Skip to comments.They Warned Us About the Mortgage Crisis (barf)
Posted on 10/10/2008 5:39:32 PM PDT by Kiss Me Hardy
State whistleblowers tried to curtail greedy lendingand were thwarted by the Bush Administration and the financial industry....
(Excerpt) Read more at businessweek.com ...
Small consolation: The comments thread is unmoderated, so Freepers can tell Busiess Week what we think of the story, Business Week itself, and the fact that the magazine is the latest weekly edition of Obama's updated talking points.
business week has been a social pub for at least 20 years.
Yep, but it still amzes me they could be so blatant about it, especially as it’s a magazine allegedly for investors (not the house organ of the Dems).
You know what?
Obama, ACORN, Barney et al were all party to the disaster. A HUGE party to the disaster.
But - the buck stops with George W Bush. Our President has failed us miserably.
The article starts with “whistleblowers” trying to get banks to limit their ability to have higher interest rates with their clients.
High interest rates did not cause this problem, Businessweek. You guys are really stretching this one.
People, stay away from supporting liberal business publications. They can’t go bankrupt fast enough.
Agree that Bush failed — buck stops there etc. But to gear an entire “investigative” article around the premise that it ONLY Bush’s fault takes the idea of fairness and buries it aat the bottm of the media manure pit.
I’m a consevative; but I will not be blind. We need to know all the facts and the sequence of events. The rats carry most of the blame, but I bet there are some republicans in it too. All involved need to be jailed.
about 1989 or 90 i saw a chart comparing men’s and women’s longevity and health care costs.
it was blatantly a lie—women live longer than men and they forgot to put the last decade of the women’s expenses into the computation.
i wrote them a letter, and believe it or not i got a reply, saying, in effect, who cares what you think?
Wasnt his boyfriend Freddie Mac..?
that’s franky and fanny.
What exactly is “greedy lending” anyway? The “greedy” lender searches that land for those poor innocent bastards that (because they have no income and bad credit histories)can’t repay their loans. Nevertheless, I trick them into taking the money (at least this is what Obama says), and I MAKE them take my money. As I am a greedy, miserly, Ebeneezer Scrooge, I just can’t wait to lend my money to bad credit risks. (Sheesh)
And another thing you’ll notice about the article: any mention of S&P.
The ratings agency is owned by McGraw Hill, which also owns Business Week, so not a single, solitary word about how the mag’s corporate sister was giving great ratings to all the outfits that soon thereafter went bust.
If Bush didn’t exist they would hae to invent him — a handy receptacle for absolute blame on any given topic.
By Jeff Poor
Business & Media Institute
9/24/2008 4:00:57 PM
Are journalists playing favorites with some of the key political figures involved with regulatory oversight of U.S. financial markets?
MSNBCs Chris Matthews launched several vitriolic attacks on the Republican Party on his Sept. 17, 2008, show, suggesting blame for Wall Street problems should be focused in a partisan way. However, he and other media have failed to thoroughly examine the Democratic side of the blame game.
The media coverage of Franks coziness with Fannie Mae and his pro-Fannie Mae stances has been lacking. Of the eight appearances Frank made on the three broadcasts networks between Jan. 1, 2008, and Sept. 21, 2008, none of his comments dealt with the potential conflicts of interest. Only six of the appearances dealt with the economy in general and two of those appearances, including an April 6, 2008 appearance on CBSs 60 Minutes were about his opposition to a manned mission to Mars.
Frank has argued that family life should be fair game for campaign discussion, wrote the Associated Press on Sept. 2. The comment was in reference to GOP vice presidential nominee Sarah Palin and her pregnant daughter. Theyre the ones that made an issue of her family, the Massachusetts Democrat said to the AP.
The news media have covered the relationship in the past, but there have been no mentions since 2005, according to Nexis and despite the collapse of Fannie Mae. The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his spouse. Another Washington Post report said Frank called Moses his lover and that the two were still friends after the breakup.
