The hard core Obamaphiles still claim he is solving a problem not of his own making, and they are largely correct.
To be sure, the mortgage meltdown did not happen on his watch. But the mortgage market was largely wrecked by Fannie Mae and the suspension of prudent lending in the service of political meddling. This process happened over decade but took a sharp turn towards disaster under the stewardship of James Johnson serving the housing policies of Bill Clinton, and somewhat continued under George Bush. Attempts to reign in Fannie Mae in 2005 after discovery of major fraudulent accounting met stiff partisan political resistance. James Johnson at Fannie became quite adept at controlling Congress.
We cannot underestimate the damage done by Fannie and the unwillingness of Congress to reign them in, even when warned. The two biggest defenders of Fannie- Barney Frank and Chris Dodd- wrote the financial reform bill which bears their name. What a joke. The economy will be hampered by the destruction of the housing market for years to come.
While Bush was largely blamed for the deregulation, the two most destructive changes, were signed by Bill Clinton. The Gramm- Leach-Bliley Act undid the Glass Steagal Act from the days of FDR and the Depression which served to keep speculative activity our of the commercial banking sector. While Clinton signed it, the bill had wide support from both parties. The same is true of the Commodity Futures Modernization Act of 2000 which removed over-the-counter derivatives trading from the supervision of the Commodities Future Trading Commission.
It was understandable that in the face of the dot.com bust, Y2K, the Wall Street Scandals of Enron and Worldcom, and the 9/11 attacks that the Fed would ease on the money supply and that the government would spend to allay the impact of these multiple shocks. Deficits rose sharply but were dropping, when the 2008 financial disasters hit. This recent shock caused a severe credit squeeze that further restrained the economy. We are still feeling the impact of credit liquidations.
All of this was in play when Obama took office and the excesses are difficult and painful to unwind. As we study the causes of this record financial upheaval it becomes clear that it is way too simplistic and quite inaccurate just to blame Bush, but these factors were certainly not the fault of Obama.
But once the Democrats had control of both Houses and the White House and starting passing massive new legislation, numerous regulations, supporting unionization, overriding bankruptcy law, and preaching class warfare from the bully pulpit they have to take some responsibility for the results. The emergency room doctor may not have caused the car wreck that brought the mangled patient to his operating room, but from that point he is responsible for the actions that lead to either recovery or death.
Obama inherited a mess and he is making it worse. His party, however, was deeply, though not solely, involved in the series of missteps that brought this collapse about.