Republicans Sought Better Oversight Over Freddie Mac and Fannie Mae; Democrats Opposed It
Barney Frank wants CEOs to reduce their pay if they’re going to get a big government bailout.
It’s a thought. But, then, maybe Frank should consider reducing his own pay — since he and other Democrats opposed Bush Administration efforts to more closely regulate Fannie Mae and Freddie Mac.
Just a reminder:
New York Times, September 11, 2003:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
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 government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
Of course, the plan was opposed — by Democrats, including Barney Frank:
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
Remind me why we care what Barney Frank thinks again?
P.S. Another reminder. Who said this?
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac…and the sheer magnitude of these companies and the role they play in the housing market…If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie and Freddie pose to the housing market, the overall financial system, and the economy as a whole.
That’s John McCain from 2005, speaking in support of legislation to control Fannie and Freddie. See Karl from a few days ago for more.
Barack Obama was concerned as well — concerned, that is, to make sure he was collecting as much money as possible from Fannie and Freddie. He did well, too, becoming the third top recipient in the Senate of Fannie and Freddie contributions from 1989-2008. [UPDATE: Make that second top recipient.] (Karl pointed out related figures days ago.) That’s fast work, since he’s been a Senator for only 4 years.
UPDATE: Yes, I know Republicans controlled Congress during this time. But this election is between McCain, who tried to do something, and Obama, who took money from Fannie and Freddie. As Ed Morrissey noted in the post linked above, the 2005 legislation never made it out of committee — and “Chris Dodd, then the ranking member of the Banking Committee and now its chair, was in the middle of receiving preferential loan treatment from Countrywide Mortgage, one of the companies gaming the system in the credit crisis.”
If McCain neglects to hammer these points home over the next few weeks, he’s toast. Obama and his fawning multitudes among the MSM are trying furiously to suggest otherwise – don’t let them get away with it, Johnny Mac.
Dmac (e639cc) — 9/21/2008 @ 6:51 pmSo the failure of legislation to make it through the GOP Congress is the fault of….wait for it….the Democrats.
jpe (bd88bc) — 9/21/2008 @ 6:54 pmjpe,
This election is between Obama, who did nothing, and McCain, who tried doing something. And Obama is trying to tie McCain to Bush, who tried doing something.
Patterico (cc3b34) — 9/21/2008 @ 7:00 pmYes, jpe. The Senate had this turncoat named Jeffords. Remember him ?
On May 24, 2001, Jim Jeffords left the Republican Party, with which he had always been affiliated, and announced his new status as an independent. Jeffords discussed this decision during his announcement that he was leaving the Republican party. “I will make this change and will caucus with the Democrats for organizational purposes once the conference report on the tax bill is sent to the president. I gave my word to the president that I would not intercept or try to intervene in the signing of that bill”. Jeffords decided to switch when the Senate Republicans had refused to fully fund the Individuals with Disabilities Education Act. [2]
The independent status of Jeffords changed the Senate composition from 50-50 (with a Republican Vice President, Dick Cheney, serving as President of the Senate to break tie votes) to 49 Republicans, 50 Democrats, and one independent. Jeffords promised to vote for Democratic control after being promised a committee chairmanship by Democratic Leader Tom Daschle. He then handed his chairmanship of the Health, Education, Labor, and Pensions Committee, which he had held since 1997, to Ted Kennedy (D-MA) and was given the chairmanship of the Senate Environment and Public Works Committee, which would have been occupied by ranking minority member Harry Reid. Jeffords held this committee chair until the Democrats lost control of the Senate in 2003 following Congressional elections in 2002.
Once Jeffords could no longer block legislation, others stepped in.
Significant details must still be worked out before Congress can
approve a bill. Among the groups denouncing the proposal today were the
National Association of Home Builders and Congressional Democrats who
fear that tighter regulation of the companies could sharply reduce
their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing
any kind of financial crisis,” said Representative Barney Frank of
Massachusetts, the ranking Democrat on the Financial Services
Committee. ”The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of
affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
”I don’t see much other than a shell game going on here, moving
something from one agency to another and in the process weakening the
bargaining power of poorer families and their ability to get affordable
housing,” Mr. Watt said.
