The real reason America is in this financial crisis: Senate Democrats such as Barack Obama, Chris Dodd and Hillary Clinton received mucho bucks from Fannie and Freddie. The proverbial watering trough for the Democrats.
From Bloomberg:
The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.
Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.
But really, it isn’t. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street’s efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
…
It is easy to identify the historical turning point that marked the beginning of the end.
Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission’s chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie’s position on the relevant accounting issue was not even “on the page” of allowable interpretations.
Then legislative momentum emerged for an attempt to create a “world-class regulator” that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.
Greenspan’s Warning
The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
Different World
If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.
That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”
Mounds of Materials
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
Oh, and there is one little footnote to the story that’s worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.
The Democrats would want you to think that the Republicans were solely responsible for this meltdown. Don’t believe them.
Tags: 2008 Elections, Barack Obama, Bill Clinton, Campaign Finance, Culture Of Corruption, Democrat Hypocrisy, Democrat Party, Joe Biden, Liberal Bias, Liberal Hypocrisy, Low Wattage Of The Liberal Mindset, MSM, Nancy Pelosi, National Politics, Obama, U.S. Senate
Stumble It!
September 22nd, 2008 at 10:27 am
Way to be on the ball Goerge.
The key statement written here:
“But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue.”
Good ole dims.
Katie will catch up in a minute, Obamas holed up in Tampa getting ready for the debate…theyre kinda busy right now,so his people havent gotten out the talking points …errr….spin yet….Axelrod, please help!!
September 22nd, 2008 at 3:51 pm
Oh right, Republican de-regulation had NOTHING TO DO WITH IT AT ALL! I see….LOL.
Hey stuckers, just curious, are OK with this stipulation in the BushCo Grand Larceny, um, I mean bailout proposal?
“DECISIONS BY THE SECRETARY… ARE NON-REVIEWABLE … AND MAY NOT BE
REVIEWED BY ANY COURT OF LAW OR ANY ADMINISTRATIVE AGENCY”
WTF??? Give a blank check with no oversight and “unitary executive” power to the very idiots who got us in this mess? Are you kidding me? That guy is supposed to be BY LAW, ABOVE THE LAW?
I mean isn’t that a little bit too fascist even for you fascists?
Our founders must be absolutely rototilling in their graves over these BushCo un-checks & un-balances.
September 22nd, 2008 at 4:44 pm
Um, stuckers, they are saying the blame for this not passing in 2005 was THE DEMS FAULT?
Quick quiz: Who controlled the house & Senate in 2005?
Another quick quiz: Who was President?
Um, hello, Bush himself opposed this, check it out you might learn something.
http://www.presidency.ucsb.edu/ws/index.php?pid=24851
September 22nd, 2008 at 6:27 pm
Another important fact from this article:
“Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess. ”
But why would the Democrat leadership do this, you ask?
The three top campaign donation recipients from Fannie Mae were all Democrats. Chairman of the Senate Banking Committee Senator Chris Dodd (D-CT) got $165,000, Senator Barack Obama (D-IL) was given $126,349, and failed presidential candidate Senator John Kerry (D-MA) took $111,000 from the folks at Fannie Mae. Is this information getting out there?
September 22nd, 2008 at 6:29 pm
Ands what about all the dems who actually worked for Fannie and Freddie and are now associated with Obama:
Most of the top Fannie executives were also Democrats each of whom worked closely with Democratic presidents and Barack Obama. Franklin Raines, Clinton White House budget director, ran Fannie Mae and pocketed $50 million. Jamie Gorelick was a Clinton Justice Department Official (famous for adding to our intelligence failures helping cause the attacks on 9/11) was paid $26 million. Jim Johnson, who most recently served on Obama’s VP search committee, was the CEO of Fannie Mae and has also made millions
http://newsbusters.org/blogs/warner-todd-huston/2008/09/21/media-not-reporting-failed-financial-agencies-are-big-donors-oba
September 22nd, 2008 at 6:39 pm
Katie: Axelrod sent you the wrong memo…we arent talking about the House bill you link, it was S 190, a Senate bill…that died because of your party leadership…but lets see Mccains own words of warning to his colleagues about the issue:
May 26, 2006
Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years
were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion
accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to
trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was
directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit
restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes
some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying
disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac — known as Government-sponsored entities or GSEs — and the sheer magnitude of these companies and the
role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the
contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage
of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the
overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.
