Bush policies were not the main cause of the financial crisis

President Obama and his fellow Democrats are claiming that the policies of the Bush Administration caused the recent financial crisis. I have yet to hear exactly what policies they claim caused the crisis. This debate may reveal what they claim. This challenge is intended for experienced debaters. In this debate Con will identify the Bush policies claimed to have caused the financial meltdown and argue why they were the main cause of the financial meltdown. Con must show that they were Bush policies, not the policies of Clinton, Democrats, or the Federal Reserve and also not the fault of factors beyond the reach of government policy. It is up to the readers of the debate to decide which factors were most important, i.e., the "main cause," and which were of lesser importance. I'm arguing that while some Bush policies may be contributory, the main fault lies elsewhere. The Wikipedia article on the subprime mortgage crisis has a left-leaning bias, but it nonetheless has useful background information and references. http://en.wikipedia.org... They summarize: "The immediate cause or trigger of the crisis was the bursting of the United States housing bubble which peaked in approximately 2005–2006. High default rates on "subprime" and adjustable rate mortgages (ARM), began to increase quickly thereafter. An increase in loan incentives such as easy initial terms and a long-term trend of rising housing prices had encouraged borrowers to assume difficult mortgages in the belief they would be able to quickly refinance at more favorable terms." Fannie Mae is popular name for the Federal National Mortgage Association, a "government sponsored enterprise." http://en.wikipedia.org... It is sponsored by the government and subject to government regulation, but it has shareholders and mains a quasi-independent status. It is not under the authority of the Executive Branch of the federal government. I think the primary causes of the recession were: 1. The widespread belief that housing prices could not drop substantially, so that investments in housing were safe. Warren Buffet and Alan Greenspan attribute this to being the most important cause. That was widespread bad judgment, not a government policy. Warren Buffett: "It was part of a bubble mentality and that bubble mentality got incorporated into models used not just by rating agencies but by others." ... And Buffett admits the agencies failed in their supposed objective wisdom: "They were incapable of thinking at great variance from what everybody else thought." http://www.guardian.co.uk... Alan Greenspan: "If it weren't the subprime crisis it would have been something else," he said. That is because an era was ending that had seen "disinflationary forces" from developing countries such as China and a "protracted period" in which there was an "underpricing of risk." http://economistsview.typepad.com... (Greenspan does not speak plain English, but he's saying the same thing as Buffet.) 2. Repeal of the Glass Steagall Act http://en.wikipedia.org... that had prevented banks from making risky investments. This was done in 1999 as a policy of the Clinton Administration. Some Republicans supported the repeal, but it was a Clinton policy. 3. The policy of issuing poorly-secured real estate loans underwritten directly or indirectly by Fannie Mae and Freddie Mac. This began with the Clinton Policy embodied in the Community Reinvestment Act changes made in 1995 that required investment in real estate previously thought too risky. The requirement were further stiffened in 1999. An attempt to roll back the the requirements to make risky loans was rejected by the Federal Reserve Board in 2004. http://www.newrules.org... "In 1999, The New York Times reported that with the corporation's move towards the subprime market "Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s." Alex Berenson of The New York Times reported in 2003 that Fannie Mae's risk is much larger than is commonly held. Nassim Taleb wrote in The Black Swan: "The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deem these events 'unlikely'" http://en.wikipedia.org... 4. That Fannie Mae and Freddie Mac remained under the control of Democrats throughout the Bush years. In 2002, Fannie and Freddie began buying up so-called NINJA (no income, no job) mortgage loans at a furious pace. Compensation of Freddie and Fannie executives was based on the size of the mortgage portfolio, not the quality of the loans. This encouraged the entire mortgage industry to make unsound loans on the grounds that (1) the government endorsed the belief that real estate would not drop, no matter what, and (2) risky loans could always be sold to Freddie and Fannie, as they had an insatiable appetite for them. 5. That Democrats in Congress blocked attempts to reform Freddie and Fannie. The Bush Administration when to Congress on three separate occasions asking that regulation of Freddie and Fannie be tightened. (Video: http://www.youtube.com...) "Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. ... According to an article by Kathleen Day in the Oct. 8, 2003, Washington Post, Frank opposed giving the Bush administration the right to approve or disapprove business activities that "could pose risk to the taxpayers." He told the Post he worried the Treasury Department "would sacrifice activities that are good for consumers in the name of lowering the companies' market risks." Just a month before, Frank had aggressively thwarted reform efforts by the Bush administration. He told The New York Times on Sept. 11, 2003, Fannie Mae and Freddie Mac's problems were "exaggerated," a gross miscalculation some five years later with costs estimated to be in the hundreds of billions. "These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis," Frank said to the Times. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." http://www.businessandmedia.org... Democrats took over Congress in 2006 and not only failed to recognize the economic problems rooted in Fannie and Freddie, they completely blocked Bush Administration efforts to regulate these out-of-control institutions. 6. The Bush Administration might have made a greater issue of fragility of the housing bubble, beyond their attempts to regulate Fannie and Freddie. However, failure to create a great enough ruckus is not an economic policy, it is political failing. Democrats had a greater political failing because they blocked reform. If one deems failure to act to be a "policy" then it was the Democrats policy that prevailed, not Bush's policy. What caused the recession? A housing bubble fueled by the policies of Democrats and sustained by Democrats who blocked reforms that might have prevented the ultimate collapse. The resolution is affirmed.