Yes, jpe, Democrats, with some Republican pussies, blocked the regulation. Do you know what a filibuster is ?
Mike K (2cf494) — 9/21/2008 @ 7:11 pmSo the failure of legislation to make it through the GOP Congress is the fault of…
The suspense builds – can “it” comprehend?
….wait for it….
Can “it” actually learn?
Democrats.
Guess not.
Dmac (e639cc) — 9/21/2008 @ 7:22 pmjpe-
MartyH (928d75) — 9/21/2008 @ 7:29 pmWhy do you think Fannie and Freddie spent all that money lobbying if nor at least to block legislation unfavorable to their interests. They certainly got their money’s worth.
daleyrocks (d9ec17) — 9/21/2008 @ 7:54 pmOne might wonder why Dodd and Obama were #1 and #2 in funds bequeathed to them by Fannie and Freddie. What quid pro quo resulted? And why would
madmax333 (0c6cfc) — 9/21/2008 @ 8:02 pmthe junior senator from Ill. get such a disporportionate amount in a few short years? Will the media bother to query the Anointed One?
As I’ve linked to before, Fannie and Freddie aren’t the cause of the problem.
And that link contains others. Here’s one.
You’re trying to score political points. Some context, for your readers
readnek (105b91) — 9/21/2008 @ 8:05 pmI think it was his connection to ACORN, who was pushing all of those liar loans into the ghetto.
Another Drew (551fef) — 9/21/2008 @ 8:05 pmReadnek’s second link is to a summary of a Paul Krugman article. That doesn’t mean you shouldn’t read it but be prepared.
DRJ (0754ed) — 9/21/2008 @ 8:10 pmI am constantly reminded when reading Krugman that he was a financial advisor to Enron, and we know how that turned out (and we need to remind Mr. Krugman that we remember his association with them at every turn).
Another Drew (551fef) — 9/21/2008 @ 8:22 pmLet him wear the “mark of Cain”.
“Readnek’s second link is to a summary of a Paul Krugman article”
No, it’s to a commentary on a Krugman article by a former bank officer and mortgage specialist.
Be more precise with your language, please.
readnek (105b91) — 9/21/2008 @ 8:24 pmreadnek….
Why??? Her line and your line are the same, just using different semantics….
reff (539a9d) — 9/21/2008 @ 8:27 pmreadneck leaves some out:
I think we can give Fannie and Freddie their due share of responsibility for the mess we’re in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren’t the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box. But Krugman is right to focus on the fact that it was the regulatory and charter constraints of the GSEs that kept that box closed. In the schizoid reality of the GSEs, when they had their “shareholder-owned private company” hats on they did plenty of envelope-pushing. When they had their “affordable housing” hats on, they rationalized dubious theories of credit quality–like the fervent belief that low or no down payment can be fully offset by a pretty FICO score–to beef up their affordable housing goals, often at the expense not of the poor put-upon “private sector” but of FHA, whose traditional borrower pool they pretty thoroughly cherry-picked. Nonetheless, the immovable objects of the conforming loan limits and the charter limitation of taking only loans with a maximum LTV of 80% unless a well-capitalized mortgage insurer took the first loss position, plus all their other regulatory strictures, managed fairly well against the irresistible force of “innovation.” If there has ever been an argument for serious regulation of the mortgage markets, the GSEs are it.
So the “schizoid” condition of Fannie and Freddie allowed it, but weren’t responsible? And this is a reason to pretend that McCain was wrong in his call for greater oversight?
Apogee (366e8b) — 9/21/2008 @ 8:31 pmso dems are complaining that the repubs didnt act in a heavy-handed manner and just run roughshod over them??
chas (e36377) — 9/21/2008 @ 8:41 pmPatterico> Did you read this op-ed by the WSJ’s Paul Gigot back in July (basically, a great told-you-so to the Democratic enablers of Fannie and Freddie)…this post reminded me of it:
http://s.wsj.net/article/SB121677050160675397.html?mod=most_emailed_day
Shodo (dbfcb4) — 9/21/2008 @ 8:48 pmYou’re trying to score political points.
readnek – Correct me if I’m wrong, isn’t that what you’re trying to do here.
