"I have you now...no one can withstand the dark side of the force..."
Posted on 09/23/2008 1:06:37 AM PDT by Herakles
Many monumental errors and misjudgments contributed to the acute financial turmoil in which we now find ourselves.
How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing."
Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained
In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator.
All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent.
(Excerpt) Read more at online.wsj.com ...
Now the electorate thinks Obama knows more about the ecomony.
Clearly, education has failed to teach people how to read.
Oh I DO blame them. And I curse them with words that are unprintable here.
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency”
This bill gets passed, the US is no longer a republic. Period. It becomes a monarchy run by Hank Paulson.
http://www.youtube.com/watch?v=usvG-s_Ssb0
guess they can't see or hear too
The credit default swap component of the derivatives market was valued at around $900 million in 2001. It is now valued at about $45 trillion in 2008. A bunch of financal companies went "all in" with their greed.
The housing bubble being burst is just the fuse that has exploded the derivatives market. The governor of New York realizes the problem and has put measures in place to try to regulate it, but the U.S. government is hiding it from the American public.
This bill that they want to pass will not solve the problem and will create a harder fall in the end.
Congress is to blame? Couldn’t be.
The taxpayer soaking bail out hysterics have been claiming that it’s the fault of free enterprise and that “millions will starve to death in the streets” unless we impose super-socialism right now!
It will be a VERY good time to be in Paulson's circle of cronies if that is enacted.
"I have you now...no one can withstand the dark side of the force..."
Does that include John McCain ? He seems to have forgotten the history of this and is blaming everyone and everything but the Democrats in Congress . This man is a Huge disappointment. I am afraid we are going to be let down Big time here folks and a Marxist is going to march into the White House because Of Incompetence of the McCain Campaign
“McCain tried to stop this financial mess; Obama did not.
Now the electorate thinks Obama knows more about the ecomony.
Clearly, education has failed to teach people how to read.”
$300,000,000,000.00 this summer. Now this. After this $700,000,000,000.00 is spent, what comes next?
Scanned from a Chinese newspaper today:
http://i223.photobucket.com/albums/dd138/jjf777_bucket/NYTimes.jpg
Somebody gets it.
Sorry, I got that wrong, it’s from the NY Times. DKWISLOC
[don’t know whether I should laugh or cry]
My paraphrasing and re-casting of the excellent article (a must-read):
Our current mess can be tied directly to the Rats in Washington and the greed of Obama’s campaign bigwigs (Jim Johnson, former chairman of Fannie Mae and Franklin Raines, former Fannie Mae CEO). The Rats propped up these two government-sponsored enterprises (GSEs) so their CEOs could reap multiple millions while lining the pockets of Obama and Dodd through massive campaign contributions and perks.
Fannie and Freddie as GSEs were viewed in the capital markets as government-backed buyers, thus they were able to borrow as much as they wanted at below market rates to buy junk mortgages and mortgage-backed securities.
Economists at the Federal Reserve and Congressional Budget Office had studied them in detail, and found that they did not significantly reduce mortgage interest rates despite their subsidized borrowing rates. If they were not making mortgages cheaper and were creating risks for the taxpayers and the economy, what value were they providing?
Fed Chairman Alan Greenspan became a powerful opponent and began to call for stricter regulation and limitations on the growth of their risky portfolios.
Fannie Mae and Freddie Mac had accounting scandals in 2003 and 2004, so to avoid regulation and retain their government sponsored low-cost financing advantage, they re-committed to increased financing of “affordable housing.” They became the largest buyers of subprime (garbage) and Alt-A (mostly garbage) mortgages between 2004 and 2007, supercharging growth of junk mortgages, exposing taxpayer’s to $1 trillion, and substantially magnifying the costs of this collapse.
Beginning in 2004, their portfolios of subprime and Alt-A loans and securities began to explode from less than 8% of all mortgages in 2003 to over 20% in 2006. During this period it was clear that originators were scraping the bottom of the home-buyer barrel to pump-up Fannie and Freddie profits (i.e. CEO compensation and campaign contributions to Rats) since loan quality declined with low or no down payments and low adjustable initial rates.
Fannie and Freddie bought the support of Rats and were allowed to continue unrestrained. Barney Frank (Rat., Mass), the chair of the House Financial Services Committee, (wrongly, ignorantly, stupidly) described the arrangement with “Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing.”
Obama now criticizes Republicans and deregulation, but along with Rats Frank and Dodd, blocked the only reform proposed - causing and increasing the size of current crisis. Sen. McCain has been pointing to systemic risks and trying to do something about them for years. In contrast, Sen. Obama lined his pocket with their money and helped to block Republican and Fed regulation that would have stopped the insanity. Obama likes Fannie and Freddie so much, he hired their former CEOs who cooked the books and left us taxpayers with the bill while keeping their millions in compensation.
In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill. The bill was the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Rats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Rats, remained silent.
Rats are blaming the financial crisis on “deregulation.” This is a canard. There has been deregulation in our economy that has produced innovation and lowered consumer prices. The primary “deregulation” in the financial world permitted banks to diversify their risks, which has kept banks relatively stable in this storm.
As a result, U.S. commercial banks have been able to attract more than $100 billion of new capital in the past year to replace most of their subprime-related write-downs.
Deregulation also made possible bank acquisition of Bear Stearns and Merrill Lynch, saving billions in likely resolution costs for taxpayers.
If the Rats hadn’t blocked the 2005 legislation, the huge growth in junk loans from Fannie and Freddie could not have occurred, and the scale of the meltdown would have been substantially less. The Rats who today blame Republicans on the lack of regulations were the ones who blocked the only legislative effort that could have stopped it. And the deregulation that did occur mitigated bank risk and positioned them to reduce the cost to taxpayers of this mess - caused by Rats.
B-U-M-P everyone’s accusing me
I agree. The situation and the facts are perfect for McCain to deliver a blow to the Obama campaign from which it should not recover. It's basically an open and shut case concerning Dem blame for the crisis. Instead McCain insists on attacking Wall Street "greed". His advisors better sit him down and pound it into his head about who and how he should attack. Attack the Dems McCain! And quit trying to blame the people who didn't cause the mess.
We wrote an article for the Journal of Economic History back in 1991 (actually, Charlie wrote most of it, I just piggybacked), and he's right here.
It will be a VERY good time to be in Paulson's circle of cronies if that is enacted.
The government/quasi-government body most responsible for creating this mess (the Fed), is attempting a big power grab, purportedly to fix the problems it has created. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.
I would only add a bit more of an explanation for Barney Frank of how none of what Fannie Mae, Freddy Mac, or the Feds have done has helped make housing more affordable. In fact we can see a self-evident demonstration of how the market maintains it's equilibrium by how the price of housing went up as the cost and the availability of mortgages were tinkered with by the Feds.
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