RUSH: There's a BIG IDEA AT STAKE in the Democrat-Caused Financial Crisis

www.rushlimbaugh.com ^ | September 22, 2008 | Rush Limbaugh

[Yosemitest]

There's a BIG IDEA AT STAKE
in the Democrat-Caused
Financial Crisis September 22, 2008

BEGIN TRANSCRIPT

RUSH: Okay, as to the bailout here, folks,
a lot of people over the e-mail are very confused about this, even some of my closest circle, because they think,

"Well, the bailout's a bad idea, but what if we don't?
Is everything going to crash around it?
This is more nuance than, you know,
just cut-and-dried, up-or-down, liberal-versus-conservatism."
I think, folks, a lot of people say,
"You know, we're beyond the point of assigning blame here.
That's not the problem.
What we have to do is understand what to do in the future."
Well, you can't understand what to do in the future unless you properly assign blame, and there is so much blame here. All of this could have been avoided,
were it not for liberal social engineering brought about by the Clinton administration.
It actually started with Jimmy Carter, but it intensified during the Clinton years,
and the whole purpose of it, of course,
was to play the race card,
to get into class envy,
and to go out and buy votes.

There's a piece at Bloomberg.com today by Kevin Hassett. Kevin Hassett is director of economic policy studies at the American Enterprise Institute. He's also a Bloomberg News columnist, and he is an advisor to McCain. Let's be up-front in this presidential campaign.

"How the Democrats Created the Financial Crisis."
He says it's not complicated. It really isn't complicated.
"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."

Now, there's no... AAA subprime (laughing),
uh -- Well, it's a little bit of an oxymoron.

"[I]n 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms:
If Fannie and Freddie 'continue to grow,
continue to have the low capital that they have,
continue to engage in the dynamic hedging of their portfolios,
which they need to do for interest rate risk aversion,
they potentially create ever-growing potential systemic risk down the road,' he said.
'We are placing the total financial system of the future at a substantial risk.'
Fannie Mae and Freddie Mac. What happened next was extraordinary.
For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
"If that bill had become law, then the world today would be different.
In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds,
burying many of our oldest and most venerable institutions.
Without their checkbooks keeping the market liquid and buying up excess supply,
the market would likely have not existed.
But the bill didn't become law, for a simple reason:
Democrats opposed it on a party-line vote
in the committee, signaling that this would be a partisan issue.
Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter...."
And it goes on to mention here
"many of the senators who protected Fannie and Freddie,
including Barack Obama, Hillary Clinton and Christopher Dodd,
have received mind-boggling levels of financial support from them over the years."

It's interesting, too,
you've seen the list of donations that have gone to all the Democrats of Fannie Mae.
At the top of the list of course is Chris Dodd;
number two is Obama.
However, if you reorder that list and look at the people who have received the most in the least amount of time,
Obama is at the top of the list by far and away. He's been in the Senate two and a half years, and he's the leader.
Dodd got his money over the course of many years.
So you have to ask,

"Why in the hell was Obama given so much money by Freddie Mac so fast, so quickly?"
The tentacles, my friends, the tentacles here
-- and I say this with all candor --
reach deep into the Democrat Party.
Let's talk change for a moment.
The most important and far-reaching change needed
has been brought home definitively by all this turmoil in the financial markets,
precipitated by the subprime mortgage crisis.

There is a singular culprit here,
and that is it -- and there's a great idea at stake here, too,
and the idea is

that the free market measures itself and handles itself better than the government running.
The great idea that we're about to throw away with this bailout is
that the government can run things better.
The government can take care of you,
the government can insure you,
the government can protect you,
the government can provide for you.
This is an idea which has been shown to fail around the world.
We are about to incorporate it here if this bailout goes through as designed.
This should not be a mystery anymore to anybody
because the Drive-By Media refuses to do its job.
Last week the roots of this crisis were explained, and its authors were identified.
Long-serving congressmen and senators,
overwhelmingly Democrats, working in concert with the liberal allies in the bureaucracies and the management of these so-called companies
-- really government agencies, Freddie Mac and Fannie Mae.
They're government agencies, they always have been --
and liberal special interests and advocacy groups hijacked federal housing policies and turned them into patronage programs.
The quasi-governmental entities were at the root of this problem
because what they did forced the hand of genuine private mortgage companies
to conform to the same irresponsible lending policies as Fannie and Freddie had adopted
if they were to survive.
And it also fostered creation of sleazy mortgage companies
whose business model was making lousy loans
in the expectation of being able to dump 'em later
through new financial instruments that had been created just to do that,
and I have just gotten started.

BREAK TRANSCRIPT

RUSH: This bailout crisis, my friends,
it is crucial I think here to understand the truth.
The policy perversions that led to this mess
began with the active connivance of the Clinton administration
and were perpetuated by leading Democrats in the House and Senate.
There were some responsible Republicans supported by the Bush administration time and again
attempted to avert the disaster they saw coming.
They wanted new regulatory agencies and so forth,
but their reform efforts were defeated in the House and the Senate.
Barney Frank in fact said,

"There's nothing wrong."
(doing Frank impression) "There's nothing wrong,"
is what he said.
Now, this emergency bailout friends can go either way.
It can fix the underlying problem
or merely represent another opportunity for another leftist hijacking,
and Obama and Pelosi are out there saying, they want oversight over this.
You know what that means?

