This whole financial crisis stuff had my head spinning yesterday - I was trying to figure it all out - how it started, what it means, etc. And I first came across these Democratic soundbites:
“The turmoil on Wall Street is further evidence that Republican economic policies have failed. During eight years of control in Washington, Republicans put in to practice their belief that markets should be allowed unfettered freedom and drastically weakened oversight,” House Majority Leader Steny Hoyer, D-Md., said in a statement.
“In the midst of a dire economic situation, President Bush this morning characterized recent market developments as an ‘adjustment’ that can be painful for investors and employees of the firms, while Senator McCain said the ‘fundamentals of our economy are strong,’” Pelosi said.
“President Bush, Senator McCain, and their Republican Party are out of touch and apparently ill-equipped to get our economy back on track.”
“I certainly don’t fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to,” Obama said, adding, “It’s a philosophy we’ve had for the last eight years - one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else.”
But then I saw this, as stated by the NY Times in September 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.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
Wait. So it there was a proposal for tighter regulations, what happened?
Among the groups denouncing the proposal 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.
Well, now, I haven't heard this part of it on CNN....
The fraudulent accounting that allowed Enron executives to enrich themselves and led the company to bankruptcy and the loss of $68 billion in employee and investor assets is dwarfed by that at Fannie Mae and Freddie Mac whose loses to investors will top $103 billion. Fannie Mae’s accounting fraud was $11 billion, 19 times larger than Enron’s $567 million accounting restatement.
Both Franklin Raines and James Johnson, CEO’s of Fannie Mae, who played key roles in previous Democrat administrations were fired, but later went to work for the Obama campaign. Clinton Deputy Attorney General Jamie Gorelick also was a highly paid executive at Fannie Mae but left to join the 9/11 Commission (she was chiefly responsible for the wall that prevented law enforcement and intelligence agencies from sharing information). Gorelick is considered as a possible Attorney General in an Obama Administration.
News organizations which ran daily stories linking the Bush Administration to Enron executives have been nearly silent on the direct, long term political connections between the Fannie Mae disaster and Democrats.
Both Fannie Mae and Freddie Mac used $174 million, to pay for lobbyists to insulate them from the tightened regulation and oversight that might have avoided this crisis. And it won’t surprise many readers to learn that Obama received over $126,000 in campaign contributions since first running for the Senate in 2004. Obama ranked #2 on the list which includes mostly Democrats. By comparison, McCain received $21,550. Other top Democrats on Fannie Mae’s money list include Senator Chris Dodd, who received a favroable loan from a related mortgage company, John Kerry, Hillary Clinton, Harry Reid and Nancy Pelosi.
Now, I'm no financial analyst, and I am just starting to weed my way through all of this. But this information makes me wonder why, if the largest financial crisis in the United States was triggered by the Democrats and actually rooted in the Clinton administration (though good intentioned to help low income families obtain housing, but poorly executed), why do they keep pointing the finger at Bush and the Republicans? Moreover, how come no one is really talking about this part of it?
Wouldn't Obama, then, be "more of the same?"