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Archive for Friday, September 26, 2008

Democrats share blame

September 26, 2008

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It isn't often that public outrage peaks so close to an election, but this is a rare moment in history when "we the people" can exact a price from the political leadership that has duped, scammed and lied to them, contributing mightily to the current financial mess.

At the Senate Banking Committee hearings Tuesday, Democrats, led by Chairman Chris Dodd of Connecticut, seemed to think the mortgage crisis, aided and abetted by Fannie Mae and Freddie Mac, AIG, Bear Stearns, Lehman Brothers and other disasters, occurred on someone else's watch. Dodd, joined by ranking Republican Richard Shelby of Alabama, criticized what he said was the ad hoc nature of the government's response to the financial crisis and complained that the Bush administration's proposals lack detail.

Some history is important. It was pressure from the Carter and Clinton administrations that forced Fannie and Freddie to grant more high-risk loans to people who otherwise would never qualify. They mostly wanted to promote not only new home ownership numbers, but also more home ownership in the minority community. That was a noble goal, but the cost turned out to be too high.

Democrats would love to blame the Bush administration for a disaster they mostly helped to create. But, according to the White House, as early as April 2001, the administration warned that the size of Fannie Mae and Freddie Mac was "a potential problem," because "financial trouble of a large (government-sponsored enterprise) could cause strong repercussions in financial markets, affecting federally insured entities and economic activity."

As recently as June of this year, President Bush asked Congress to take the necessary measures to address growing foreclosures. "We need to pass legislation to reform Fannie Mae and Freddie Mac," he said. In July, Congress passed reform legislation, but it was too late.

It is an affront to the nation that some of the people who brought on the crisis (and financially and politically benefited from the status quo) were asking the questions at the Banking Committee hearing. They should have been in the witness chair. Dodd said the crisis was "entirely foreseeable and preventable."

Then why didn't he try to prevent it? He should have been answering questions about the PAC contributions he received from Fannie Mae and Freddie Mac, (according to opensecrets.org, he's the Senate's No. 1 recipient of campaign contributions, $133,900, Barack Obama is no. 3, $105,849), his sweetheart Countrywide Financial mortgage rate and whether they influenced his inattentiveness to the growing mortgage crisis.

If the public wants real reform, it will penalize the people and the party that failed to provide it. Voters can do more than "throw the bums out." They can throw these bums out and replace them with freshmen Republicans who will take office with a reformer's zeal and rebuild the government's financial house before the Potomac fever virus infects them.

With John McCain and Sarah Palin already committed to reform (as opposed to Barack Obama's nonspecific "change"), the combination of a new Republican administration and a Republican Congress that has been chastened by its defeat in the 2006 election and imbued with a new zeal to change the way Washington works, could produce a revolution that would have made our Founders proud.

Polls show many congressional races are tightening. But while Democrats are bragging about increasing their numbers and producing a "veto-proof" majority, can the public trust that those who gave us the problem can provide the solution?

McCain and Palin ought to do more than ask voters to elect them. They should call for a complete housecleaning in Washington and ask voters to give them the mop. Real reform won't come with a Republican White House and a Democratic Congress. And it surely won't come with an all-Democratic government.

While Republicans could have done much more when they held a congressional majority under a Republican president, they now swear they have learned their lesson. With the public engaged as never before, even Republicans wouldn't be able to get away with business as usual this time.

Let the revolution begin! Judgment Day should come on Nov. 4.

- Cal Thomas is a columnist for Tribune Media Services.

Comments

lee66049 6 years, 2 months ago

Hydra I can see your problem you think the executive branch is responsible for oversight. The legislative branch is, notice they have oversight committees. And you said the republicans controlled the senate...yet it was a tie. Remember the VP had the tie breaker vote?IF you don't know history and you don't know how your government works...I can see where a person would have problems.....And for the record..Sen Dodd (D) is responsible for the Banking and Housing committee....both are in the tank right now.

daddax98 6 years, 2 months ago

lee66049 I am still waiting for your answer I am genuinely corn fused

just_another_bozo_on_this_bus 6 years, 2 months ago

"While Republicans could have done much more when they held a congressional majority under a Republican president, they now swear they have learned their lesson. With the public engaged as never before, even Republicans wouldn't be able to get away with business as usual this time."Is this guy the energizer bunny of idiocy, or what?