Whenever this kind of money is going to be spent by the government on something,
Democrats are going to get their hands in it,
and they're going to reward people like ACORN.
They're going to try to.
They're going to try to build on their social programming and networking here
with this kind of money outstanding that is supposedly aimed at shoring up the US economy.
Now, McCain and Palin can claim to recognize the problem, and they can commit themselves to fixing it.
But they can't deliver the needed change on their own.
They need support in the House and Senate to do that.
Right now, there is no prospect of them getting that help,
not with Pelosi and that odious and compromised Barney Frank, Henry Waxman, Chuck Schumer, Christopher Dodd in the House and Senate leadership.
The names I just gave you have their fingerprints all over this.
Plus names that you were told of last week and identified last week:

Franklin Raines, Jim Johnson, Janet Reno, Jamie Gorelick.

It is a stain,
it is a stench,
and it is directly traceable to liberal Democrat policies and desires.
We know who caused the problem!
We know that we can only expect the change we need
by replacing them with congressmen and senators
pledged to a different course with a fundamentally different concept
of how the federal government can best serve the interests of the American people.
That's the change we need.
The change we need

is bye-bye Barney Frank.
The change we need
is get rid of Chris Dodd,
get rid of Nancy Pelosi,
get rid of all of these Democrats,
Chuck Schumer.
Get rid of all of these people.
That's the change we need, pure and simple.
Isn't it interesting that the mortgage debacle and the resulting impact on our financial markets is said to have begun with deregulation?
Ha!
And isn't it interesting that no one in the administration challenges this,
and of course nobody in the Drive-By Media challenges it,
and McCain doesn't even challenge it.
The reason is that we are witnessing the biggest nationalization of our economy since the Great Society and the New Deal,
and we are all on the sidelines as it happens,
and this is what I'm talking about
this very important idea
-- an idea that defines the greatness of this country -- on the line.
And that idea is that government is not the provider, the guarantor, the protector, and the redeemer for every living soul and institution in the country,
particularly in this case when the problems can be traced back to people in government.
Now the very people who created the problem
have set themselves up to be in charge of the whole program,
now blaming capitalism,
blaming the private sector for this.
The fact is this:
When Jimmy Carter was elected his first year, 1977,
he and the Democrat Congress put in place the Community Development Act,
and the purpose of this account
was to pressure private financial institutions to make risky loans to poor people.

That was the purpose.
These loans would not have been made based on any commonsense business model,
but the Carter administration decided to hell with business models
and use the law to pressure the issuance of these loans for the typical reasons liberals do these things:

to buy votes,
to create dependents,
and to create love and respect and devotion to the Democrat Party.
Groups like ACORN
-- which exist, by the way, in ACORN's case --
exist for the express purpose of committing voting fraud.
That's one of the groups that Obama, you know, worked with as a street organizer in Chicago.
Groups like ACORN and others were also behind this.
They allied themselves with the Democrats and the administration and Congress.
Now, ACORN is a "grassroots" group that is backing Obama for president,
they're close to him,
they were close to him when he was a man of the street agitating things in Chicago.
But none of this was good enough for the Clinton administration in 1995.

A renewed and more vigorous emphasis was made on making these loans.
Janet Reno and Roberta Achtenberg

(who was a former radical member of the California board of supervisors
and an assistant secretary of HUD, Housing and Urban Development),
put enormous pressure on financial institutions to make more and more risky loans,
and they began accusing banks of redlining
when they didn't meet the level of risky loans that they had imposed on them.
They then prevented these financial institutions from expanding and merging
unless they met a certain level of community redevelopment loan making
-- and they threatened these institutions with government action.
Reno herself said,
"There will be investigations if you do not follow these regulations.
If you don't make loans to these people who essentially can't pay 'em back,
we're going to investigate you,
and we're going to tie you up."

We got the quotes, from a Cybercast News Service story.
Subprime mortgages and things like them, are mortgages given to people who can't afford traditional mortgages.
They can't afford down payments.
They can't afford to make the going rate of interest payments.
So new types of loans were invented to get these people into homes but which were extremely risky.
There were no down payments, low introductory rates, in some cases no closing costs.
Fannie Mae and Freddie Mac, in order to show ever-increasing assets on their balance sheets,
would buy up these subprime loans,
but the greater the asset,
the executives at these government-run companies would show more assets,
but they're worthless.
One of the problems now is
you've got a market, but nobody knows what the market is.
There isn't a market right now. It's tumbled.
Some people are saying

that there's an outside chance that the market is so low
that the taxpayer (i.e., the Treasury) could really win big with this bailout,
given how little they're going to have to spend to buy up all these assets.

But the way it worked inside Fannie Mae and Freddie Mac was this.

They loaded up on these worthless assets;
they would put them,
predate them into prior years so they show fantastic asset growth.
It was on the asset growth that their bonuses were determined,
such as Franklin Raines and Jim Johnson and all the other people, Daniel Mudd
who worked at these places who walked out of there with anything between 75 and 90 and a hundred million dollars.
Now, this is the short story behind much of the debacle that we're dealing with today.
I mean, there are other issues out there,
but this is the systemic underpinning of the crisis.
All roads three-day Fannie Mae and Freddie Mac, contrary to what they're trying to make you believe
-- and this is what really infuriates me and makes me passionate to get through to everybody I can.

