American History teacher, Betsy Newmark starts making the case this morning why the current financial crisis can be blamed on Democrats in her take down of Nancy Pelosi.
First she tries to make a deal without consulting the House Republicans. Then she demands that the GOP House members provide 100 votes for the plan because she wants to protect her Democratic Representatives and make sure that they don’t take the blame for a deal that may turn out to be very unpopular. She could have passed the bill last week if she wanted because she has the majority in the House and could have pushed it through as she has pushed through so many bills since she became Speaker. She’d probably have even gotten a few dozen Republican market.
Then John McCain shows up and says that the House Republicans have to be included in negotiating a deal. The Democrats then all run for microphones to say that John McCain was gumming up the deal. But he was actually bringing in the House GOP so that they could voice their concerns and influence the bill and get the support that Pelosi herself was demanding.
But she just wanted them to rubber stamp the deal that the Democrats and Senate GOP had made with Henry Paulson. And when they insisted on having a role in crafting the bill and refused to go along with a the deal as negotiated earlier, she goes and calls them unpatriotic for not having helped out more earlier. As Allahpundit points out, even Paul Kanjorski, the Democratic chair of the House Financial Services subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises, admits that the Democrats had not involved the House GOP enough.
If she really thought that this was a patriotic deal that was absolutely necessary for the country’s financial health, she wouldn’t have cared whether she had GOP support or not. That’s the way she’s acted on innumerable bills since she became Speaker.
Newmark links to an important article by Bill Wilson whom outs the roll that Democrats have played in causing the crisis that has its links to the Clinton years. Wilson effectively traces the whys and hows:
In 1995, the Clinton Administration issued rules that required banks and lending institutions to give loans to people who could not afford them. The lending standards were essentially gutted. This was an overt act of government.
The banks complied and gave the loans. They got the money to lend by selling the bad mortgages to Fannie Mae and Freddie Mac. These semi-government entities “bought” the bad mortgages from the banks. But where did Fannie and Freddie get the money to buy the bad debt?
Fannie and Freddie got the money by packaging the bad debts into bundles and selling them to investors. Now, most people would never have bought these “mortgage backed securities” except for one thing: Fannie and Freddie marketed them as backed by the U.S. Government.
So, naturally, investors bought them. And over time, these securities were traded and treated just like real money. But of course they weren’t “real money.”
They were backed by little more than hope; hope that people with insufficient income or prospects would somehow be able to pay the mortgage.
When those mortgage payments failed to materialize, the securities couldn’t pay the dividends and the whole sordid deal started to fall apart
Wilson points out that even Bill Clinton saw the coming crisis and attempted to reel in governemnet created lending institutions. But even the politically savy Clinton was able to get anything done. Freddie Mac and Fannie Mae had become political giants.
There was ample warning. Since 1999, responsible members of Congress and the two presidential administrations have attempted numerous times to tighten the lending standards and force reform of the system.
But using millions in political cash, Fannie Mae and Freddie Mac blocked all moves at reform. And people like Frank and Dodd – and, yes, Barrack Obama — were there to defend the government social policy, while raking in tens of thousands of campaign contributions for themselves.
So now all of us will pay dearly for this failed utopian government policy. And while it will be an expensive and painful lesson to learn, learn it we must if we are to avoid a more costly repeat.
When government uses its power to distort the market for arbitrary ends, the scheme fails. Facts will not change just because some starry-eyed politician says they should.
It seems simple. So why do our politicians have such a hard time learning it?
Wrting in today’s Boston Globe, Jeff Jacoby details just how much Massachusetts Representative Barney Frank is involved in the crisis. Jacoby actually traces Democrat involvement to the Carter administration:
The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and “redlining” because urban blacks were being denied mortgages at a higher rate than suburban whites.
The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to “meet the credit needs” of “low-income, minority, and distressed neighborhoods.” Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this “subprime” lending by authorizing ever more “flexible” criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.
And here, Jacoby points dierctly at Frank’s malfeasance. Frank is the Chairman of the House Financial Services Committee.
Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that “these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis.” When the White House warned of “systemic risk for our financial system” unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.
Now that the bubble has burst and the “systemic risk” is apparent to all, Frank blithely declares: “The private sector got us into this mess.” Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he’ll find one suspect in the nearest mirror.
Writing in today’s Hartford Cuorant, Kevin Rainey points out jusatat how much Demcrat Chairman of the Senate Banking Committee, Chris Dodd is up to his eyebrows in malfeasance:
During the last two weeks of unsettling events, the same people who had a hand in creating the mess have expected the public to believe they can find the way out. Any candid analysis of the road to this parlous state implicates officials in Washington and their cozy relationships. Public records show, for example, that Dodd, chairman of the Senate banking committee, received more campaign contributions from Fannie Mae and Freddie Mac employees than any other member of Congress. He is third on the list of Bank of America-related donations after Barack Obama and Hillary Clinton.
So the two failed lending institutions are big doners to Barack Obama and Hillary Clinton. It should come as an outrage in the first place that Freddie Mac and Fannie Mae, while sponsored by the US federal government, make campaign contributions in the first place. Why are they using assets for political purposes? And why is it mostly to Democrats and in its highest amounts to the Democrat candidate?
These abominations have occurred not only under Democrat stewardship, but also to the benefit of Democrat politicians and their benefactors such as the notorious “community activist organization, ” ACORN. According to the numbers at the Fannie Mae Foundastion’s own web site, during a period of time from 1992 to 2004, the Foundation made contributions totalling just under $700,000 to ACORN. A Google search of ACORN and investigation prompts 755.000 result hits.
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This post was written by bobsikes on September 28, 2008