While the relationship reportedly ended 10 years ago, Frank was serving on the House Banking Committee the entire 10 years they were together. The committee is the primary House body which along with the Office of Federal Housing Enterprise Oversight (OFHEO) has jurisdiction over the government-sponsored enterprises.
He has served on the committee since becoming a congressman in 1981 and became the ranking Democrat on the committee in 2003. He became chairman of the committee, now called the House Financial Services Committee, in 2007.
Herb Moses, who helped develop many of Fannie Maes affordable housing and home improvement lending programs, has left the mortgage industry, Darryl Hicks wrote for NMN. Mr. Moses - whose last day was Feb. 13 - spent the past seven years at Fannie Mae, most recently as director of housing initiatives. Over the course of time, he played an instrumental role in developing the companys Title One and 203(k) home improvement lending programs.
Hicks explained in his story how Moses orchestrated a collaborative effort between Fannie Mae and the Department of Agriculture.
The Dartmouth grad also played a crucial role in brokering a relationship between Fannie Mae and the Department of Agriculture, Hicks wrote. This led to the creation of Fannie Maes rural housing program where the secondary marketing agency agreed to purchase small farm loans insured through the department.
While Moses served at Fannie Mae and was Franks partner, Frank was actively working to support GSEs, according to several news outlets.
BusinessWeek reported in its Nov. 14, 1994, issue that Fannie Mae called on Frank to exert his influence against a Housing & Urban Development proposal that would force the GSE to focus on minority and low-income buyers and police bias by lenders regardless of their location. Fannie Mae opposed HUD on the issue because it claimed doing so would ignore the urban middle class.
Moses left Fannie in 1998 to start his own pottery business. National Mortgage News called Moses a mortgage guru and said he developed many of Fannie Mae's affordable housing and home improvement lending programs. Moses ended his relationship with Frank just months after he left Fannie.
Even after the relationship ended, however, Frank was a staunch defender of Fannie Mae even as other experts suggested there were serious problems building in Fannie Mae and Freddie Mac.
According to an article by Kathleen Day in the Oct. 8, 2003, Washington Post, Frank opposed giving the Bush administration the right to approve or disapprove business activities that could pose risk to the taxpayers. He told the Post he worried the Treasury Department would sacrifice activities that are good for consumers in the name of lowering the companies market risks.
Frank has also reaped campaign contribution benefits from Fannie Mae and its counterpart Freddie Mac. According a front page story in the Sept. 19, 2008, Investors Business Daily by Terry Jones, Frank has received $40,100 in campaign cash over the past two decades from the GSEs.
Frank is ranked 16th on a list that includes both houses of Congress and fifth among his colleagues in the House. According to data from the Center for Responsive Politics OpenSecrets.org, political action committees financed by both Freddie and Fannie have contributed $3,017,797 to members of Congress since 1989. And according to the July 16 issue of Politico, the two entities have spent a whopping $200 million to buy influence including not only campaign donations to members of Congress, but also presidential campaigns and lobbying efforts.
In a July 23 op-ed, Wall Street Journal Editorial Page Editor Paul Gigot put the blame for the GSEs collapse firmly on the members of the liberal establishment who took money from Freddie and Fannie. Fan and Fred also couldn't prosper for as long as they have without the support of the political left... This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. [Paul] Krugman and the Washington Post's Steven Pearlstein in the press.
Frank was asked by CNNs John Roberts on the Sept. 22, 2008 American Morning about this and his opposition to reform Fannie Mae and Freddie Mac. Originally, he claimed he didnt think the two GSEs were facing any problems when the issue first surfaced in 2003. He instead blamed the Republican-controlled Congress for their ultimate fall, failing to mention his friendly relationship with Fannie Mae and the contributions it had made to his campaign over the years.
Yes, I did not think we were facing a crisis in 2003, but that didn't mean we didn't have to have reform, an animated Frank said when confronted with the question. Heres the deal, the Republicans controlled Congress from 1995 through 2006. They did zero to reform Fannie Mae and Freddie Mac.
