Debunk this please! ( Democrats to blame for Meltdown!)

[Bennyboy]

This is going round the internets today and I need some ammo if you will....


Sept. 22 (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.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

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.

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Read More: http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hasset%20t&sid=aSKSoiNbnQY0

[Midlodemocrat]

1. After 8 years in the WH the repigs are still blaming us?

Shit. You can't make this up.

[DS1]

2. This from the GOP who were saying we shouldn't point fingers?

They were only saying that long enough to tie it to the Dems.

Gawd I hate those fuckers

[RoccoR5955]

3. Remind those sending this drivel of...

1) The Keating 5. The S & L scandal that McCain was involved in.
2) Reagan. Who said that we needed less regulation in our economy, with his "trickle down" economics.
3) Phil Graham, who co-sponsored the bill that actually led to this breakdown, and got rid of safeguards that were put into the system, since the 1930s.

That's all the ammo you need. If you look them up, you will find out WHY Fannie and Freddie got to the point that they are at today, along with the other mortgage speculators.

You can't just go blaming it on Dems, if they were not in the majority when these other things happened.

[sinkingfeeling]

4. Late 2004 and 2005....ummm.. both houses of congress were GOP held.

How did the Democrats stop it in the Banking committee.... here's the makeup from 2005

109th Congress (2005-2006)
Members of the
Senate Committee on Banking, Housing, and Urban Affairs,
109th Congress
Democrats: Republicans:
Paul S. Sarbanes (Md.), Ranking Member
Christopher Dodd (Conn.)
Tim Johnson (S.D.)
Jack Reed (R.I.)
Chuck Schumer (N.Y.)
Evan Bayh (Ind.)
Thomas R. Carper (Del.)
Debbie Stabenow (Mich.)
Robert Menendez (N.J.)
Richard Shelby (Ala.), Chairman
Robert Bennett (Utah)
Wayne Allard (Colo.)
Mike Enzi (Wyo.)
Chuck Hagel (Neb.)
Rick Santorum (Pa.)
Jim Bunning (Ky.)
Mike Crapo (Idaho)
John E. Sununu (N.H.)
Elizabeth Dole (N.C.)
Mel Martinez (Fla.)

9 Democrats and 11 Republicans

[smoogatz]

5. Easy.

In 2005, the Senate Banking Committee was controlled by Republicans, who were then the majority party in the Senate. The majority of the committee members AND the chair were Republicans. If they couldn't get the bill out of committee, it means that some Republicans on the committee also voted against it (or didn't vote). It's disingenuous to call it a "party-line vote" if Republicans voted that way, too.

Consider the source: this guy's on the AEI payroll. He's also a McCain advisor. He's trying to put a little lipstick on McCain's generation-long championing of banking deregulation.

[FVZA_Colonel]

12. And he wrote a book claiming the Dow would be at 36,000 by 2004.

http://www.amazon.com/Dow-36-000-Strategy-Profiting/dp/0609806998

[Glorfindel]

6. The Pukes have had a death-grip on congress since 1995

And the presidency since 2001. It's nonsense to say the Democrats are to blame for this meltdown.

[Mojorabbit]

7. It started when Clinton was president

and phil graham and the republican congress repealed the depression era regulation to prevent this. It was a veto proof majority but I think Clinton was not adverse to signing it depending on who you read. That started the ball rolling way before the fanny mae/ freddie mac problem. Both parties are complicit in my opinion.

[sinkingfeeling]

8. This entire article is Bulls**t. This was never voted on in committee per KOS.

http://www.dailykos.com/storyonly/2008/9/20/21195/8886/22/605095

S190 was discussed in the Senate Banking Committee on July 28, 2005 with the result, "Ordered to be reported with an amendment in the nature of a substitute favorably", which I believe is Congress speak for, "we don't like this, please go rewrite it and we may reconsider", i.e., the bill died in a Republican controlled committee and never came to the floor of the Senate or back to the Senate Banking Committee for reconsideration. S190 died in committee.

[Bennyboy]

9. Leave it to DU! Now I am loaded for Moose!

Thanks!

[creeksneakers2]

10. The Republicans keep trying to fool people into thinking

that Fannie Mae and Freddie Mac caused all the economic problems. Fannie Mae and Freddie Mac buy mortgages, guarantee them, then resell the mortgages. As far as I know, every mortgage Freddie or Fannie ever sold is guaranteed, so nobody anywhere has lost a cent other than Freddie and Fannie. Since the government took over, the taxpayers are on the hook for all the loans Freddie and Fannie guaranteed but so far I don't think we've had to pay anything.

Fannie and Freddie didn't oblige any private firms to securitize mortgage debt.

