Michele Bachmann's Full Speech

If, like me, you want to hear everything Michele Bachmann said in her much-discussed speech in Congress about how the mortgage crisis was caused by the Clinton administration doling out patronage, check out the full-length clip on Ken Avidor's YouTube page.

Ken is always there with the latest on Minnesota's own Sarah Palin action figure.

In the speech, Bachmann fixes her sites on a group of people (which she unusually dichotomizes by calling it "minorities and people of color" in low-income neighborhoods -- i.e., Clinton supporters) who were given loans based on no more than the color of their skins.

All this, she says, is the fault of changes Bill Clinton made in the Community Reinvestment Act, which was originally passed in 1977 (under another Democratic administration, eh?) to stop mortgage redlining.

First, a little history on the CRA, courtesy of the Wikipedia. (Although this wiki entry is obviously being contested by different factions, I would say some info in it appears to be objectively true, based on its footnoting). Banks opposed the act, and the only banker to speak in favor of the CRA in 1977 was from Chicago's long-time progressive community lender, Shorebank. Interestingly, Shorebank appears to be weathering the current mortgage crisis in fine shape, despite lending to the same group of people Bachmann disparages.

The CRA was changed during the Clinton years to reach more people with home ownership opportunities. Bachmann basically calls this political patronage (without using that word) in her speech, and blames it for the sub-prime flameout.

In her speech, it's actually hard to tell if these are her words or not, because she begins by saying she is quoting an article by Terry Jones of Investor's Business Daily, but she never closes the quote.

Unable to tell if Bachmann's entire speech was lifted from Jones or just the first sentence, I found Jones's original article (from Sept. 24, and I'd like to point out it's an editorial, not a news story). Here's what belongs to whom in Bachmann's words.

Just about the first half of the speech is a direct quote from Jones, including the most inflammatory verbiage (that loans were made on the basis of race and little else, and that Clinton was paying back his urban voting bloc). From the point when Bachmann says "These were changes that led Fannie and Freddie to get into the sub-prime loan market," she is speaking in her own words (still somewhat based on the article, but it would pass a plagiarism test). This is the part where she tries to qualify her remarks up until that point by saying that minority homeownership is a good thing, it was just done wrong.

I gather from my Google search that the CRA is a favorite whipping boy of conservative media, such as the National Review (gee, I never thought I'd link to that). However, a relatively well-footnoted paragraph near the end of the Wikipedia entry says:

Robert Gordon [professor of economics at Northwestern] has pointed out that approximately half of the [bad subprime] loans were made by independent mortgage companies that were not regulated by the CRA, and thus had no government obligation to offer credit to minorities. In the later part of the crisis, these mortgage companies made subprime loans at twice the rate of CRA banks. Another third of the major subprime lenders were regulated, but had very little CRA involvement. Gordon also makes the argument that the weakening of the CRA in 2004 was followed by intensified subprime lending.

Wonder if Michele read the Wikipedia before her speech.

Follow up, Oct. 23, 2008: Pioneer Press business columnist Ed Lotterman published a well-phrased refutation of Bachmann's CRA rant.