I pointed out on another thread earlier today that the mortgage originators were looking for a best execution strategy, whether they were mortgage brokers or banks and whether that involved selling to the CSE’s or Wall St. conduits. The article you linked confirms what I said, but I don’t share other parts of its analysis or conclusions. The article also contradicts the lefty stance that deregulation was the cause of this crisis.
But that Paul Krugman is a winner. If you keep predicting a recession, one will eventually get here. He’s predicted nine of the last three by most recent count.
daleyrocks (d9ec17) — 9/21/2008 @ 8:50 pm“I think we can give Fannie and Freddie their due share of responsibility for the mess we’re in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble.”
Read that once or twice if you have to. It’s simple english, it puts things in perspective, and it doesn’t exonerate anyone.
readnek (105b91) — 9/21/2008 @ 8:56 pmHere is more of what happened. Note the Spitzer role again.
Why did so many smart people at so many top firms make dodgy investments? Why were there so many unknown unknowns, now at least becoming known unknowns? One explanation is the absence of warnings from the professionals whose job it is to identify risks at companies such as financial-services firms: the much-maligned research analysts. For decades, the large Wall Street brokerages had armies of analysts who, when they did their jobs right, asked the hard questions and issued tough reports that often alerted both company executives and public investors to market-moving issues.
There are now about half as many Wall Street analysts as in 2000. Former New York Attorney General Eliot Spitzer eviscerated the profession with $1.4 billion in settlements and a new mandate for how the industry would be structured, which made the analysts uneconomical. Some brokerages had mixed analysis with investment banking during the dot-com boom, but regulatory overkill undermined this source of informed analysis. Last year, Brad Hintz, who covers brokerages for Sanford C. Bernstein, told Barron’s, “Research analysts have gone the way of high-button shoes and buggy whips.”
Democrats, Democrats, Democrats
Mike K (2cf494) — 9/21/2008 @ 8:57 pmAgain: persepctive.
readnek (105b91) — 9/21/2008 @ 9:04 pmThe FT.
“Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle.”
readnek (105b91) — 9/21/2008 @ 9:05 pmOf course, the [2003] plan was opposed — by Democrats, including Barney Frank
The plan produced S.1656, authored by New Jersey Democrat Jon Corzine.
There were no co-sponsors.
steve (8ea3bc) — 9/21/2008 @ 9:10 pmMike – It’s easy. You get rooms full of people with no real world experience. Each of the people in the rooms have fancy degrees in math, business, etc. from high quality schools. They each believe they are the smartest people in the world and don’t hesitate to share that opinion with you. They believe they have exactly modelled the risks of the underlying mortgages they are sticking in the securities they are peddling. Nevermind that there is no good historical data on subprime mortgages, mortgages with the characteristics they are selling, documentation problems of the underlying loans, etc., etc. The masters of the universe have spoken!
The geeks have inherited the earth until they cost everyone too much money.
daleyrocks (d9ec17) — 9/21/2008 @ 9:11 pmreadnek – I keep seeing that Oxley quote. Why oh Why would the White House ever oppose a regulatory bill on Fannie that had Barney Frank’s support do you suppose?
daleyrocks (d9ec17) — 9/21/2008 @ 9:15 pmWhy has no one on the Sunday shows talked about the millions “earned” by the leadership of F & F? Shouldn’t those CEOs be punished too? Or being a Friend of Barry counts for more than we thought.
Patricia (ee5c9d) — 9/21/2008 @ 9:31 pmMr Oxley’s screed has already been discredited on this site.
Another Drew (551fef) — 9/21/2008 @ 9:40 pmIt is interesting that one of the many reforms suggested by knowledgeable observers is the scrapping of Sarbannes-Oxley, which has been a disaster to American business, but a watershed event for overseas financial markets in the IPO business.
White House Press release give the tale of the tape, the timeline and the smack down all rolled into one.
Press Release link
daytrader (ea6549) — 9/21/2008 @ 10:27 pm“The geeks have inherited the earth until they cost everyone too much money.”
