Crisis Panel’s GOP Members Fault Government for Housing Bubble

The four Republican members of the 10-person committee established to investigate the causes of the worst financial crisis since the Great Depression are placing blame for the housing bubble that brought the nation's economy to its knees squarely on the shoulders of the federal government, going back to the mid-1990s.

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The ""Financial Crisis Inquiry Commission"":http://www.fcic.gov (FCIC) was created in May 2009 by Congress. After more than a year-long investigation, the commission was scheduled to release its final report detailing the reasons the nation slipped into its recessionary hole on December 15.

In an advisory notice to the media, the commission said it had decided, by majority vote, to delay the release of its findings until January 2011, in order to ""more fully inform the President, the Congress, and the American people about the facts and causes of the crisis.""

It's been rumored that the FCIC, which describes itself as ""a bipartisan commission that has been given a critical non-partisan mission,"" has been wrangling with dissension along party lines among its membership.

The four Republican members of the committee include Bill Thomas, a former congressman from California; Keith Hennessey, who sat on the National Economic Council under President George W. Bush; Douglas Holtz-Eakin, who previously served as head of the Congressional Budget Office; and Peter Wallison, a fellow at the American

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Enterprise Institute. This group released its own report on Wednesday, which they referred to as the ""Financial Crisis Primer"":http://republicanleader.house.gov/UploadedFiles/Financial_Crisis_Primer_Final.pdf.

In it they said that through ""Fannie Mae"":http://www.fanniemae.com, ""Freddie Mac"":http://www.freddiemac.com, the ""Federal Housing Administration"":http://www.fha.gov, and other programs, ""the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.""

The report says the federal government contributed to declining lending standards by forcing the GSEs, in particular, to invest in high-risk mortgages in order to satisfy the affordable housing goals mandated by their regulator.

The GSEs easily met the affordable housing goals for many years, but these goals were incrementally increased as part of a new housing policy agenda that began during the mid-1990s under President Bill Clinton and continued through the 2000s under President George W. Bush, according to the report.

It notes that during his tenure, President Clinton announced a ""national homeownership strategy"" that would increase the homeownership rate in America from the then-current level of 65 percent to 67.5 percent by 2000, and subsidizing mortgages through the GSEs was a politically expedient way to increase the homeownership rate.

""The government has always supported homeownership. But trying to get something for nothing -- to subsidize homeownership without increasing the budget deficit -- was a recipe for a crisis,"" the report said.

The FCIC said in an ""official statement"":http://www.fcic.gov/news/pdfs/2010-1215-Advisory.pdf Wednesday following the release of the GOP members' report, ""Today some members of the commission made public their personal views on the financial crisis. The commission had not previously seen or had an opportunity to review what was released today. But, as it does with the views of any of its members, the commission will review and take them into consideration.""