The issue is not a runaway, unregulated free market.
The issue is not the failure to regulate.
The issue is not stupid and crooked executives throughout the banking industry doing stupid and crooked things,

although there was some of that.
There's some of that in every area of life.
But that's not the cause.
What you need to understand, my good friends, is
that this situation has occurred
and is occurring
as a direct result of government policies:
liberal government policies that were used to force the issuance
of trillions of dollars in risky loans
that people could not pay back.
And when they couldn't pay them back,
people couldn't get the asset value that they had sold and packaged the mortgages for,
and everything crashed,
everything crumbled.
And about this bailout, I want to call your attention to something.

How many times in the last six months have we read stories about the Fed adding to liquidity here or helping this institution there?
We've already had a bunch of bailouts.
We've already had a government stimulus package to help the US economy,
and now Obama's talking about wanting another one.
These things have a history of not working.
They may show short-term relief,
but over the long haul, world history is replete with example after example after example
that centralized economic planning does not work. The Democrats on Capitol Hill,

and primarily I'm talking here about Chris Dodd and Barney Frank,
were in the middle of this from day one.
They supported the Carter and Clinton administrations
when they pressured the private sector to make these risky loans.

They protected Fannie Mae and Freddie Mac when they bought up these risky loans
-- and in 2003, when the Bush administration attempted to impose some accountability on Fannie Mae and Freddie Mac
when they tried to force them to accept outside auditors, require better capitalization.
You know what the leverage rate was?
They only had to have a dollar of cash on hand for every 30 bucks they had borrowed.
That kind of leverage is just obscene.
So they wanted to change that; they wanted more capitalization.
But guess who blocked it?
Good old Barney Frank and Chris Dodd stood right smack-dab in the way.
When, in 2005, Republicans in Congress tried to do the same thing, they were obstructed as well.
In fact, Chris Dodd and Barney Frank said there was nothing wrong with these government-run companies
and the Republicans were trying to scare people.

We have, now, ladies and gentlemen,
a clear definition of affordable housing, according to Barney Frank.

Affordable housing is giving people houses that you and I pay for. That's affordable housing
-- and I'm not talking about, you know, tenements and housing projects.
I've heard Barney Frank talk about this enough times.
Every time he would talk about this he said,
"We can't get rid of the affordable housing, affordable housing."
"Affordable housing" to Barney Frank and the liberals is making sure that every liberal Democrat in this country who can't afford a house gets one.
And then affordable housing, after they have been given the house
-- under the pretext of buying it, of course --
but when they can't pay it back, guess what Barney Frank and Chris Dodd want:
Let 'em stay in the house.

In this new bailout legislation, Barney says,
"You can't kick them out of the house,
and we want limits on CEO pay."
Any precondition on this bailout must include Barney Frank and Chris Dodd resigning.

BREAK TRANSCRIPT

RUSH: Now, wait, folks. This gets even better.
Welcome back to the Rush Limbaugh program,
meeting and surpassing all audience expectations on a daily basis.
So now we have Hank Paulson,

the Treasury Secretary,
ex-Goldman Sachs
and a Democrat appointed by President Bush,
an old buddy of Chuck-U Schumer, by the way
-- and who isn't in this mess a friend of Chuck Schumer's?
Schumer was involved in all of this as well.
And now we got Hank Paulson in charge of, not elected,
the most far-reaching government takeover of a huge chunk of our economy ever.

One little aside here, folks,
one little aside,
and I promise not to lose my place.
This amount of money that we're talking about, 700 billion

-- and let's just admit it's going to be a trillion before it's all done with, okay?
Even that will pale compared to the cost of Algore's global warming plans if Democrats get their hands on that.
Global warming tactics, their plan to fix global warming will cost more than even this.
I'll have more on that in due course.

This is the most far-reaching government takeover of a huge chunk of our economy ever,
and it still isn't enough.
It's still not enough for Barney Frank.
Paulson wants a slush fund.
He basically wants $700 billion to buy up bad loans as he and only he sees fit.
Now you have Obama and Pelosi saying they want oversight?
Ha. That means ACORN is going to get 500 mill here,
some other little Democrat group, teachers union is going to get some money here,
Maxine Waters is going to get about a thousand dollars for each of her constituents to pass around out in California.
I mean none of this is official, but this is the way these things work.
Now, keep in mind these are bad loans in the sense that they were risky.
But the loans have not actually defaulted yet,
so unlike the savings and loan failure, this would be far more reaching.
The government's going to buy up loans before they default.
That's called affordable housing, the way the Democrats define it.
Barney Frank, among other things, says that this is unacceptable unless even more money is spent helping more people facing foreclosure.
Barney Frank's definition of affordable housing

is that if they're about to be foreclosed on for not being able to pay,
they get to stay in the house.