No not Geeks, accountants that figured out how to enrich themselves while in positions they should have never been able to attain.
Bean counters, NOT Geeks!
Bean counters, the same sort that have aided the importation of our jobs overseas, massive companies charging American consumers the same $20 fees while using 25 Cent labor. None of which care if lead is used in the toys your child will chew upon. Just numbers! Cheaper production equates to larger profits! TODAY!
See we all just need to get onto this “globalization” bandwagon, they make 25 cents an hour, you too will work for 25 cents an hour. Even thouth they pay 50 cents for fuel and you have to pay 4 bucks for the same. Come on, get “globalized” today!
As a nation, we should let them all fail! NOT bail out the banks, the ins companies or anybody else. The only time that actually worked was with Chrysler, but they had a real leader.
This time around, it’s but a total Bamboozle job on those that will have to end up paying!
Oh and the first that need to be broken, is the heads of any of these firms! ZERO compensation should be allowed for such, subprime, performance!
TC (f398ed) — 9/22/2008 @ 1:09 am“I’m always for less regulation.” Spin that however you want, but it’s what McCain said. Always means always, until you get to zero (no regulation at all).
Anonymous (e11f81) — 9/22/2008 @ 5:12 amreadneck – and it doesn’t exonerate anyone.
My point exactly.
But it does blow away your main point: – that the GSE’s had nothing to do with the meltdown and so the regulation argument is irrelevent.
If that wasn’t your argument, then why cut and paste in this thread? You should refrain from bringing up cheap political points. More lefty projection.
Apogee (366e8b) — 9/22/2008 @ 5:22 am29 TC- I share your concerns. Dream on though. Barclays is buying Lehman and has set aside $2.5 billion for bonuses for Lehman NY staff. I guess we’ll be told that if we have doubts or complaints, own some of the company stock and vote at board meetings. Yeah, that’s the ticket. I’ve contributed way too much of my dough in the past to companies which went in the toilet with a series of really bad managements. Said managements always seem to do well feathering their own nests with options and golden parachutes. IMO the SEC oversight is at best a joke and at worst itself a criminal enterprise.
madmax333 (0c6cfc) — 9/22/2008 @ 5:31 amSpeaking of shitty management, I’m wondering how much compensation Lord Magic Negro sucked in for managing that Annenberg Challenge Fund and how many friends of Obama made out also? Look at “benevolent” Marxists/socialists like the obama, Wright, Ayers, etc. and observe how well they’ve done financially, despite racist white Amerikka holding them down.
#30 – Anonymous drive-by hack
Let’s just put up the entire quote, shall we?
I’m always for less regulation. But I am aware of the view that there is a need for government oversight. I think we found this in the subprime lending crisis — that there are people that game the system and if not outright broke the law, they certainly engaged in unethical conduct which made this problem worse. So I do believe that there is role for oversight.
As far as a need for additional regulations are concerned, I think that depends on the legislative agenda and what the Congress does to some degree, but I am a fundamentally a deregulator. I’d like to see a lot of the unnecessary government regulations eliminated, not just a moratorium.
Kind of different than what the leftist liar threw out there before running away.
But then, they have to be dishonest, otherwise nobody would listen.
Apogee (366e8b) — 9/22/2008 @ 5:45 amYour headline is misleading.
It is a very old and well-known trick: a politician counts the votes and proposes something he knows won’t pass, then trumpets his position at election time, and so we think he is a “good guy”. Remember the attempt to pass a balanced budget amendment? Looking back, we should have known that it was a charade. Now, I’m reminded by your update that they held the majority, and *still* didn’t pass what you claim “Republicans sought”! In this scenario, a politician claims to be for it, and you believe him. Do you *really* believe that John McCain or anybody else *seriously* proposes to impose discipline on their masters?
So, suppose we know the Democrats are the bad guys, O.K. But does anyone here still believe that the Republicans are the “good guys”, fiscal conservatives, etc., dedicated to *this* sovereign nation and no other?
The Republicans generally speaking don’t deserve the benefit of the doubt that your headline would promote.