However, on Sept. 17, 2008, former Bush administration Deputy Chief of Staff Karl Rove elaborated on the Bush administrations efforts to curb abuses at the two GSEs in 2003. He told Fox News Hannity & Colmes that Frank was among the most aggressive opponents of White House attempts to reform Fannie Mae and Freddie Mac.
All of this bad stuff on Wall Street happened because people got greedy and the greed started at Fannie Mae and Freddie Mac, Rove said. And I know this because five years ago, the administration was alerted by the regulator, James Lockhart, that there was insufficient authority and that these institutions particularly Fannie were out of control.
And I got to tell you, for five years, I was part of an effort at the White House to fight this and
Frank has been quick to blame deregulation for some of the problems in the financial environment, as he did on Bloomberg televisions Sept. 19 Political Capital with Al Hunt. However, as earmark crusader Rep. Jeff Flake, R-Ariz. pointed out its not deregulation, but it was the structure of Fannie Mae and Freddie Mac that had been guarded by Frank and other members of Congress.
Some people point at deregulation, Flake said to the Business & Media Institute on Sept. 23. Its not deregulation at all. We have for far too long shielded Fannie and Freddie for example, with the implicit and now explicit guarantee. I just found it humorous.
http://www.businessandmedia.org/printer/2008/20080924145932.aspx Just a few minutes ago, a reporter was asking me about this and saying, Barney Frank is saying thats just because there were allegations, correct ones that Fannie and Freddie have been the playground for politicians for years and now the other side is saying Fannie and Freddie were just a small part of this and this goes far beyond. It does, but these same people a couple of weeks ago said, You got to bail out Fannie and Freddie because they touch everything out there. They touch nearly every mortgage out there. And because of that explicit guarantee that we would come and bail them out, nobody has been subject to market discipline. Frank claims differently, according to a letter to the editor published in the Sept. 17, 2008 Wall Street Journal. Frank noted that in 2005 he supported regulating compensation for Fannie and Freddie executives. In fact, my reform efforts had begun when we were still in the minority. In 2005, I joined Michael Oxley, then chairman of the House Financial Services Committee, in supporting legislation to increase the regulation of Fannie and Freddie that passed the House by a vote of 330 to 90, Frank wrote. When former Congressman Richard Baker proposed to examine the compensation structure of Fannie and Freddie's top executives, and some members of Congress tried to block him, I explicitly spoke out in support of his right to do that and our right, as a Congress, to examine the GSEs compensation practices. The red flags were raised long before the government bailed out the two GSEs in August 2008. The first egregious scandal involving Fannie Mae occurred in 2004. A 2004 Wall Street Journal editorial was first to point out claims in an OFHEO report that showed accounting malpractices by the GSE. For years, mortgage giant Fannie Mae has produced smoothly growing earnings. And for years, observers have wondered how Fannie could manage its inherently risky portfolio without a whiff of volatility, the Oct. 4, 2004, editorial, Fannie Mae Enron? said. Now, thanks to Fannies regulator, we know the answer. The company was cooking the books. Big time. See Related Sidebar: Networks, Once Silent on Fannie Mae, Blame Capitalism for
Sorry the link should have been put at the end not inserted randomly into the story.
Considering that Bush's power as President doesn't include changing or ignoring laws enacted by Congress and a previous President, the idea that Bush is responsible for this mess is ridiculous. He tried to get Congress to address this issue just about every year after the exorbitant and excessive explosion of the subprime mess. Each time Congress denied that a problem was in the offing and told Bush to shove it.
In matters of foreign policy, the buck stops with the President. In matters of domestic policy Congress is most responsible for taking meaningful action. The President's job does not extend to disregarding Congress or the Constitution. The same goes for the FEMA mess and Hurricane Katrina. The Bush Administration couldn't disregard Louisiana's state's rights to do what was necessary.
So yes, the buck stops somewhere, but not always with the guy in the Oval Office.