So one of the main individuals responsible for the current financial problem,

wants the American taxpayer to subsidize not only the buyout of bad loans that have yet to fail,
but he wants to spend even more money
to shore up these individuals who, in many cases, shouldn't have bought a house in the first place.
The left sees this as their opportunity to change the nature and identity of this economy.
And the Republicans are going right along with them, including the president, including McCain.
There's no way around this.
I mean neither of them,
and no one in the party seems capable of exposing what's going on here, and opposing it.
It's not enough to say that you're against the latest bailout.
You need to explain why.
You need to stop with the populist left-wing rhetoric about needing more regulations,
you gotta stop beating up on Wall Street,
you gotta stop pandering,
you gotta realize, Senator McCain,
you are running against Obama.
You're not running against George W. Bush and Wall Street.
You are running against Senator Obama.

Sarah Palin understands it.
She pulled your irons out of the fire
and you're about to throw 'em back in.
This idea that Andrew Cuomo should be Securities and Exchange Commission chairman,

that's what McCain said last night on 60 Minutes.
I kid you not,
McCain would appoint Andrew Cuomo.
From The Village Voice, ladies and gentlemen,
in August 5th of this year, a whole story:
"Andrew Cuomo and Fannie and Freddie -- How the youngest Housing and Urban Development secretary in history gave birth to the mortgage crisis."
Andrew Cuomo is up to his neck in this.
This is a 16-page printed story on a computer printer from The Village Voice.
Cuomo jacked up low income, low mandates on Fannie and Freddie,
and he is at the head of the line, too, with other Democrats on this whole crisis,
and McCain talks about putting him in the -- (sigh).

END TRANSCRIPT

Read the Background Material...

Bloomberg: How the Democrats Created the Financial Crisis: Kevin Hassett

IBD: Congress Lies Low To Avoid Bailout Blame

Newsbusters: IBD: Carter More to Blame for Financial Crisis Than Bush or McCain

Village Voice: Andrew Cuomo and Fannie and Freddie

FOX: Obama Laments Debt, But Promises Billions for Anti-Poverty Program

American Thinker: Mistress of Disaster: Jamie Gorelick

Wall Street Journal: The GOP Leads a 'Socialist' Bailout

National Review: The Bailout. Has Everyone in Washington Lost His Mind?

American Spectator: Financial Collapse Democrats

*Note: Links to content outside RushLimbaugh.com usually become inactive over time.

---

Change: Remove the Democrats Responsible for Mortgage Mess
September 22, 2008

BEGIN TRANSCRIPT

RUSH: I just got this over the course of the break at the top of the hour.
By Bill Sammon, FoxNews.com:

"Barack Obama, who lamented Friday that
'we have not managed our federal budget with any kind of discipline,'
is nonetheless promising to spend $50 billion on a United Nations anti-poverty program that critics say will drive up American debt."
So this is how Obama wants to solve the economic problems.
He wants to give the corrupt rat hole known as the United Nations $50 billion of our money to fight poverty.
That's really going to help US American debt.
And that's not just once. He wants to do that every year.
The UN's millennium development goal wants to cut poverty in half by 2015 by distributing wealth from countries like the US and giving it to those less fortunate.
Go talk to people, responsible leaders in Africa who are begging the world to stop this,
because it is preventing education, ambition, inspiration,
it's preventing African citizens from learning to take care of themselves,
which is exactly what the UN wants.
Everybody knows that wealth transfers don't work.

By the way, Snerdley said during the break,

"After listening to your brilliant explanation of this in the first hour,
why should I even bother paying off my mortgage?
I mean, I could just not pay it,
I go into default and the government's going to let me keep the house."
I said,
"Ah, ah, ah, ah, ah, ah, Snerdley,
the odds are that Fannie Mae and Freddie Mac didn't buy your mortgage because your mortgage is probably not subprime."
Let me ask you,
did you have to put a down payment down?
Did you have to pay closing costs?
Do you have an ARM? You got a flat rate?
Well, then I'm sorry, you don't qualify, you gotta keep paying.
That's exactly right.
Snerdley, you did things right, you followed the rules,
and you better pay or they're going to come take your house away,
and if Barney Frank gets his way
some subprime person is going to be put in your house if you default on it.
That's what Barney Frank's trying to set up here.
So, yeah, if you got a legitimate mortgage that's not subprime
the odds are that Fannie Mae, Freddie Mac didn't buy it
and, even if they did, they packaged it differently than they did the subprimes.

So we've got a Democrat candidate who wants to nationalize the private sector.
We have a Republican candidate who is more populist than conservative.
In case you missed this, last night on 60 Minutes,

Senator McCain said that he would name Andrew Cuomo,
the New York state attorney general,
son of Mario the Pious,
to the Securities and Exchange Commission.
Now, Andrew Cuomo ran HUD under President Clinton.
McCain said,
"I've admired Andrew Cuomo.
I think he's somebody who could restore some credibility, lend some bipartisanship to the effort."
Cuomo didn't comment.
From The Village Voice in August of this year, August 5th, the headline:
"How the Youngest Housing and Urban Development Secretary in History Gave Birth to the Mortgage Crisis
-- In 2000, Cuomo required a quantum leap in the number of affordable, low-to-moderate-income loans that the two mortgage banks --known collectively as Government Sponsored Enterprises -- would have to buy.

