Puncturing the Myth of Bill Clinton

Under Democrats and Republicans, regulation grows.

Bill Clinton got rave reviews for his speech at the Democratic National Convention. My wife said: "Clinton was great. He made Republicans look like liars and losers." Clinton, now a sainted elder statesman, also gets credit for the booming economy of the '90s.

Today, he appears in an Obama commercial—in full "I feel your pain" mode—saying that Obama "has a plan to rebuild America from the ground up."

When someone claims anyone can rebuild a society from the ground up, I say he is arrogant and delusional.

Clinton then tries to scare viewers by telling them that Republicans want to "go back to deregulation. That's what got us in trouble in the first place."

Ah, the progressives' George W. Bush deregulation myth: Bush's anti-regulation crusade caused our problems. This is a lie that seems true because of constant media repetition. In fact, Bush talked deregulation but vastly increased the regulatory state. He hired an astounding 90,000 new regulators. Under Democrats and Republicans, regulation grows.

A rare exception was repeal of the Glass-Steagall Act, which forbade financial companies from offering both commercial and investment banking services. You know who signed that?

Bill Clinton.

He was right to sign it (backed by Treasury Secretary and later Obama adviser Larry Summers) because outlawing full-service banking put American banks at a competitive disadvantage.

Five years earlier, Clinton supported the Riegle-Neal Interstate Banking and Branching Efficiency Act, which finally legalized interstate branch banking. Federal and state laws that forbade intrastate and interstate branch banking—that is, diversification—were one of the worst features of American finance. They made banks highly vulnerable to failure of specific business centers and farm communities, helping to make the Great Depression what it was. (By contrast, Canada had no such restrictions and no bank failures.)

So Clinton—not Bush—was the bank deregulator. Were those acts responsible for the financial debacle of 2008? No. Bear Stearns, Lehman, etc. were not affiliated with commercial banks.

Banks got in trouble because they filled their portfolios with securities built on shaky mortgages. And here is where Clinton does bear responsibility.

His secretary of housing and urban development was Andrew Cuomo, now governor of New York and apparent presidential wannabe.

Cuomo, as Wayne Barrett wrote in the Village Voice in 2008, made a series of decisions that "helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded 'kickbacks' to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why."

Barrett goes on: "Perhaps the only domestic issue George Bush and Bill Clinton were in complete agreement about was maximizing home ownership, each trying to lay claim to a record percentage of homeowners, and both describing their efforts as a boon to blacks and Hispanics. HUD, Fannie and Freddie were their instruments, and as is now apparent, the more unsavory the means, the greater the growth. … (Cuomo) did more to set these forces of unregulated expansion in motion than any other secretary and then boasted about it, presenting his initiatives as crusades for racial and social justice."

Naturally, when Clinton's HUD secretary became New York's attorney general, he vowed to prosecute unscrupulous lenders. I'm waiting for him to prosecute himself.

President Clinton happily takes credit for reducing America's budget deficit and presiding over a period of strong economic growth. But this happened not because of wise leadership. Clinton had the good fortune to reside in the White House just as the high-tech information revolution kicked in and a Republican Congress stopped him from spending what Democrats wanted to spend.

Progressives say that his increase of the top tax bracket did not prevent economic growth, but it never occurs to them that growth would have been even stronger had government not confiscated that money.

Sadly, most who watched St. Bill at the DNC will never know the truth.