Senator John McCain
Quick Info: S. 190 [109th]: Federal Housing Enterprise Regulatory
Reform Act of 2005
Stick to fashion critique, at least its entertaining.
September 22nd, 2008 at 8:06 pm
Haha great post, check out all the emptty seats at an Obama rally:
Sitting Room Only for Obama in Green Bay
September 22, 2008 2:53 PM
Sen. John McCain, R-Ariz., and Alaska Gov. Sarah Palin packed the house last week in Green Bay, Wis., at the Resch Center.
Not so today in the same arena with Sen. Barack Obama, D-Ill., as ABC News’ Sunlen Miller captured in these photos.
http://blogs.abcnews.com/politicalpunch/2008/09/sitting-room-on.html
September 22nd, 2008 at 8:34 pm
Senate Bill 109 was introduced by Hagel (who, as one of the few Republicans who’s not stuck on stupid or stuck on corruption is pro-Obama!)
And of course, this bill that was only introduced and never even up for debate much less a vot would have FIXED EVERYTHING!
Meanwhile, listen and learn, stuckers!
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. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation as they began buying riskier mortgages with implicit federal backing. He and his Democratic rival, Senator Barack Obama, have donors and advisers who are tied to the companies.
But last week the McCain campaign stepped up a running battle of guilt by association when it began broadcasting commercials trying to link Mr. Obama directly to the government bailout of the mortgage giants this month by charging that he takes advice from Fannie Mae’s former chief executive, Franklin Raines, an assertion both Mr. Raines and the Obama campaign dispute.
Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain’s campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance, formed in the summer of 2000. Some who came forward were Democrats, but Republicans, speaking on the condition of anonymity, confirmed their descriptions.
“The value that he brought to the relationship was the closeness to Senator McCain and the possibility that Senator McCain was going to run for president again,” said Robert McCarson, a former spokesman for Fannie Mae, who said that while he worked there from 2000 to 2002, Fannie Mae and Freddie Mac together paid Mr. Davis’s firm $35,000 a month . . .
http://www.nytimes.com/2008/09/22/us/politics/22mccain.html?_r=1&ref=politics&pagewanted=print&oref=slogin
September 23rd, 2008 at 12:31 am
This is the bill that was introduced by Hagel in 2005 to GOP majority and never even got off the ground? And would have solved EVERYTHING apparently, LOL….
Wow Hagel must be a pretty smart guy, right?
http://news.aol.com/political-machine/2008/06/28/hagel-id-accept-obama-cabinet-post/
September 23rd, 2008 at 11:49 am
http://thomas.loc.gov/cgi-bin/query/F?c109:2:./temp/~c109oqi1lM:e0:
heres the actuall Bill.
September 23rd, 2008 at 3:58 pm
Oh uh huh, can one of you Stuckers explain to me this sentence in the 2008 Republican Platform?
“We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself.”
Are they full of BS or WHAT?? They just want to redistribute wealth upward — and it’s Iraq all over again, QUICK QUICK DO THIS INSANE THING RIGHT NOW NO TIME FOR DEBATE, OR THERE’LL BE A BIG ECONOMIC MUSHROOM CLOUD!
You people are in the ‘SOME OF THE PEOPLE ALL OF THE TIME’ category….
September 23rd, 2008 at 8:20 pm
Thanks Kaite for going around the world….again.
Lets get back to the article, shall we???
“Oh, and there is one little footnote to the story that’s worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.”
But did you see the tie he was wearing.??..I just cant beleive the tie he was wearing.