"The GSEs don't actually sell mortgages to borrowers.
They buy them from banks and mortgage companies,
allowing lenders to replenish their capital and make more loans.
They also purchase mortgage-backed securities, which are pools of mortgages regularly acquired by the GSEs from investment firms.
... Cuomo's predecessor, Henry Cisneros, did that for the first time in December 1995,
taking a cautious approach and moving the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families.
Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the 'very-low-income.'
Part of the pitch was racial,
with Cuomo contending that Fannie and Freddie weren't granting mortgages to minorities at the same rate as the private market.
William Apgar, Cuomo's top aide, told The Washington Post:

'We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible.'"

Well, guess how they got the flexibility?
Hello, Janet Reno.
Hello, Bill Clinton.
Hello, Jamie Gorelick.

"While many saw this demand for increasingly 'flexible' loan terms and standards br>as a positive step for low-income and minority families,
others warned that they could have potentially dangerous consequences.
Franklin Raines warned that Cuomo's rules were moving Fannie into risky territory."
Well, he went there,
he went there and found a way to score huge.
But the point is, the McCain campaign ought to quit running against Christopher Cox and the SEC
and start running against Democrats on Capitol Hill, Barney Frank and Chris Dodd and so forth.
Let me give you a brief history lesson, ladies and gentlemen.
Two years ago the Democrats, great fanfare,
took control of both the House and the Senate,
promising great changes and great advances.
So on January 5th, 2007, just about the time Pelosi and her cronies took control of the House,
the Dow Jones Industrial Average was 12,400,
the New York based Conference Board said its consumer confidence index was 110.3,
the Bureau of Labor Statistics had the unemployment rate at 4.6%,
and according to the CNN, a gallon of gasoline in January 2007 was about $2.20.

Last Thursday, at about one o'clock Eastern,
the Dow had a bottom of 10,500 before Paulson and Bernanke intervened.
That's about a 15% drop in the Dow since Pelosi and the Democrats took over Congress.
And we could go on.
The Conference Board's latest take, consumer confidence, 56.9%, a drop of 48%.
The unemployment rate in August at 6.1%, an increase, Bureau of Labor Statistics of 33%,
gasoline prices at about $3.70 a gallon, 68% increase.
What changed?
What changed?
Barney Frank and Senator Chris Dodd took control of the House and Senate banking committees,
Representative George Miller, Democrat, California,
Senator Ted Kennedy took over their respective labor committees,
John Dingell, Democrat, Michigan,
Jeff Bingaman, Democrat, New Mexico, became chairman of the energy committees.
There has been not only no oversight from the Democrat-controlled Congress on any of these things,
there has been an active effort to prevent oversight while at the same time blaming capitalism
and the fact that there has been no regulation.

They want as many of you thinking that capitalism brought this about
when in fact all roads lead to Fannie Mae and Freddie Mac
and the Democrats who enabled them and ran them.
They keep saying that people didn't believe in regulations.
This was a policy imposed by law and enforcement on the private sector.
So you've got Obama, wants to nationalize the private sector.
We have a Republican candidate who's more populist than conservative.
What we want is change.
Change the chairman of the banking committees in Congress,
get rid of Chris Dodd and Barney Frank.
They are a disgrace.
They are lying about their roles in all of this.
They shouldn't be anywhere near addressing this problem now.
They should resign from their posts.
And the Republicans ought to demand it day in and day out.
To sweep this thing under the rug
is some sort of bipartisan failure or some kind of private sector meltdown or what have you,
removes responsibility from the kingpins behind this.
The tendency is of the Washington governing class to circle the wagons and protect themselves.
When you get to a juncture like, this party is not going to matter.

Barney Frank and Chris Dodd need to step down from these committee chairmanships,
and they need to be demanded that each day by the Republicans.
Here's the Barney Frank quote.

"The private sector got us into this mess;
the government has to get us out of it.
We do want to do it carefully."
The private sector didn't get us into this mess, Congressman Frank, you did!
And your party.
So here they are demagoguing and demanding protections for homeowners
while trying to prevent a cascading meltdown that will ruin everybody including homeowners,
just like they do on Social Security privatization.
By the way, Obama is out lying about that now.
Obama is telling seasoned citizens groups
that John McCain would have had their Social Security money in the stock market today.
It is an abject lie,
and the Washington Post all kinds of people are calling him on this lie.
Even when McCain supported privatization,
the bottom line was, if you were born, was it after 1950 or before 1950?
If you're before 1950, your money doesn't go to the stock market.
You do not have the option of investing it yourself.
Your money stays right where it is in the Social Security so-called trust fund.
It's an abject out-and-out lie from The Messiah's campaign.

BREAK TRANSCRIPT

RUSH: Joe in Annapolis, glad you waited, sir, welcome to the program.

CALLER: Thank you so much, Rush. Mega Navy town dittos to you.

RUSH: Appreciate that, sir.

CALLER: I am a mortgage banker.
In fact, I might be the only mortgage banker in America who does not own his home currently.

RUSH: Well, now, wait. You have to explain that.

CALLER: (laughing) I sold my home directly before the boom --

RUSH: Oh, oh, I thought you meant you lived in it, but you didn't own it.

CALLER: I do not own my new --
I have a condominium now in Annapolis, but did I own a home before.
I sold it directly before the boom,
and of course after the boom, housing prices went so high
that it eliminated me from the market because of course
being in the mortgage business there wasn't a whole lot of chance my income was going up at that juncture.

