Democrats caused Wall Street Crisis

Liberty11 — Thu, 23 Oct 2008 21:31:30 -0400

What is the proximate cause of the collapse of confidence in the world's
banks? Millions of improvident loans to American house buyers. Which
organizations were on their own responsible for guaranteeing half of
this $12 trillion market? Freddie Mac and Fannie Mae, the so-called
Government Sponsored Enterprises which last month were formally
nationalized to prevent their immediate and catastrophic collapse. Now,
who do you think were among the leading figures blocking all the earlier
attempts by President Bush – and other Republicans – to bring these
lending behemoths under greater regulatory control? Step forward, Barney
Frank and Chris Dodd.

In September 2003 the Bush administration launched a measure to bring
Fannie Mae and Freddie Mac under stricter regulatory control, after a
report by outside investigators established that they were not
adequately hedging against risks and that Fannie Mae in particular had
scandalously mis-stated its accounts. In 2006, it was revealed that
Fannie Mae had overstated its earnings – to which its senior
executives' bonuses were linked – by a stunning $9.3billion. Between
1998 and 2003, Fannie Mae's executive chairman, Franklin Raines, picked
up over $90m in bonuses and stock options.

Yet Barney Frank and his chums blocked all Bush's attempts to put a
rein on Raines. During the House Financial Services Committee hearing
following Bush's initiative, Frank declared: "The more people exaggerate
a threat of safety and soundness [at Freddie Mac and Fannie Mae], the
more people conjure up the possibility of serious financial losses to
the Treasury which I do not see. I think we see entities that are
fundamentally sound financially." His colleague on the committee, the
California Democrat Maxine Walters, said: "There were nearly a dozen
hearings where we were trying to fix something that wasn't broke. Mr
Chairman, we do not have a crisis at Freddie Mac and particularly at
Fannie Mae under the outstanding leadership of Mr Franklin Raines."

When Mr Raines himself was challenged by the Republican Christopher
Shays, to the effect that his ratio of capital to assets (that is,
mortgages) of 3 per cent was dangerously low, the Fannie Mae boss
retorted that "our assets are so riskless, we could have a capital ratio
of under 2 per cent".

Maxine Walters' complaint about previous attempts to bring the great
state-sponsored housing finance bodies under stricter control was partly
a reference to Bill Clinton's efforts. Last week the former President
acknowledged that "responsibility" for the absence of proper regulation
rested "with Democrats who were resisting any efforts of Republicans in
Congress, and earlier when I was President and tried to impose tighter
standards on Fannie Mae and Freddie Mac". Then, as now, members of his
own party saw all such initiatives as unwonted attacks on the chances
for low-earners, and particularly African-Americans, to own their own
homes.

From its inception in 1938 Fannie Mae (and later Freddie Mac) was
designed to make housing finance available to "ordinary Americans". This
was a noble aim. In the 1970s another Democrat President, Jimmy Carter,
introduced legislation which demanded that such bodies enhance their
lending to minorities. Again, this was based on a noble idea: to stamp
out racism in the mortgage market. Thus by 1998 you had the Federal
Reserve Bank of Boston producing a document entitled "Closing the Gap: a
Guide to Equal Opportunities Lending", which instructed banks that an
applicant's "lack of credit history should not be seen as a negative
factor" in obtaining a mortgage. As Stephen Malanga of the Manhattan
*Institute notes: "Of course the new federal standards couldn't just
apply to minorities. If they could pay back loans under these terms,
then so could the majority of loan applicants. Quickly, these became the
new standards in the industry. As the housing market boomed, banks
embraced these new standards with a vengeance. Between 2004 and 2007,
Fannie Mae and Freddie Mac became the biggest purchasers of subprime
mortgages from all kinds of applicants, white and minority, and most of
these loans were based on lending standards promoted by the Government."

One of the few journalists to see where this would lead was Jeff
Jacoby, of the Boston Globe. Last week he reminded his readers what he
had written in 1995: "Our banks are knowingly approving risky loans to
get the feds and the activists off their backs... When the coming wave
of foreclosures rolls through the inner city, which of today's
self-congratulating bankers, politicians and regulators plans to take
the credit?". Jacoby adds now: "Barney Frank doesn't. But his
fingerprints are all over this fiasco."

It's true that the improvident lending was not initiated by Fannie and
Freddie: their role in this was to buy these loans and sell them on –
but then the music stopped. Cynical students of the American political
system will note that the biggest recipient of campaign contributions
from the munificent duo of Fannie and Freddie over the past 20 years was
one Christopher Dodd, Democrat Chairman of the Senate's Banking
Committee.

Rather surprisingly, given that he has only been in the Senate for four
of those years, the second biggest beneficiary was Barack Obama. In
August the Washington Post reported that Obama's presidential campaign
team had sought the advice of Franklin Raines "on mortgage and housing
policy matters". Perhaps Mr Obama's team just wanted to know where all
the bodies are buried – there are rather a lot of them.

The saddest outcome of all this within America – apart from the
crippling cost to the nation's taxpayers – is that the very people the
Democrats had intended to help will be the biggest victims: for many
years to come banks will demand the most stringent terms for mortgages
to the least well off.

In the meantime, let us praise Congressman Artur Davis of Alabama, who
confessed this week: "Like a lot of my Democrat colleagues I was too
slow to appreciate the recklessness of Fannie and Freddie when in
retrospect I should have heeded the concerns raised. I wish my Democrat
colleagues would admit that we were wrong." I fear Congressman Davis
will not go far with this attitude – but at least he will be able to
look at himself in the mirror.

Excerpt taken from article Donald Lawson wrote at the UK Independent

Thanks for posting this

James_Protzman — Thu, 23 Oct 2008 16:01:49 -0400

To Isaac and Robert and Ryan and whomever. Thanks.

Re: Opie and Andy on Obama

Isaac136 — Thu, 23 Oct 2008 14:46:10 -0400

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Gosh — Thu, 23 Oct 2008 14:09:27 -0400

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Re: Opie and Andy on Obama

kenerika — Thu, 23 Oct 2008 14:01:44 -0400

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http://www.humanevents.com/article.php?id=29122

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Re: Opie and Andy on Obama

Isaac136 — Thu, 23 Oct 2008 13:32:42 -0400

My own hat tip is to RobertP on www.BLUENC.com

Opie and Andy on Obama

ryanteaguebeckwith — Thu, 23 Oct 2008 13:22:51 -0400

A video on "Funny or Die" features director Ron Howard and actor Andy Griffith reprising their roles from "The Andy Griffith Show" to endorse Barack Obama.

Hat Tip: Isaac 136

newsobserver.com projects - Opie and Andy on Obama - Comments

Democrats caused Wall Street Crisis

Thanks for posting this

Re: Opie and Andy on Obama

Wow! Chuck Norris said something too!

Re: Opie and Andy on Obama

Re: Opie and Andy on Obama

Opie and Andy on Obama