Sigmund 6 years, 2 months ago

Over five years ago the administration warned this would happen, at least according to the New York Times; "On September 11th, 2003 the Bush administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under the plan 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."Again according to the New York Times, who opposed new regulations and over sight? "Among the groups denouncing the proposal in 2003 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.""Low income and affordable housing" is inside The Beltway speak for "subprime junk home loans," social welfare pigs with lipstick to you and me.And what of Barney Frank, surely he was on board with reforming the program prior to collapse dragging down the economy? Again according to the New York Times, ''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.''"New Agency Proposed to Oversee Freddie Mac and Fannie Mae" NY Times, September 11, 2003, by Stephen Labaton.http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=printAnd now Barney Frank is supporting the Bush plan? "The chairman of the House Financial Services Committee declared Friday that an agreement on legislation to relieve a spreading financial crisis depends on House Republicans dropping this revolt against President Bush."http://apnews.myway.com/article/20080926/D93ECMJ81.htmlAnd do not think the banks and financial institutions are failing for any other reason than they bought all those Fannie and Freddie securities, the same ones that Barney Frank told us were all fine five years ago. Show me a single financial that is failing that is not because of Freddie and Fannie mortgages. The Congress has talked of limiting or removing CEO pay if the company fails, can't we do the same for our senators and representatives since Fannie and Freddie failed under their "oversight" ???? If not, why not???

sfjayhawk 6 years, 2 months ago

ese says "What does one do with so many humans that can't take care of themselves?"ese what do you think should be done with these humans? I am eagerly awaiting your response, I guessing it will be priceless.

just_another_bozo_on_this_bus 6 years, 2 months ago

"What does one do with so many humans that can't take care of themselves?"That bit of hubris has had devastating consequences over the years. Got your gas chambers cranked up, ese?

daddax98 6 years, 2 months ago

"You will see it takes more than a majority to pass legislation."I know it takes more then a majority to override a veto but I was not aware that it takes more then a majority to pass a bill. Please enlighten me

lee66049 6 years, 2 months ago

Awe...Bozo that is so cute...look at your 7th grade civics book with the pictures and learn. You will see it takes more than a majority to pass legislation. Your complaint falls flat on it itty bitty facie when you see the democrats failed to regulate Freddie and Fannie Mae so that low income could get housing loans. Use google....its your friend.

jonas_opines 6 years, 2 months ago

Cal should have properly titled this "Democrats get blame." With all this talk of sharing, his actual placement of blame was, predictably, one-sided.

dandelion 6 years, 2 months ago

Yeah, why didn't Gore and Clinton solve all the problems, then Bush could have had 8 years of vacation. Maybe if he wasn't on vacation, this wouldn't have been a crisis. Wasn't it just a couple of weeks ago that he said everything was just fine. I'll bet we eventually find out this was a rip off just like his stupid little war, that it wasn't necessary at all, and that these companies that pay little or no taxes ended up ripping us off. But that's ok, Cal will find a way to make that the Democrats fault too.

zzgoeb 6 years, 2 months ago

hmmm...fascinating! Read this chronology of deregulation to get a REAL understanding of the history of this problem, and don't forget the really BIG deregs came under Reagan and then Gingrich; NOT Democrats!!!http://findarticles.com/p/articles/mi_m1329/is_4_33/ai_n27506063

lee66049 6 years, 2 months ago

More lies? Some one please tell ss18 that Senator Dodd is responsible for banking and housing committee please. How many times did Sen Dodd speak out against reforming Freddie and Fanny Mae....was it all three attempts to regulate it? I think it was. :)

just_another_bozo_on_this_bus 6 years, 2 months ago

Democrats certainly share some of the blame for this mess, but they were clearly junior partners to the Republicans. That's what makes Cal's column his latest exercise in idiocy.

staff04 6 years, 2 months ago

"IF you don't know history and you don't know how your government works"That's really funny coming from you lee. Really funny.

Sigmund 6 years, 2 months ago

Hydra, great questions! The United States House Committee on Financial Services (or House Banking Committee) oversees the entire financial services industry, including the securities, insurance, banking, and housing industries. The Committee also oversees the work of the Federal Reserve, the United States Department of the Treasury, the U.S. Securities and Exchange Commission, and other financial services regulators. It is chaired by Barney Frank (D-MA) and the ranking Republican is Spencer Bachus (R-AL).As for both republicans and democrats both dropping ball five years ago, and four years ago, three years ago, two years ago, and one year ago, absolutely correct. Republicans have been in open revolt with their leadership for the last couple of years, when will the democrats revolt against theirs?