RUSH: Well, see that's another aspect of it,
because the overvalued price of homes is a central factor in what happened here
because of the bankrolling and the support for all these worthless mortgages and so forth.
With everybody running into the market to buy a house, what happened to the supply of houses?
It shrunk up so the price of housing went sky-high.

CALLER: Absolutely.

RUSH: And that led to ARM crises with people and their mortgages and so forth.
I know they took the pledge and understood that it could go up,
but when it did they weren't able to handle it.
What's happening now in the home price business, correct me if I'm wrong, is just a major correction here,
prices are now starting to stabilize.
What the market would really set them to be opposed to this mess
that existed with Fannie Mae and Freddie Mac?

CALLER: Well, you are absolutely correct and, of course,
I get very concerned as a non-homeowner at this point that people will step in
in terms of government -- when I say people -- and try and correct it.
Of course politicians always want to have the economy look good if they're in office
and they always want it to look bad when they're not in office.
And when the housing prices were going up, nobody was doing anything
except for trying to encourage it with lower rates and that sort of thing,
government was always involved with Fannie and Freddie, as you have discussed at great length and very accurately, I might add,
so nobody was doing anything.
Now that it's crashing, as it needs to in effect, everybody is complaining
and blaming Bush and the Republicans.

RUSH: Yeah, they are,
and of course the Republicans are not out defending themselves in any of this.
You used the word "crash,"
but in California, first-time home buyers are up almost 20%,
because prices out there are stabilizing
and people can afford to get into the housing market now for the first time.
Anyway, Joe, appreciate the call, thanks much.

Laura in Newman, Georgia, nice to have you here. Hello.

CALLER: Hey, how are you today?

RUSH: Ah, pretty good, thank you.

CALLER: I just wanted to say how much I enjoyed your explanation.
All roads lead to Fannie and Freddie,
the explanation of the current financial debacle that just gave me a much better understanding of what's going on.
And I think you need to repeat it every day.

RUSH: What did you think, I'm curious, before you heard my explanation,
what did you think the problem was?

CALLER: Well, I thought that it related to redlining,
but I just could not understand how big it had gotten.
I mean, it's hard for me to grasp the amount of money,
and I guess I don't really understand the sheer number of people involved.
You would think if someone is writing a mortgage, they would want to give it to people who could pay it back eventually.

RUSH: See, this is one of the fundamental problems that people are coming to grips with.
Most people, when they go borrow money have to prove that they can pay it back.
They have to show a net worth statement, income, all this.
It's tiresome and it's invasive, depending upon the amount of money you want to borrow and for what reason.
The loans we're talking about, these people didn't have to prove they had jobs.
See, you can't relate to that.

CALLER: No, I cannot.
I remember the seventies when interest rates were so high --

RUSH: I do, too.

CALLER: -- and I thought that I would never be able to own a house.
My husband and I made a move and we sold our house and moved to a place where houses were a good bit more,
and it was, you know, quite a shock and interest rates were so terribly high,
and it was depressing, I thought we'll never own a house again,
but we do, so it's not all bad.

RUSH: There are some positives here. I don't want to be totally negative.
I mean, people don't want to hear the positives right now,
but we're learning that you can't lend money to people that can't pay it back.
Whether we're going to keep doing it is another matter.
What's at stake here, folks, is the takeover of the US economy by the American left.
That is what is at stake here.
And you might be saying,

"Well, where's the Bush administration on this?"
Hey, I can only guess,
but the last thing I think any sitting president would want to leave office on
is an economic situation like this.
So whatever it takes to get this off the books for a while
and look, there are some people, folks, who believe that something drastic has to be done
because if we just let it go and crash,
that too much is going to crash
and it's going to hurt a whole lot of people.
But who is it that's telling us this?
The people telling us this
are the people who want control over this.
There's a big idea at stake here.
It really is.
It is whether or not socialism works.

Can the government be the provider, the guarantor, the protector
of everybody for their wants and their needs?
We know intellectually, we know historically, it doesn't work;
it has never worked, at least it doesn't work for creating prosperity.
It creates tyranny. It works for people at the head of the chain on something like this,
but it doesn't create prosperity for people.
So these are, to me, very, very crucial questions.
The arguments that we have in this country are over
You could be charitable and you could say that people on the left and people on the right want the same things.
I used to think that but I don't anymore,
but for the sake of discussion you could say they want the same things.
We want a prosperous economy;

we want educational opportunity for kids;
we want a safe, crime-free neighborhood;
we want economic opportunity growing;
we want access to plentiful supplies of energy,
all the basic things here that have defined the country.
The argument has been how to provide them.
The liberals think that government should be in charge of parceling these things out because they'll do it in a more fair way.
Conservatives say, no, the government doesn't create diddly-squat,
it's the private sector that creates all this and rewards risk and rewards people who work hard and so forth.

