Posted on 10/11/2008 5:46:48 AM PDT by markomalley
For John McCain and the Republicans, there’s nowhere to go but up. Cut through all of the self-congratulatory talk about how foresighted and responsible they were in voting for the $700 billion mortgage bailout and the truth is that the GOP today is staring into a political abyss. The stock market has fallen, and the remarkable political bounce that Republicans had gained with Sarah Palin’s vice-presidential nomination is gone.
Obama has surged into the lead in the polls by depicting McCain as out of touch, aided by the Arizona senator’s erratic, muddled performance on the bailout. First, he temporarily suspended his campaign, and then reversed himself the following day. McCain joined Obama in voting for the bailout bill last Wednesday, then went on national television the following day to denounce the very legislation he had just voted for as “insanity” and an “obscenity, because it’s a waste of taxpayer dollars.” In the same interview, McCain added that Americans need a president who would veto pork-laden bills like the one he just voted for. After flailing about incoherently like this, McCain needs to understand that a substantial part of the Republican “base” (whose votes he desperately needs if he is to have any chance of defeating Obama) feels betrayed by his performance on the bailout issue. McCain appeared so cowed by Treasury Secretary Henry Paulson’s warnings of economic collapse that he embraced the very kind of pork-barrel legislation he had denounced hundreds of times on the campaign trail.
What’s frustrating about the timidity of McCain and the congressional Republican leadership is that they have moral high ground on this mortgage-bailout issue, and Obama and the Democrats have huge political liabilities if Republicans have the good sense to exploit them. McCain may be starting to understand this; on Monday, he blasted Obama and the Democrats for killing his legislative efforts to reform Fannie Mae and Freddie Mac (the federal government-sponsored housing agencies whose collapse helped trigger the current financial crisis) several years ago. These efforts were blocked in 2005 and 2006 up because of opposition from congressional Democrats, among them Sens. Chris Dodd and Barack Obama, who received hundreds of thousands of dollars between them in campaign contributions from supporters of Fannie and Freddie .But that is just the tip of the political iceberg when it comes to the Democrats’ responsibility for the collapse of these two companies, which cost taxpayer s close to $200 billion and helped trigger the larger meltdowns in mortgage and credit markets.
The fact is that Washington politicians, the overwhelming majority of them Democrats, had a very large role in creating the mortgage mess in the first place. For more than 30 years, the federal government has pursued policies (often in tandem with Left-wing community activist groups like Obama’s ACORN) in which credit requirements were systematically eroded in order to make loans to people with poor credit histories who were very unlikely to pay them back.
The Community Reinvestment Act and the Destruction of Fannie and Freddie
Responding to complaints that banks were refusing to make loans to persons, mostly racial minorities who lived in poor inner-city areas, Congress passed and President Carter signed into law in 1977 the Community Reinvestment Act (CRA), which decreed that these financial institutions have “an affirmative obligation” to meet the credit needs of the communities in which they operate, and that federal regulators need to take this into account when considering requests to merge or open branches. Yet enforcement of the law was sporadic until the early 1990s, when the Federal Reserve Bank of Boston laid the groundwork for the Clinton Administration’s efforts to breathe new life into the CRA. The study, released to great fanfare by the Boston Fed, supposedly proved that racial bias in mortgage lending (as opposed to creditworthiness) was to blame for nonwhites’ inability to get housing loans. That conclusion “comports with common sense, no more studies needed,” Boston Fed President Richard Syron declared.
But the study soon fell apart under close scrutiny. Alicia Munnell, the Boston Fed‘s vice president for research, admitted in an interview that appeared in the January 4, 1993, issue of Forbes, that the study mishandled statistics on minority default rates. When the errors were accounted for, the same study showed no evidence that minority applicants were being discriminated against. Months after the interview appeared, Munnell joined the Clinton Administration as assistant secretary of the treasury for economic policy. In 1995, Treasury announced a new series of regulations that would make it much more difficult for banks to get a satisfactory CRA rating which could be critical to their survival.
No longer would businesses be able to get by with good ratings based on effort. Instead they would have to meet specific performance goals, broken down by neighborhood, income group and race, Howard Husock wrote in the Winter 2000 issue of City Journal. The CRA regulations enabled Left-wing “community organizations” like ACORN and the Boston-based Neighborhood Assistance Corporation of America (NACA) to put pressure on banks to lower credit standards. The CRA also became an effective political club to force banks to subsidize groups like ACORN and NACA, who also conducted voter-registration and lobbying campaigns.
