Why is Barack Obama president of the United States? Media coddling? A weak McCain campaign? A strong, if dishonest, effort by Obama to present himself as a pragmatic centrist? All of these things played a role, but the advent of the subprime crisis at the height of the 2008 presidential campaign was the decisive factor. No drama Obama responded well, while McCain seemed over his head.
As America teeters on the brink of a second financial crisis, I think back to 2008, and the irony of a suprime mortgage fiasco propelling to the presidency a man who’d spent a career abetting the folks who’d caused the crisis to begin with. Despite releasing an Internet ad on ACORN, Obama, and the subprime meltdown, the McCain campaign was unwilling or unable to pursue the issue. The Clinton administration’s gutting of credit standards in the name of fair housing, in close cooperation with ACORN and Fannie Mae, laid the foundations of the mortgage crisis of 2008. Yet in the second presidential debate, McCain did nothing to combat Obama’s claims that the crisis was strictly a product of under-regulation. In the third debate, Obama flat-out lied about his longstanding ties to ACORN. The media, of course, let him get away with it.
While I lay all this out in Radical-in-Chief, I keep thinking back to a story I didn’t have the time or space to tell in detail. ACORN’s first big target in Chicago was Bell Federal Savings and Loan Association. While poring over the ACORN archives at the Wisconsin Historical Society, I ran across the extensive preparation ACORN Chicago made for that first battle, including lots of correspondence with Bell Federal itself.
What struck me reading over the documents was Bell Federal’s naive confidence in its position. They knew that they’d treated all their mortgage customers the same, regardless of race–in fact they were proud of this–and Bell rightly insisted that undercutting credit standards in the name of supposed fairness was the surest way to financial disaster. Little did Bell Federal suspect the assault about to be launched against it–the massive campaign to portray it as a nest of evil, racist capitalists, with the usual bogus statistical claims that anything less than total equality of result meant discrimination.
Obama was intimately familiar with the battle to undermine America’s credit standards, and in full philosophical sympathy with it. It took a one-two punch of Alinskyite intimidation and federal regulatory pressure to create the preconditions for the subprime crisis of 2008, and Obama was on board for all of it. Yet he managed to convince the country, with barely a peep to the contrary from McCain, that the real problem was the lack of regulation.
Now we are flirting with a second crisis, brought on by overspending, debt, and excessive regulation. Dodd-Frank, a banking bill named for Barney Frank, another abettor of the Fannie Mae fiasco, depresses business. As the head of Americans for Financial Reform, one of Obama’s most important stealth-socialist community organizing mentors, Heather Booth, was the key lobbyist for Dodd-Frank. Exactly the same sort of leftism that laid the foundations for the first financial crisis is at the root of the second. The collapse of the European socialism that long served as a model for Obama’s organizing colleagues has only compounded the problem.
Yet Obama still struggles to pin his problems on Bush–that is, to return to the arguments about the origins of the financial crisis that worked for him in 2008. Those arguments were bogus to begin with. To this day, Obama hasn’t been called on it.
If the economy tanks again, Obama is finished. Yet if it recovers just a bit, the 2012 campaign will be a struggle between two accounts of the origins of our economic troubles: was Bush or Obama at fault? Conservatives may not want to hear it, but the “Bush did it” narrative still carries weight with the public. True, Obama will find it tremendously difficult to win reelection by campaigning against his predecessor. But he is going to try. That’s why the story of Obama’s two financial crises is still worth telling.