I really don't think the left wants and has the same vision for the country anymore that they once did.
I think this is a radicalized Saul Alinsky Democrat Party

that JFK would not recognize,
that Hubert Humphrey would not recognize,
that Robert Strauss from Texas would not recognize,
that Pat Brown, the governor of California, would not recognize,
that Morris Udall would not recognize,
that Scoop Jackson would
not recognize.
I mean, none of these old Democrats would recognize this Democrat Party.
This party has been radicalized,
it's been taken over by the Alinskyites,
and their purpose is to destroy the country as it exists and remake it.
You say,
"Why would people want to do this?"
They don't like it, folks.
I can't explain the psychology of liberalism.
I think it's a disease, but I can't explain it.
We don't have time to try to understand it.
We don't have time to gather our thoughts, why are they doing this
because, frankly, in my case I don't care that they hate me,
I don't care to understand why,
doesn't matter.
The fact that they do is what is,
and the situation right now is these people have to be defeated.
After that we can put 'em on the couch, try to figure 'em out.

How can you live in the greatest place in the history of humanity and hate it?
It's not rational.
We try to understand this
applying the same belief systems to our own belief systems
and it doesn't work. We don't have hatred for the country, we don't understand it.
It's not rational to us.
To try to rationalize their irrationality is a very, very frustrating thing.
In the meantime, we have a golden opportunity here.
They have nominated a 100% empty suit

with no experience,
no qualification,
no nothing
except he comes right out of the Alinsky Rules for Radicals school
which is all about taking down the existing power structure
and blaming the United States for imperialism,
being too powerful,
being too rich,
being too wealthy,
being too unjust,
being too unfair,
blah, blah, blah, blah, blah,
and they're on the cusp here of grabbing in both hands
a trillion dollars worth of money to sit here and nationalize the home mortgage business.
The very people that wrecked it
seek now to control it.

BREAK TRANSCRIPT

RUSH: By the way, some of you earlier
may not believe that Janet Reno was involved in pressuring lending institutions back in the Clinton days.
This is from the CybercastNewsService.com:

"Under the Clinton administration,
federal regulators began using the act to combat 'red-lining,'
a practice by which banks loaned money to some communities but not to others, based on economic status.
'No loan is exempt, no bank is immune,' warned then-Attorney General Janet Reno.
'For those who thumb their nose at us, I promise vigorous enforcement.'"
Now, look,
let me say something about redlining.
Redlining in and of itself is horrendous.
You just decide because of the way somebody looks or where they live that you're not going to give them a loan.
That's not good.
But you don't fix that by giving one to everybody that's not capable of paying back a loan.
It's exactly what we did with affirmative action.
We started elevating people with no accomplishments, no achievements on the basis of past transgressions.
They tried the same thing here with redlining, and look at where it got us.
"The Clinton-Reno threat of vigorous enforcement
pushed banks to make the now infamous loans that many blame for the current meltdown.
One economist told the Cybercast News Service, banks,
in order not to get in trouble with the regulators, had to make loans to people who shouldn't have been getting mortgage loans in the first place."
And then the banks, they could just sell the loans off to Fannie or Freddie,
who could buy them with little regard for negative financial outcomes 'cause that's what Fannie and Freddie were set up to do.

END TRANSCRIPT

Read the Background Material...

Investor's Business Daily: ...And The Wrong

CNSNews: Financial Meltdown: Where Does the Buck Stop?

American Spectator: Financial Collapse Democrats

Bloomberg: How the Democrats Created the Financial Crisis: Kevin Hassett

Investor's Business Daily: Congress Lies Low To Avoid Bailout Blame

Newsbusters: IBD: Carter More to Blame for Financial Crisis Than Bush or McCain

Village Voice: Andrew Cuomo and Fannie and Freddie

FOX: Obama Laments Debt, But Promises Billions for Anti-Poverty Program

*Note: Links to content outside RushLimbaugh.com usually become inactive over time.

[philman_36]

...nor does Freddie Mac receive federal funds."
Right, they receive federal subsidies.
CBO TESTIMONY
The housing GSEs receive a substantial federal subsidy as a result of their special status, estimated to be $13.6 billion in 2000.

Is Freddie Mac a government agency?
No.
Right, they're a government sponsored entity (GSE), but we've been over that.

It's funny that you use the lying, cheating bastards own website for information.

[fightinJAG]

Alot of arrows are being slung around, but no one is addressing the main issue as to why Bernanke is freaking in the first place.

I haven’t seen republicans explain why Bernanke is wrong.

In wartime there can only be one general.

You have a way with words. Straight to the very heart of the matter once again.

I think the key that the balkers are missing is what President Bush said: "These are not normal times." IOW, the balkers seem to be approaching this like it's some kind of "normal" spending bill, rather than coalescing around the principles of action demanded by a particular, huge crisis. Jack Welch was on H&C the other night. He said if a plan isn't in place by Monday or Tuesday, it's possible the fourth quarter could completely tank. If the country goes into rapid and steep deflation, wow, that is very, very difficult to pull out of. Look at Japan. After it's "lost decade," home prices there have still not regained their levels of 20 years ago. The number one home appliance is the safe! Decades later, the Japanese still keep their money stashed at home because they don't trust the banks. If we lose our position as an economic superpower (as Germany and France have both said would happen; there was a run on banks in Hong Kong yesterday because the bailout plan was stalling), not only might we face a long and harsh period of deflation, but our military might also would be compromised. Throughout history, economic issues correlate highly with war. IOW, this possibly is jeopardizing not only our economic security, but our national security, as well as the extent of peaceful coexistence in the world today.

