Like Senator Kit Bond (#6) and her House colleagues Barney Frank (#21) and Gregory Meeks (#35), Waters was among the most ardent defenders of Fannie Mae and its completely incompetent CEO, Franklin Raines (#40). Even as the crisis became increasingly greater in size, Waters’ defense grew more intense and unyielding. Waters focused her considerable ire on OFHEO and its director, Armando Falcon. More generally Waters was completely blind to the enormous risk that was being incurred to expand homeownership rates to meet the edicts of President Clinton’s (#12) housing strategy. The only way for homeownership rates to expand at the necessary rate to achieve President Clinton’s housing goals was to slash lending standards and thus make it easier for people to obtain mortgages.
Lending standards that had developed over decades and were based on trial and error were turned upside down overnight. Waters saw nothing wrong with that. Here is Maxine Waters in October 2004 – approximately 6-months after the housing bubble peaked in April – dismissing any concerns about Fannie Mae, the housing market or providing loans with no down payments;
“Through nearly a dozen hearings we were frankly trying to fix something that wasn’t broke. Mr. Chairman, we don’t not have a crisis at Freddie Mac and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines…What we need to do today is to focus on the regulator, (OFHEO, author), and this must be done in a manner so as not to impede the affordable home mission. That mission, as you noted, has seen innovation flourish from desktop underwriting to 100-percent loans.”
As this quote – and the mindset it reflects – attests, Maxine Waters and all the other like-minded members of Congress have much to answer for regarding the financial crisis.
See Bill Clinton (#12) for his central plan for housing. See Henry Cisneros (#11) and Andrew Cuomo (#16) for the great lengths President Clinton’s two HUD secretaries went to advance this central plan. For Waters’ congressional colleagues in advancing the Clinton central plan for housing, see Kit Bond (#6), Barney Frank (#21) and Gregory Meeks (#35).