John McCain is running around saying he had the solution back when this bill was introduced but he didn't cosponsor it until almost a year after the bill stuck in committee. I don't know if McCain was even on the committee.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN00190:@@@P

[ladywnch]

11. few people believe this if the CNN poll numbers mean anything. It shows Reps taking most of the

blame.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x386757

it appears the majority of people relize who has screwed the economy....and how is better suited to fix it.

[metapunditedgy]

13. A more appropriate response

It's hard to debunk when it's not really a factual piece. Just a bunch of unsupported accusations.

Here's my satirical response. (From blog.) The claim that FNM/FRE somehow caused everyone to do really stupid things while raking in huge $$ playing a game of hot potato is worthy of satire, I think.

--------

Finally, the Truth Can Be Told

Kevin Hassett is blaming the Democrats for the Fannie/Freddy failures in a commentary piece today. Now, Edgy doesn't doubt that the Democrats had their hands in the FNM/FRE cookie jar. Hassett notes that Democrats have taken funds from Fannie and Freddie.

His argument is that Fannie and Freddie built up bad mortgage portfolios, and then apparently they used special mind control powers to confuse everyone else, and then something happened which he doesn't really explain, and maybe aliens were involved, and then BOOM! Bear Stearns fell and it went on from there. Hassett argues eloquently that nobody on Wall Street had two brain cells to rub together to keep them from doing the stupid stuff that made them tons of money on into 2007.

The turning point was when the Democrats opposed a 2005 bill that would have solved the problems of today, yesterday. Of course, Hassett can be forgiven for not having enough space to describe the reasoning behind the Democrat's opposition. (Laws are very complex, after all, and really confusing.) He also avoids pointing out that the Republicans, not the Democrats, controlled Congress in 2005. It would only have confused the point he was making.

Oh, by the way, Hassett is an advisor to the McCain campaign. That means you can trust him to give a balanced, objective view of the events of 2005. Thanks, Bloomberg, for making us informed voters!

Attribution: <http://metapunditedgytheanticlown.blogspot.com/>

[DogPoundPup]

14. FINANCIAL TIMES ARTICLE: House bill, the 2005 Federal Housing Finance Reform Act

In the aftermath of the US Treasurys decision to seize control of Fannie Mae and Freddie Mac, critics have hit at lax oversight of the mortgage companies. The dominant theme has been that Congress let the two government-sponsored enterprises morph into a creature that eventually threatened the US financial system. Mike Oxley will have none of it. Instead, the OHIO REPUBLICAN who headed the House financial services committee until his retirement after mid-term elections last year, blames the mess on ideologues within the White House as well as Alan Greenspan, former chairman of the Federal Reserve.

The critics have forgotten that the House passed a GSE reform bill in 2005 (USE GOOGLE TO SEARCH THIS FACT!!!) that could well have prevented the current crisis, says Mr Oxley, now vice-chairman of Nasdaq. He fumes about the criticism of his House colleagues. All the handwringing and bedwetting is going on without remembering how the House stepped up on this, he says. What did we get from the White House? We got a one-finger salute. The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.

Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and FACED HOSTILITY FROM THE BUSH ADMINISTRATION. Adamant that the only solution to the problems posed by Fannie and Freddie was their PRIVATIZATION, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all.

We missed a golden opportunity that would have avoided a lot of the problems were facing now, if we hadnt had such a firm ideological position at the White House and the Treasury and the Fed, Mr Oxley says.
http://www.ft.com/cms/s/0/8780c35e-7e91-11dd-b1af-000077b07658.html?nclick_check=1

[Bennyboy]

15. Nice......

A blast from the past, but this is some factual stuff I need. thanks for popping this one back up....

[bhikkhu]

16. A bit more blame on the economic front:

Today Wall Street and the securities industry have been socialized by Congress and the Democrats are firmly in control. $700 billion will buy up the bad mortgages that people can’t pay and alter the terms to stop foreclosures so everyone, no matter how unworthy, can own a house they can’t lose, whether they can make the payments or not.

So how do I feel about this?

I can’t tell big-government politicians what to do and what will work. I’m not that smart, and they wouldn’t listen anyway. My job is to figure out what will really happen and then help you middle-class Americans deal with the world as it is and profit from it.

http://www.kitco.com/ind/Ruff/ruff_oct032008.html

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...the thesis being standard party line crap: the repugs are for small government, while the dems tax and spend and then "socialize" what the economies they wreck.

I don't think its anything but blather. My own (R) employer is as upset as I over the whole mess, and agrees that spending was out of control during the repug controlled congress, that greed goes both ways, that * is an idiot about the economy and didn't do crap, that at least when Clinton was president we weren't always on the verge of disaster, and that both parties are royally screwed if they have any plans for the next few years but explaining how they buried the strongest economy in the world.