I know you’re not naive or ignorant, so why the headline that misleads so many? Winning the election at any cost because the other guys are worse? My dear fellow patriots: we have lost. Our institutions are now so corrupt that I think our democratic processes offer nothing but an ever tightening enslavement. That’s what your loyalty to one of these parties is getting you.
RC (cab086) — 9/22/2008 @ 5:58 amFrom :
They are rushing like mad to cram this Mother of All Bailouts down our throats in the next 72-96 hours. And right there in the text of the proposal is this naked power grab: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
Thats dictatorship. Read it again. What do *you* call it?
RC (cab086) — 9/22/2008 @ 6:51 am“Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.”
“Mr Oxley’s screed has already been discredited on this site.”
No it was not. It was mocked, but backed up with nothing.
readnek (105b91) — 9/22/2008 @ 7:16 amOne more comment please.
Your thread is about one specific matter, and I don’t want to spam that, but your headline implies something more, and I’m replying to that.
Again, I object to the implication in your headine that the Republicans are looking out for us. Where are the Republicans screaming bloody murder from the rooftops about this:
[from the Washington Post, June 24, 2005, (Kelo decision)]:
The Supreme Court ruled yesterday that local governments may force property owners to sell out and make way for private economic development when officials decide it would benefit the public, even if the property is not blighted and the new project’s success is not guaranteed.
Bush administration friends of the court briefs were on the wrong side of both Kelo and Heller. Was it V.Fox (the president’s good friend) who bragged that they would undermine the dollar to such an extent that we would beg for the amero? Prophecy, or inside information about what’s coming? How many jihadis walked across the border this year?
Are you really going to vote for Trotsky because he’s better than Stalin?
The implication in your headline, that the Republicans are looking out for us in these matters, is nonsense.
RC (cab086) — 9/22/2008 @ 8:48 amEnd. Thank you.
Thank you RC.
Republicans ran the whole show for years and did nothing on this particular subject. They “sought oversight” but obviously didn’t seek it hard enough.
If Prez. Bush couldn’t get the job done with an all Republican congress and judiciary how is “the reformer” going to get it done? even if he gets his all Rep congress back?
Now both parties are going to vote in this massive new bailout, even after propping up the important pillars of the economy (the neccessary bailouts), coz they know if they dont that the ensuing “market adjustment” just might be followed by a “political adjustment” in terms of who gets money for campaigns and who people will vote for.
The really funny part is that the guys who made their money and got out before the bottom fell out are going to get a tax break on all the money they made in order to “keep the economy growing”. Which eventually-to-be-bailed-out-by-taxpayers Ponzi scheme do you think those guys will stick all their untaxed “grow the economy” money into next?
EdWood (c2268a) — 9/22/2008 @ 9:56 amCurrently the Democrat clown show is showing that it intends to obstruct the administration’s attempt to address the financial industry crisis.
Typical. No solutions, nothing but obstruction – economics, oil supply, terrorism – that’s been the Democrat mantra for many years now.
SPQR (26be8b) — 9/22/2008 @ 5:35 pmYes, after the emphasis on renewed drilling by the GOP jaw-boned the price of oil down to around $106/bbl, today saw a $23/bbl spike due to the dallying and obstructionism of the Dems on Capitol Hill.
Another Drew (1e1c13) — 9/22/2008 @ 5:43 pmWay to go, Nan!
Do you *really* believe that John McCain or anybody else *seriously* proposes to impose discipline on their masters?
If John McCain has a master, it’s news to a lot of people. I’ve pulled my hair out a few times at his choices (immigration, campaign finance, torture) but I’ve yet to see his “master.” You are starting to sound like DNC talking points, or, horrors, a Paulista.
Tell me, did the WTC collapse look like an inside job ? Come on, you can tell me.