Satirical 6 years, 2 months ago

I think we can all agree both parties are to blame, but some individuals are more to blame than others. De-regulation in and of itself is not a bad thing. Too much regulation can suffocate and stifle new industries or be a death sentence to struggling sectors. Regulation that outlaws fraud and increases transparency is a good thing since it increases investor confidence and makes the system run better. The hard part is keeping the good regulation and tossing out the bad regulation.There was no single problem that caused the mess we are in today, and there is not a single fix. But, pressure to provide loans to low income individuals who couldn't pay them off is a large part of what got us in this mess. When common sense gets replaced by a social agenda bad things happen. This is a prime example of why liberalism as a philosophy is so flawed. Liberals make decisions with their heart and not with their head. You can't help people who won't help themselves. It is like the old saying: Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.Please show me where in the Constitution it says it is the responsibility of government to provide for every resident (not citizens because that would discriminate against illegal aliens) free food, clothing, shelter, and health care for their entire life without any reciprocal responsibilities. Liberals think they are entitled to the sun, moon and stars simply by being born. But in this life you reap what you sow, and government assistance should be short term and limited to only those who really need it.

Sigmund 6 years, 2 months ago

Hydra, Barney Frank never said, "I don't support this reform bill because BushCo will kill it. This reform is futile if the face of BushCo's opposition." It was BushCo that was pressing the issue!What he did say (according to the New York Times), "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.''"New Agency Proposed to Oversee Freddie Mac and Fannie Mae", NY Times, September 11, 2003, by Stephen Labaton.http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=printEither he was derelict in his duties or lying, your choice. He should feel free to be the first to call for televised hearings into this mess. He then can name the names of other republicans and democrats who should also be called to task.

Sigmund 6 years, 2 months ago

Hydra (Anonymous) says: "So basically what you are saying is that since Dems took control of the House 2 years ago they can tell BushCo how to run the executive branch? Sorry my friend the House does control the purse strings, at least to the point that financial legislation has to start with them, but that really ends their power."No, what I am not saying you claim I "basically" said, I am saying what I said. Republicans (BushCo) at least recognized there was a problem, The Congressional democrats were either stupid or lying when they claimed there wasn't, your pick. As for the House controlling the purse strings they do, but that isn't relevant here. BushCo was asking for MORE regulation, not less, and congressional democrats against more regulation. We can debate the war at a different time as it is also not relevant to Fannie and Freddie regulation. ''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.''"New Agency Proposed to Oversee Freddie Mac and Fannie Mae" NY Times, September 11, 2003, by Stephen Labaton.http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=printAnd now Barney Frank is supporting the Bush plan? "The chairman of the House Financial Services Committee declared Friday that an agreement on legislation to relieve a spreading financial crisis depends on House Republicans dropping this revolt against President Bush." http://apnews.myway.com/article/20080926/D93ECMJ81.html"Frank blames House GOP for breakdown of deal", Associated Press, Sep 26, 2008, by Charles Babington.So, just when are house and senate democrats going to grow a pair and stand up to BushCo??? Oh, and while you are pondering that question you can be assured that I am not your friend.

Sigmund 6 years, 2 months ago

BTW, if the House and Senate republican candidates wants their base to vote for them in the next election, they had better vote against the "BushCo" plan. The last time (Immigration Reform) Republicans stayed away from the polls in droves. They will do it again if they approve this pig slathered in lipstick.

Sigmund 6 years, 2 months ago

"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."http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16Sen. John McCain, May 25, 2006, speaking if favor of "Federal Housing Enterprise Regulatory Reform Act Of 2005" If one democrat had crossed party lines and supported this bill, just one, this bill would have gone to the floor of the senate. As it was, it never got out of committee.

Sigmund 6 years, 2 months ago

If this BushCo plan is so good as Pelosi, Reid, and Frank tell us, then why not pass it without republicans and take all the credit? It would be a master political stroke with the Presidential election about one month away! The answer is obvious, this is a horrible bill, they know it, and they don't want to take all the blame.Again, when will senate and house democrats take a stand against BushCo??

Sigmund 6 years, 2 months ago

Hydra, as your link 404's please repost it. This same bill, in various incarnations, was introduce numerous years. If your point is that republicans were as much to blame as democrats, we have no disagreement. Still, "something has to be done" doesn't mean that it has to be the BuschCo, Paulsen, and Bernake's bailout bill paid for by taxpayers. The democrats are free to draft and pass a better solution without a single republican vote. When will the house and senate democrats stand up to BushCo in the bailout of Fannie, Freddie, and Wall Street?Oh and BTW, nothing really has to be done. Let Fannie and Freddie fail along with all the Wall Street crooks, then loud calls for all the names of recipients of Fannie and Freddie campaign contributions and the money returned, then hearings held to determine which senator and house members and Wall Street exec's should go to jail. The democrats will surely call for those hearings as they control both the senate and the house, correct? Or will we be treated to another series of hearings on steroid use in Major League Baseball?At least one good thing has happened so far out of all this, the democrats will let the ban on off-shore drilling expired without even a whimper. They blame BushCo opposition but in truth it is their own constituents who opposed reinstating the ban. Otherwise it would make another great issue to help trounce the republicans in a presidential election year.When will house and senate democrats stand up to BushCo?

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