“But - the buck stops with George W Bush. Our President has failed us miserably.”
You know what, ignorance is bliss.
If you take Freddie and Fannie out of their central role in becoming the black hole into which the mortgage industry was asked, prodded, pleaded and pressured to create and sell to them over $4 trillion of new business in 4 years time, then (a)there could not have been the housing bubble, or (b) the scale of the sub-prime bubble, and thus no credit and liquidity crisis.
Now, who regulated Freddie and Fannie? The people the President appoints to the Federal Reserve? No. The people the President appoints to the SEC? No. The people who run the FDIC? No. The people at the Comptroller of the currency? No. State regulators? No.
Fred & Fan had a separate regulator, established by, appointed by, under the sole control of and responsible to one outfit and no one else - by law - Congress. Period.
Administration Treasurer’s in 2000, 2002, 2003 and 2005 signaled the warnings. Alan Greenspan signaled the warning in 2003. Some Republican leaders, with the President and the Treasury’s support held hearings in 2002, 2003 and 2005 with recommendations to reign in Fred and Fan. Opposition was led by Democrats. Barney Rubble Frank said he wanted to “roll the dice” with Fred and Fan.
The rest is history.
The fact that the media did not shout it to the roof tops when those pushing for reform were heard - including the administration - does not make it the President’s fault that you were not informed and not given the importance of the issue when reform was called for.
...their host, John D. Hawke Jr., expressed skepticism.
Hawke, a veteran banking industry lawyer appointed to head the OCC by President Bill Clinton in 1998, wouldn't budge...
He said he would reinforce federal policies that hindered states from reining in lenders.
I heard this just yesterday, I did not believe it, but now I am hopping mad, for obvious reasons.
I can summarize it in one stupid phrase, "reaching out to the opposition" in a political war.
Why didn't Bush replace all Clinton appointees?
I am beginning to hate Bush more and more, but for reasons totally different from the moonbats'...
The Republicans' tendency in the last ten years to "etiquette" themselves right out the political door" as someone put it.
Agreed. The more I see our current GOPers, the more I miss the Gipper.
But the lack of any push --- or indeed a tiny hint --- of accountability and restitution as part of the ultimate solution tends to make me believe that it will stay there.
Unless and until that becomes part of the solution, it is bound to fail.
Too many are scheming right now, as we speak as to how to get on the "bail-out" gravy train...
And Roy Cooper, the AG of North Carolina, is the same AG who refused to prosecute Crystal Mangum, the prostitute to accused the Duke lacrosse players of rape. She also accused three other men of rape a few years earlier.
Roy Cooper claimed she wouldn’t be prosecuted because she had mental problems. (Tell that to Hinkley who sits in prison for shooting a sitting president.)
I wouldn’t believe a word he says. Actually at this point I wouldn’t believe one word any politician says.
At thispoint, I can't argue with you.
In a debacle like this there should be a mechanism to replace the whole rotten bunch of them; Executive, Legislative and Judicial.
Alternatively, we could have a culture like the Japanese, where "Honor" deals with the problem...
“The rest is history.”
History includes choices, such as Paulson and Cox who should have been fired instead of showered with lavish praise as Bush did this morning.
~Bush congratulated Congress and said the bill will “stabilize our financial markets and maintain a leading role in the global economy.”~
Excuse me while I remain in ignorant bliss. As I said, the buck stops with Bush and he failed, miserably.
“History includes choices, such as Paulson and Cox who should have been fired instead of showered with lavish praise as Bush did this morning.”
and in your version of history, when, at what point in time, and under what laws was either Paulson or Cox responsible, allowed, to reign in Freddie and Fannie???? please document the legal source of your statement
Check out Investor’s Business Daily for a great article about the TRUTH.
Thanks to another freeper for this link.
If the U.S. government takes an ownership position in banks could legislation be passed to mandate the government sell its ownership position upon recovery of bank solvency and bankings ability to repay the governments capitalization?
The government screws up everything and banking is too important to gamble with.