Posted on 10/03/2008 12:11:53 PM PDT by PAR
Normally I would think it quite presumptuous for someone such as myself, with no formal experience running a campaign or advising a candidate, to make specific recommendations to a presidential candidate. However, my frustration level is extremely high and the stakes are obviously very high, so I am going to do it anyway. The general thesis is that you are not attacking Obama and the democrats in general with enough strength and specificity regarding Fannie Mae/Freddie Mac. I am not alone. Just last night, Brit Hume and Charles Krauthammer expressed disbelief that you have not attacked on an issue which should be a clear winner. Why is this important? In my view, by not calling a spade a spade, you are essentially ceding the economic debate to Obama. And if that happens, polling seems to indicate that you will lose. Rather than just complain, I have suggested below how you might approach the topic.
Please let your supporters know if the McCain campaign either disagrees with the basic facts outlined below or if you have chosen for political reasons to not make the argument below. If the campaign has made the decision to not make the argument below for political reasons, it needs to communicate to its base precisely why because I believe the morale of the base of the party (and definitely me personally) is materially affected in an adverse way when clear and obvious democratic misrepresentations that could have a significant impact on the outcome of the election go unchallenged by the McCain campaign.
I hope that you will address these questions in an email to your supporters.
Recommended speech and/or debate points:
“Ladies and Gentlemen, I want to take this opportunity to speak at greater length about the cause of the credit crisis and what we as a nation can do to prevent such a crisis in the future. While we discussed the economy briefly at the last debate, there wasn’t sufficient time to go into as much detail as I would have liked. Now is the time."
"The reason we are in this crisis, as even many of the democrats admit, is that financial institutions have taken enormous losses on residential mortgages and mortgage related securities, which has made it extremely difficult for these institutions to lend the money necessary to keep our economy functioning normally. [Could bring up banking capital regulations here if enough time]
The question we have to ask ourselves is this. Why did these enormous losses happen? Here is the real story.
Many of you may be unfamiliar with how Fannie Mae and Freddie Mac operate within our residential mortgage market. Since both entities played such a pivotal role in this crisis, I will very briefly outline for you the basics of what they do and how they operate.
Fannie Mae and Freddie Mac essentially are chartered to provide liquidity to the mortgage market, which theoretically provides for lower interest rates and greater availability of mortgage financing. They perform this function in two primary ways: 1) Banks and other financial institution that make mortgages package their mortgages and sell these mortgages to Fannie Mae. When banks receive the funds from Fannie Mae, the banks are then free to use those funds to provide new mortgages, thus increasing the number of mortgages that can be made. 2) In some cases, banks will re-purchase these mortgages from Fannie Mae, but only after Fannie Mae creates securities collateralized by these mortgages, appropriately called Mortgage Back Securities. Banks purchase these securities and can then sell the Mortgage Backed Securities much more easily into the market if necessary if they want to make more mortgage loans. A key feature of these Mortgage Backed Securities is that Fannie Mae provides a guarantee such that if the mortgage goes bad, Fannie Mae takes the loss.
By the way, as mortgagor, you may not even be aware that your mortgage has been sold because in most cases the bank that lent you the money is still responsible for billing and collecting your monthly payment.
Fannie Mae/Freddie Mac are THE dominant players in the residential mortgage market. According to USA Today, in early 2008 approximately 80% of all new mortgages made in the U.S. are either sold to and held by Fannie Mae/Freddie Mac or are sold to Fannie/Freddie, which then issues MBS’s that are guaranteed by Fannie/Freddie. Fannie/Freddie’s dominant position allows them to establish the terms under which most mortgages are made in the U.S. [Not technically true but close enough]. If a bank or mortgage company would not normally make a particular mortgage because an individual’s credit is not good- no problem as long as that mortgage fits within Fannie/Freddie’s lending terms, it can be sold to Fannie/Freddie, which, again, provides a guarantee if the mortgage goes bad.
Now, I’d like to share with you a quote from Franklin Raines from Fannie’s 2003 Annual Report:
‘Ten years ago, for example, the typical conforming mortgage required a down payment of 10 to 20 percent, and low-down payment mortgages were considered too risky. But then we helped to standardize the 3 to 5 percent down payment loan, brought it to global capital markets, and made it available to lenders and communities nationwide. Now low-down payment loans are commonplace. And we just adopted a new variance in our underwriting standards that will make the $500 down payment loan widely available as well..’
