CHRISTOPHER BOOKER THE LAST WORD

Before he was president, Barack Obama helped create the modern world’s worst economic crisis

In all the recent coverage to mark the 10th anniversary of the 2008 banking crash, I missed any reference to one of the key players in how that mighty crisis came about.

The immediate trigger for the banking collapse was America’s great sub-prime mortgage scandal. At the heart of this disaster was a 1995 amendment to the US Community Reinvestment Act, which imposed on banks a legal requirement to lend money to buy homes to millions of poor, mainly black Americans, guaranteed by the two biggest US mortgage associations, Fannie Mae and Freddie Mac. No one had campaigned more actively for this change to the law than a young but already influential Chicago politician, Barack Obama.

It was this Act that, more than anything, helped to create the US housing bubble, well beyond the point where it was obvious that hundreds of thousands of homeowners would be likely to default. And in 2005, when moves were made to halt Fannie Mae’s reckless guarantees, no one more actively opposed them than the man who, by then, had become Senator Obama. As official records showed, no senator received more campaigning donations from Fannie Mae (although Hillary Clinton ran him close).

I first reported on this in January 2009, just after Obama had become president, noting how he had, by then, become vociferous in blaming the banks for the crisis. I wrote about it again in January 2012, just after his State of the Union address in which again he excoriated the banks for having “made huge bets and bonuses with other people’s money”, while “regulators looked the other way and didn’t have the authority to stop the bad behaviour”. This, said Obama, “was irresponsible, and it plunged our economy into a crisis that put millions out of work”.

This may have suited the groupthink narrative of the time – that the crisis had all been the fault of those evil bankers (who, in many other ways, were certainly not blameless). But, amid all the adulation then being showered on the new president (the BBC alone sent 400 of its staff to cover his inauguration), how tellingly few people recalled the part Obama himself had played in bringing about the worst economic crisis the modern world has seen.

In a bid to sell her “Chequers plan”, Theresa May has posted on Facebook a short video in which she explains why it is the only way to get “a good deal” for the UK. She starts by saying that the EU has only “put two options on the table”.

One is a Canada-type trade deal, which is unacceptable because it would mean breaking up the UK and staying in “the Customs Union”. The other is a “relationship built on the one Norway has with the EU”. This would mean accepting “free movement of people”, we would “still have vast membership bills”, and we would again still be members of “the Customs Union, which would mean we couldn’t strike our own trade deals”.

In fact, none of this is true. Although Norway is completely outside the EU (and three-quarters of its laws), and as part of the wider European Economic Area (EEA) has full access to the single market, it is not in the Customs Union, to which only EU members can belong. It makes no direct contribution to the Brussels budget. As a member of the European Free Trade Association (Efta) it is party to dozens of trade deals with the outside world. And parties to the EEA agreement (Article 112 of the EEA treaty) can unilaterally impose selective controls on migration from the EU.

But when Mrs May then comes to sell “Chequers”, what does she claim as its advantages but the right to make trade deals with the rest of the world; the right to control EU immigration; and the fact that we could be outside the EU’S Common Agricultural Policy and Common Fisheries Policy. All these rights equally apply to Norway.

Even more relevant is that her cockamamie Chequers plan, attempting to split “goods” from “services”, has already been rejected as unworkable by virtually everyone else, from the EU itself to the “ultra-brexiteers” in her own party. There is no way, as she claims, that it could guarantee “frictionless” trade, or solve the Irish border problem. So why, in seeking to discredit the only workable alternative on offer from the EU, does she have to say so many things that are simply not true?

No senator received more donations from Fannie Mae