[fightinJAG]

Sorry for the text brick:

Let me try again.

Alot of arrows are being slung around, but no one is addressing the main issue as to why Bernanke is freaking in the first place.

I haven’t seen republicans explain why Bernanke is wrong.

In wartime there can only be one general.

You have a way with words. Straight to the very heart of the matter once again.

I think the key that the balkers are missing is what President Bush said: "These are not normal times." IOW, the balkers seem to be approaching this like it's some kind of "normal" spending bill, rather than coalescing around the principles of action demanded by a particular, huge crisis.

Jack Welch was on H&C the other night. He said if a plan isn't in place by Monday or Tuesday, it's possible the fourth quarter could completely tank.

If the country goes into rapid and steep deflation, wow, that is very, very difficult to pull out of. Look at Japan. After it's "lost decade," home prices there have still not regained their levels of 20 years ago. The number one home appliance is the safe! Decades later, the Japanese still keep their money stashed at home because they don't trust the banks.

If we lose our position as an economic superpower (as Germany and France have both said would happen; there was a run on banks in Hong Kong yesterday because the bailout plan was stalling), not only might we face a long and harsh period of deflation, but our military might also would be compromised.

Throughout history, economic issues correlate highly with war. IOW, this possibly is jeopardizing not only our economic security, but our national security, as well as the extent of peaceful coexistence in the world today.

[Pelham]

“It’s funny that you use the lying, cheating bastards own website for information.”

That’s an excellent defensive effort, although a losing one. Arguing the source is the genetic fallacy.

“Right, they’re a government sponsored entity (GSE), but we’ve been over that.”

You forgot to post the part where they receive no federal funds. Your taxes are safe.

[philman_36]

You forgot to post the part where they receive no federal funds.
I guesss you missed that...so I'll post it again...

Right, they receive federal subsidies.
CBO TESTIMONY
The housing GSEs receive a substantial federal subsidy as a result of their special status, estimated to be $13.6 billion in 2000.

Yeah, they're real sly like that. I mean, you wouldn't go out and publicly announce with a sign that says "I'm a pickpocket and thief!" if you were one, would you?

Assessing the Public Costs and Benefits of Fannie Mae and Freddie Mac May 1996
The GSEs claim that the cost of using sponsored enterprise status to improve access to mortgage finance is zero. By this Fannie Mae and Freddie Mac mean that, as of yet, there have been no federal appropriations for cash payments or guarantee subsidies. But in the place of federal funds the government provides considerable unpriced benefits to the enterprises. The subsidy to the GSEs is the free use of the government's power to raise money.

I guess yet has arrived 'cause they're fixing to get a whole bunch of "federal funds", aren't they.

[philman_36]

BTW, something that has a cash value placed upon it, like subsidies, is the same as funds. If subsidies weren’t the same as funds then how could they have a cash value?

[Pelham]

“BTW, something that has a cash value placed upon it, like subsidies, is the same as funds. If subsidies weren’t the same as funds then how could they have a cash value?”

You’re assuming that what you have been reading regarding Fannie and Freddy accurately describes them.

Let me give you an example of a “subsidy” with “cash value”. Some tax experts claim that when you own your own home you are receiving income from your own house in the form of “imputed income”. The amount of that imputed income is equivalent to what your house would rent for. And there are people who would like to tax you on that imputed income. I’m sure that you would find this “subsidy” to be preposterous since no money is being received by you.

The “subsidies” you have been reading about for Fanny and Freddy are just as empty as the imputed income you get from your house. If Fannie and Freddy had been receiving money from the Treasury it would show up on their income statement. I couldn’t see any, and I assume you didn’t find any such entry either. It would be very hard for Fannie and Freddy to steal money from us when they weren’t receiving any taxpayer money to begin with. There is plenty wrong with Fannie and Freddy without being distracted by a lot of ideological nonsense coming from analysts who appear to simply dislike GSEs.

[philman_36]

Let me give you an example of a “subsidy” with “cash value”.
Instead of using your example let me give you an example of what I call a "subsidy" with "cash value"
You gain a cash value on a home that you own in the form of equity.
I look at the GSEs in the same manner. They had "equity" if you will, a real "cash value", in the subsidy of the implied government backing that they received.

And that is the end of this conversation for me. You can say whatever you want all week and miss the next weekend as well as far as I'm concerned. It's been nice chatting, except over the weekend when you were not here.

[philman_36]

"...and miss the next weekend as well..."
My pardon...I was absent for part of the weekend, not you.
(I've been horribly sick the last couple of days and I'm off by a couple of days...I keep thinking today is Monday {:^(...you did respond to me Saturday.)

[Pelham]

“They had “equity” if you will, a real “cash value”, in the subsidy of the implied government backing that they received.”

It must be a great mystery to you why the Senate had to pass a bill on July 26 to bail out Fannie and Freddy, since you persist in claiming that the government already guaranteed them.

Of course, there was never any such guarantee, despite what is believed by those who prefer illusion over fact. The government bailed them out by choice, just as they once chose to bail out Chrysler.

Perhaps there are people who also believe that Chrysler had an implicit government guarantee. They would just as incorrect in that assumption as they are in believing Fannie and Freddy received taxpayer funds or had taxpayer backing for their debts.