Friends, this is but one example of many that illustrate how Fannie/Freddie have, over time significantly and systematically weakened underwriting standards such that more and more loans were being made to people who could simply not afford them. Note also, that Fannie recognizes its own power in the market place when it says that it, meaning Fannie Mae, will make these loans widely available in the market place. The weakening of these underwriting criteria by Fannie Mae/Freddie Mac is the primary reason for the enormous losses financial institutions have suffered in the wake of declining housing prices and the reason we are in the mess we are in.
You may ask yourself- did anyone recognize that this was a huge crisis just waiting to happen? The answer is yes. I introduced legislation in 2006 [fill in the details] that I and many others believe could have prevented this crisis [claim may be too strong]. The democrats, including Senator Obama, blocked this legislation repeatedly. Senator Obama is the number 2 recipient of contributions from Fannie Mae after only three years on the job. Again, the democrats refused to recognize what many of us saw as crisis waiting to happen and did everything in their power to stop Fannie Mae/Freddie Mac reforms.
[Need to have quotes ready of democrats who said there is no problem at Fannie Mae]
[Must rebut Biden’s assertion that Obama sent a letter to ? concerned about Fannie and that you were AWOL]
Friends, if you elect the democrats one month from now, you are electing the very people who are responsible for the mess we are in. I say that because this crisis would never have occurred had not the lending criteria for residential mortgages been dramatically weakened by Fannie Mae/Freddie Mac. That is simply a fact that cannot be disputed. There may be other ancillary reasons that affected the crisis, but, again, the crisis COULD NOT have happened if there were not millions of loans made to people who could not afford them. [I said “millions of loans made to people who could not afford them” the second time around in this paragraph in an effort to tie something that people are aware of specifically to Fannie Mae/Freddie Mac underwriting criteria]
Senator Obama and the democrats generally have maintained throughout the campaign that the cause of the credit crisis is de-regulation by the Bush administration and more generally “Bushes economic policies” . The democrats also cite Wall Street greed.
I would like to hear from Obama tonight what de-regulation he is speaking of and what Bush policies he is speaking of when he says these are to blame for the crisis we are in. I have just laid out for you very specifically how the losses that created this crisis occurred. I would ask that Senator Obama tell us how the de-regulation and Bush policies specifically led to the mortgage related losses that led to this crisis.
[If Obama does not answer the question, then before you answer your next question, even if you don’t get an opportunity to respond at that time, you need to use some time to state “Once again, I laid out specifically why these losses occurred and therefore how we came to be in this crisis. Obama talked a lot about greed and de-regulation, and Bush policies, but he was not able to tie any of those factors to the actual losses that occurred. I repeat, regardless of greed, or other policies that may very well have existed, these loans and subsequent losses could not have occurred unless Fannie/Freddie irresponsibly weakened their underwriting criteria. That’s a fact. I tried to stop it. The democrats and Obama blocked me every step of the way.
If Obama brings up the repeal of Glass-Steagall, you will then need to generally rebut his response (I trust you have the ammo), but you should also quote yesterday’s WSJ article where Bill Clinton says that the Republicans did not push him to sign the repeal and that the repeal in fact had nothing to do with the current credit crisis. All institutions capable of making residential home loans were able to make them prior the repeal and the repeal of Glass Steagall had no impact on capital adequacy of banks currently experiencing problems. If Obama continues to ramble and obfuscate, you MUST call him on it by saying "Senator Obama, I understood exactly what you said, and what you didn't provide us with is any evidence or facts to support your contention that de-regulation caused the credit crisis. If you are in possession of any facts to support your argument, please let America know what they are."
Perfect!!
McCain is a bi-partisan idiot.
bump
Good advice but McCain’s not going to take it. He seems content to be the nominee. The information about the Dems culpability in this will have to come from other sources and Rush has been making that argument along with the rest of talk radio. Whether that will have any material effect on the election is doubtful unless McCain makes the case himself.
yep.
BTTT
[With apologies to Carly Simon and credit to Revolting Cat!]
You’re right!
ditto & bump
http://www.youtube.com/watch?v=tj49V13Iv-4
McCain is going to do this, he’s been waiting, now is the time ...
