That first round was a bit out there. Let’s see how they do this round.

Issue #2 - Economy and Housing Crisis.

Jeffrey Hall

Claim: Obama supports modernizing the financial regulatory system via oversight over lenders.

TRUE - According to barackobama.com, they plan to create a 5-star credit card rating system so the consumer understands the risk involved. Additionally, they intend to create new criminal penalties for lenders who are found guilty of fraud, requiring the industry to report suspicious activity and create a loan disclosure scoring system designed to inform the borrower of all aspects of the loan.

Claim: Obama plans to help homeowners by setting up programs which can monitor lenders for what they can and cannot lend to buyers.

UNVERIFIED - Most of Obama’s policies seem geared towards borrower protection, so maybe this is just an issue of wording (I couldn’t find any information on this, though I found loosely-related statements through press releases and news articles. If anyone has information, let me know and I’ll post it).

Claim: McCain flipped on bailout issue by first saying he wouldn’t help borrowers who took risky loans, saying it was their fault. Now supports bailout.

TRUE - On March 26th, McCain indeed said it wasn’t the government’s job to help borrowers. According the the International Herald Review:

Drawing a sharp distinction between himself and the two Democratic presidential candidates, Senator John McCain of Arizona warned Tuesday against vigorous government action to solve the deepening mortgage crisis and the market turmoil it has caused, saying that “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

McCain has since expressed support for such a bailout (via abcnews.com):

Its response was to send an e-mail from domestic policy adviser Doug Holtz-Eakin:

“John McCain supports the steps needed to keep the financial troubles at Fannie Mae and Freddie Mac from further squeezing American families, and endorses the idea that management and shareholders should not benefit from government backing,” Holz-Eakin said. “While details are not yet available, the actions taken today are consistent with those objectives. Fannie and Freddie have been the poster children for a lack of transparency and accountability, and remind us of the needed reforms to financial markets in general. We need to create jobs and get the economy going — and get way from the practice of sticking Main Street Americans with these bills. If elected, John McCain will continue his crusade for the right reform of the institutions. Sen. McCain will get real regulation that limits their ability to borrow, shrinks their size until they are no longer a threat to our economy, and privatizes and eliminates their links to the government.”

Lee Newcom

Claim: The problem with Fannie Mae began with the community reinvestment act and began in the Clinton Administration when Janet Reno was threatening banks with legal action if they did not make more loans to poor people.

PARTIALLY TRUE - While it’s true that Janet Reno sought initiatives to reduce discriminatory loans in urban areas, there is a dispute over whether the Community Reinvestment Act contributes to the problem by encouraging lenders to make irresponsible loans.

Specifically, the claim is referring to a speech by Janet Reno in 1998 in which she talks about government cases against banks and requiring lenders to invest in their communities.

I give this a “partial” because of the assertion this was the origin of the crisis. There are many factors which contribute to the problem, including high amounts of real estate speculation, the housing market bubble and mortgage fraud, among a other reasons, a number of which pre-date the Clinton administration. There has not been consensus on the cause of this issue yet as it is too early to determine.

Claim: McCain’s most recent position is that the government must help buy up those loans and renegotiate the amounts owed.

TRUE - McCain recently announced at the second presidential debate a plan to spend 300 billion dollars to purchase loans and grant courts the authority to renegotiate mortgages based on the home’s current value.

Claim: Though we are in a crisis, less than 5% of loans are affected.

UNVERIFIED - (I found no direct data to corroborate or contradict this claim. If anyone wants to provide information from a neutral source, I will add it to this entry)

Claim: Bush administration tried 13 times to push regulation for Fannie Mae and Freddie Mac, which each time was blocked by Democratic leaders in the last two years.

FALSE - From factcheck.org:

It’s true that key Democrats opposed the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have established a single, independent regulatory body with jurisdiction over Fannie and Freddie – a move that the Government Accountability Office had recommended in a 2004 report. Current House Banking Committee chairman Rep. Barney Frank of Massachusetts opposed legislation to reorganize oversight in 2000 (when Clinton was still president), 2003 and 2004, saying of the 2000 legislation that concern about Fannie and Freddie was “overblown.” Just last summer, Senate Banking Committee chairman Chris Dodd called a Bush proposal for an independent agency to regulate the two entities “ill-advised.”

But saying that Democrats killed the 2005 bill “while Mr. Obama was notably silent” oversimplifies things considerably. The bill made it out of committee in the Senate but was never brought up for consideration. At that time, Republicans had a majority in the Senate and controlled the agenda. Democrats never got the chance to vote against it or to mount a filibuster to block it.

By the time McCain signed on to the legislation, it was too late to prevent the crisis anyway. McCain added his name on May 25, 2006, when the housing bubble had already nearly peaked. Standard & Poor’s Case-Schiller Home Price Index, which measures residential housing prices in 20 metropolitan regions and then constructs a composite index for the entire United States, shows that housing prices began falling in July 2006, barely two months later.

Additionally, this distorts the truth by omitting facts, primarily that Democrats proposed a number of reform bills while the Republicans held the majority:

• H.R. 2117
• H.R. 3507
• S. 1656

After the Democrats gained the majority in 2007, Barney Frank proposed the following legislation: H.R. 1427

As for the “13 times” claim, even judging by what the White House website has to say about it, one would be hard-pressed to find 13 times the Bush administration pushed for reform that was blocked by Democrats since the beginning of 2007.

Claim: John McCain was one of the most adamant seekers of regulation over Fannie Mae and Freddie Mac; Barack Obama did not want that regulation.

PARTIALLY TRUE - John McCain was a co-sponsor of a bill called the Federal Housing Enterprise Regulatory Reform Act of 2005. This bill never made it out of the Committee on Banking, Housing, and Urban Affairs, which Senator Obama was never a member of. Neither candidate voted on the bill.

Analysis below…

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