Suze Orman is an acclaimed financial expert, and she normally gives sound financial advice. Would that everyone would pay off their credit cards, put 20 percent down before buying homes, and diversify investments with precision and skill.
In a recent interview, though, Orman ranted against George W. Bush, blaming him for the current financial crisis: “Commander in Chief? You blew up every single financial vessel we had and if you think you aren’t personally responsible, well, the blame starts at the top. There is no higher top than you, SIR!” Orman continues with the real kicker: “If I were you, I would feel so absolutely horrific that I would take every penny I had and distribute it to anybody and everybody to help them in whatever way I could. You owe the American people every penny of your fortune and your family’s fortune.”
This does a disservice to the loyal crowd of mostly female listeners that has made Orman the Oprah of the financial world. A brief history lesson will clarify this.
Bush did, as Orman has pointed out in the past, use the government to encourage the poor, especially poor minorities, to buy houses they could not afford. But he got the idea from Clinton, who pushed Freddie Mac and Fannie Mae to approve high-risk mortgages back in 1999. From a piece that year in the New York Times: “Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.”
Another problem that led to the crisis was that Fannie and Freddie had the implicit backing of the federal government, but did not have much government oversight — this led them to take risks with impunity. Bush proposed a new agency to oversee Freddie and Fannie, but the Democrats killed it. Again, the NY Times: “Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac. . . . The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies.”
Bush is certainly not without fault regarding our current economic crisis, but Orman — like other experts in their field — would do well to spell out those mistakes with the accuracy one expects of a financial guru.
– Nicole Russell writes from northern Virginia.