Mike K (2cf494) — 9/22/2008 @ 6:07 pmDuring the Cold War, I was sure that the Democrats were the bad guys, and it was inexplicable that they could be so (evidently) pro-Soviet at a time when, I thought, we were fighting for ideological survival, at tremendous cost financially and psychologically. So naturally, I sided with the Republicans, and this went on for some decades. But following the collapse of the Soviet Union, our nation lost a great deal of what was in hindsight a forced cohesion. Also, much of the justification that the Republicans had used in many areas was removed. Gradually, because of issues like the federal deficit, the trade deficit, de-industrialization, open borders, etc., I was faced with the inexplicability of Republican behavior, too. The end of the Cold War should have ushered in a golden age for America, but instead, we raced toward self-destruction.
Well, faced with the inexplicable, confronted by paradox, I had to reexamine my assumptions about the Republicans, and about our government. I conclude, after a great deal of agonizing over this, that either they, themselves, are ideologues (some sort of Marxists) for whom the destruction of America is a stage on the road to building their utopia (call it what you will), or more probably, other groups weild the real money, and thus the real power, in the world, and these figures we see are just loathsome mediocrities in it for the payoff. When I said “masters”, above, I was revealing that I don’t believe McCain is an ideologue…
RC (cab086) — 9/22/2008 @ 8:12 pmThe interests who ran us uncountable trillions of dollars into debt, and all of their allies in government, will retire wealthy. I did not try to identify them, but “masters” is as good a name as any.
Comment by RC — 9/22/2008 @ 8:12 pm
That, truly is inexplicable!
Another Drew (1e1c13) — 9/22/2008 @ 8:21 pm“Your thread is about one specific matter, and I don’t want to spam that, but your headline implies something more, and I’m replying to that.”
RC – The headline was self-explanatory and did indeed only refer to one specific matter. You simply souldn’t resist your urge to spam this thread with your comments #37 and #42. Anyone who took the time to read them is more stupid for having done so.
Many thanks.
daleyrocks (d9ec17) — 9/22/2008 @ 9:03 pm[An aside, then back to the specific topic: The headline promotes the theme, ubiquitous throughout our civic discourse, of “R good, D bad” (or visa versa). I think that is a good cop/bad cop jerk-around (not by our host, but by whoever is running the show), and I gave my reasons. This is easy to understand: one unelected guy says “gimme a trillion” and the other bends over and says “where do I sign?” Which one of these is the boss? If that is so, why do we bother with elections? Answer: they are civic theater engineered to keep the masses believing in our civic myth, because it is profitable to them to preserve that for now.]
RC (cab086) — 9/22/2008 @ 10:33 pmBack to the specific topic: Under the cover of a divided majority, or when in the minority, any senator can claim to support anything he thinks would make him look good to his constituents. If we trust their good will, we might believe that they really desired what they claim. But I argued above that they no longer merit this trust, rendering the implication of the headline nonsensical. For example: the Republicans said they wanted a certain agenda. We believed that and gave them the majority. What we got was- stabbed in the back. This same argument applies to the Democrats, who have done nothing since assuming the majority, despite all of those outrageous promises they made to their base, designed to terrify us.
So, they don’t deserve that trust, that they really wanted that thing they couldn’t get, making the headline misleading in my opinion. It promotes an undeserved benefit of the doubt.
I have one general comment and that is that this is one act of a thousand acts or 10,000 acts which are relevant. Given John McCain’s propensity to endorse both sides of the same issue (don’t drill off the coasts, drill baby drill; don’t regulate, regulate baby regulate), we can hardly be surprised to find a quote supporting anything that needs to be supported.
More generally, I focused on the quotes, instead of the surrounding editorial comments, which, if you aren’t reading carefully, might look like quotes. I was struck by the following, among other things:
“The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios (New York Times, September 11, 2003).”
What really hits me about this quote is that the Bush Administration was trying to take a power away from the Congress. Given that the Executive Branch has seized many powers with B.S. rationales (e.g., the power to wage war in Iraq) that should be with the Legislative Branch, I can see why the Legislative Branch would have been very hesitant to relinquish any of it’s powers, duties, responsibilities. So, I don’t find the fact that this power was not turned over very enlightening as to the cause of this crisis. In fact, I am glad they did not turn it over. They should have retained the power, but they should have exercised their responsibilities. Notice that this was a wholly Republican Senate and Legislature and Presidency in 2003, when these problems were noted and nothing was done.