Nope. I love your effort, but it won’t work in the campaign. Every word is true and supports your thesis, but it is too long. The “low information” voters’ eyes will glaze over and they’ll turn off their ears after about two paragraphs.
I realize the issue is multi-faceted and needs a lot of information to do the subject justice. However, this has to be short and pithy if you want the target audience to listen.
This is a marketing problem, not a white paper effort. It needs to be built around a catch phrase that can frame the point going forward, similar to “drill, baby, drill.”
Unfortunately, I don't believe McCain will take the advice.
No matter how many times he “reaches a hand of friendship across the aisle” and pulls back a nub, he just doesn't seem to get it.
He will lose this election if he does not fight the fight and name the names. But I have lost faith that he has it in him. I sincerely hope I am wrong.
Timing is everything. Hopefully McCain/Palin will be saving their double barrel ads for a week before the election.
How many people remember Obama’s elitist statement made in San Fransico this past Spring or even Rev. Wrights politics?
Call me a wishful thinker, but I’m hoping they come out slamming O this weekend.
I think McCain want’s the Presidency too much to just give Obama a free ride.
JMHO
Well he isn't.. Wonder if Sara Palin will resign when she finds this out.. from VeeP or candidate for VeeP.. She might NOT have that much personal integrity..
McCain doesn’t understand that he’s destroying his own credentials as a ‘reformer’ and ‘maverick’ by being complicit in the Dem/MSM subprime mortgage coverup.
D I T T O ! ! !
The coverup is irrelevant now. The Dems got away with it and just got handed a huge extension of their power to manipulate the housing market. As Rush said, the banking industry just got nationalized. Dems are licking their chops at being able to offer their constituents “affordable” housing and if the lender disagrees the courts have the authority to order them to adjust their rates and even the loan value. The only winners out of this aside from the people who get the houses will be the lawyers and the advocacy groups that pop up to threaten the lending institutions.
This is EXACTLY what McCain needs to do. If he doesn’t step up to the plate and take a more aggressive posture on all this, he will simply be toast, despite having a great VP nominee.
There are three items (probably more but I won’t bore you) that the McCain Camp should consider:
1.McCain Access- It appears to me that I hardly ever see Obama doing the talking. He uses surogates to provide Obama points and policy decisions...rarely, if ever, himself. All you get of Obama himself are snapshots of him on the phone, smiling, or of him leaning over to shake the hand of a voter. Never him stating a position or policy.
McCain should emulate this tactic. John, for all tense and purpose, is not a good orator. He is typically too eager to stick his face in and provide answers to policy or campaign questions. The viewer then attributes his answers or actions directly to him. Allowing surrogates to provide the information screens (insulates)McCain from mistaken positions, policy, whatever. “ I didn’t say that...Mr. XXX from my campaign said that and its erroneous..blah...blah...blah”
2. It is apparent to me that this whole financial mess has taken a toll on the campaign. Now that it is over, the BUSH BIPARTISAN BILL can take whatever shape it wants and it colors both camps. McCains strength is foreign policy. CHANGE THE CONVERSATION BACK TO FOREIGN POLICY AND GET AWAY FROM DOMESTIC ISSUES. You may want to consider an emergency trip to Georgia or Pakistan where global new coverage is present. Meet some foreign dignitaries while you’re at it..Silvio Berlesconi, Nicolas Sarkosy, Gul, etc.. Take Palin along for the whirlwind. Make it last at least or close to 1 week.
3. If you’re planning an October surprise, allow enough time for the issue to be SLIGHTLY debated..1 week at most. With all that has happened in the recent month, voters need time to digest the information and to arrive at reasonable doubt as to Obama/Biden. This doubt will be carried into the voting booth.
Thanks....M
Everything you said is absolutely correct, but it is a little too wonky. He simply needs to point out that he and other Republicans tried very hard to fix fannie and freddie but were blocked by the Democrats who said Fanny and Freddie were just fine. Then point out that Barrack got big contributions from F&F and as we all know, lobbyist do not give money to people who don’t support them. He needs to hammer this home hard over and over. Even tell people to go look it up, find the video on the internet of the testimony, check it out for themselves.
On the other hand, this would be totally out of character for McCain who will try to act bipartisan.
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