morgan has been her 4th-largest contributor over her political career): she doesn’t tell people to leave more than just crumbs for the masses, but she does tell them to avoid social discord by collecting and distributing those crumbs, for Pete’s sake, rather than throwing them away!

Sure, it’s something!  And it’s better than Ted Cruz or Donald Trump or Marc Rubio telling them that they can feel good about kicking people out — which would determine my grudging vote in November.   But … it’s not much.

And, of more current significance, it is CERTAINLY not what you get from Bernie Sanders.  And when Sanders supporters point to a huge difference between Sanders and Clinton on this issues, this is exactly the kind of thing that they mean.