What is interesting is that at least some people recognized that there were serious problems and nothing was done about it, irrespective of which side of the aisle was complaining about these issues. Before reading this, I had thought that we had needed a whistle-blower on the inside of the system to shed light and truth earlier on. Apparently, the problems were obvious and anticipated.
This leads me to the following reflection, stimulated by hearing Bill O’Reilly (of all people) on GMA this morning. He said that if we don’t start electing the more honest candidates, we are never going to solve any of these problems, or words to that effect. To me, this goes to the heart of the matter. If we continue to be willing to vote for people we know to be liars, we are continuing to vote for dishonest government.
For me, McCain is one of the biggest disappointments ever. He has lied so much that even Karl Rove called him out on lying. Half a dozen Republican pundits have thrown him under the bus for lying. Sarah Palin is the most corrupt politician for whom I have ever had the chance to vote, with the possible exception of Nixon.
The primary reason I opposed Hillary Clinton so vehemently was that I believed she was a liar. I agree with Bill O’Reilly for once. We have to seek to elect those with fundamental integrity. We aren’t going to find perfection, but we can do a lot better than Bush, Cheney, McCain, and Palin.
Obama may be wrong sometimes. And, I do believe he is too close to the banking executives and that is something that has come to my attention of late. He’s not as progressive in many ways as he should be — and I’m not talking about socialistic. However, I have yet to learn that he outright lied to me. As a politician, I believe his level of personal integrity is one of his glowing strong points. If you can prove to me that he is a liar, I’ll stay home or vote for Ron Paul, who at least isn’t lying to me every morning, as McCain and Palin surely are.
Carolyn (12cef7) — 9/23/2008 @ 12:05 pmI saw an article making the same point as this one on Fox & Friends today – its bullsh1t!
Although the commitee vote killing Freddie reform is regrettable in hindsight, I know from personal experience that this was not the root cause of the problem.
I was offered a mortgage in 2002 for a four two and a half in Coral Springs, Florida with no proof of income required. This was nothing to do with Freddie or Fanny. I turned it down because it seemed too risky, but obviously many, many others didn’t when made similar offers. This relaxation of the mortgage approval process caused the housing bubble. Suddenly anyone could get a mortgage, prices rose and flippers entered the market place, thus inflating the market even more and causing positive feedback on house prices. People only needed to pay the mortgage for a few months before flipping the property and moving on. When this bubble burst and people could no longer flip, and their temporarily low interest rate period ended, they were forced to foreclose.
So what caused the mortgage approval process to relax in the first place? Could it be deregulation of the mortgage industry? Who was responsible for that?
adso (8db2e9) — 9/25/2008 @ 5:53 amVery good /// excellent /// why have we not heard all this much earlier??? // TKD
Tom Dillon (d671ab) — 9/25/2008 @ 4:42 pmDidn’t Freddie Mac have to pay a $3.8M fine for illegal campaign contributions, and conducted numerous fundraisers, primarily for Republicans, and primarily for Oxley? It also appears that HUD allowed Freddie and Fannie to buy more than $480 billion in sub-prime mortgage backed securities from 2004-06.. I don’t understand how we blame Barney Frank when these things happened with a Republican Congressional majority and a Republican White House. Until the Republican party of today, which is nothing like my father’s Republican party, can accept responsibility, it is going nowhere.
rfk (17ee75) — 9/30/2008 @ 7:15 amSo what caused the mortgage approval process to relax in the first place? Could it be deregulation of the mortgage industry? Who was responsible for that?
Comment by adso
No, it was the willingness of Fannie-Freddie to buy those mortgages as “conforming loans.” Had they not relaxed their standards as part of the whole CRA press for “affordable housing,” the lenders who originated those bad loans would have been stuck with servicjng them. Given that it was their own money at risk, those loans would not have been made. What happened was that it was OUR money at risk, as we see, and the loans were flipped along the path to Fannie-Freddie.
Unfortunately, we have a population that was educated in post-1960s public schools so that fact will never penetrate. In brief, and in the format most easily understood by the post-1960s educated, see this.
Mike K (2cf494) — 9/30/2008 @ 7:29 am