One activist with close ties to Obama was Madeline Talbott, longtime director of Chicago ACORN. Writing in the September 29th New York Post, Stanley Kurtz described at length how Talbott began a pressure campaign to drag banks in the area “kicking and screaming” into high-risk loans to people with troubled credit histories. Soon, thanks to the Clinton Administration, Fannie Mae and Freddie Mac took the plunge. In June 1995, President Clinton, Vice President Gore and HUD Secretary Henry Cisneros announced the administration’s strategy for increasing homeownership to an all-time high. ACORN activists were honored guests at the ceremony, where Clinton declared that the strategy could be implemented administratively and “will not cost the taxpayers one extra cent.”
Influential members of the mainstream media bought this line. Ronald Brownstein of the Los Angeles Times began a May 31, 1999, analysis piece this way: “It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded.” Brownstein expressed hope that (since-disgraced) Fannie Mae boss Franklin Raines and HUD Secretary Andrew Cuomo would reach an agreement “that provides more fuel for the extraordinary boom transforming millions of minority families from renters into owners.” In fact, we now know that the “boom” was in reality a con job – a cruel hoax created by political hustlers and that the “fuel” consisted of irresponsible loans that will cost taxpayers hundreds of billions of dollars at a minimum to clean up.
McCain needs to highlight Obama and the Democrats’ role in the meltdown
In September 1993, the Chicago Sun-Times reported on how Talbott led an initiative in which five Chicago-area institutions participated in a $55 million program with ACORN to provide mortgages to low- and moderate-income people with “troubled credit histories,” and Talbott persuaded Fannie and Freddie to buy up the loans. The pilot program “worked” (at so far as funneling money to the poor from the banks was concerned). That purported success also helped set the stage for today’s financial implosion by encouraging Fannie and Freddie to expand their efforts to make more loans to such people.
Obama returned to Chicago in the early 1990s, and Talbott got him to train her personal staff, and he also trained the ACORN organizers leading Talbott‘s assaults against Chicago banks. Soon, Obama was involved in subsidizing ACORN through the Woods Fund, where he substantially expanded support for such groups. Kurtz (who has probably spent more time investigating Obama’s “community organizing” background than any other journalist) makes clear that the future U.S. senator was not just involved in funding ACORN, but also helped conceal its radical nature from the American public.
A report issued by the Obama-supervised Woods Fund in the mid-1990s acknowledges the difficulty of getting foundations and donors to contribute to confrontational leftist groups like ACORN. The Woods Fund’s claim to be “non- ideological,” it said, has “enabled the Trustees to make grants to organizations that use confrontational tactics against the business and government ‘establishments’ without undue risk of being criticized for partisanship.” In addition, as the leader of another charity, the Chicago Annenberg Challenge, Obama provided support to ACORN, ostensibly for “education” projects,“ Kurtz adds. For her part, Talbott supported Obama‘s successful run for the Illinois Senate in 1996.
But the Democrats’ complicity in creating the mess goes well beyond this. After accounting scandals shook Fannie Mae in 2003-2004, agency chief Raines (President Clinton’s former OMB director) resigned. During his five years at the helm of Fannie, Raines made $90 million (he later was forced to return $24 million). He subsequently advised Obama’s presidential campaign on housing policy. In 2005 and 2006, McCain was one of a handful of lawmakers who introduced legislation to reform Fannie and Freddie. That legislation was blocked by Senate Democrats including Obama and Banking Committee Chairman Chris Dodd. Thanks to their efforts, GOP attempts to reform Fannie and Freddie’s financial practices were sabotaged until July 2008, when Republicans successfully demanded them as the price for passage of a housing bill. But by then, it was too late to stop the impending collapse.
While both firms were adding massive losses onto their investment portfolios between 2005 and 2007, House Democrats joined their Senate colleagues in blocking every effort by Republicans to pass reforms. Obama’s lower-key efforts complemented those of House liberals like Reps. Barney Frank, Maxine Waters and Gregory Meeks, who can be seen on YouTube praising Raines and haranguing federal regulator Armando Falcon for issuing a report that questioned the agency‘s financial practices. (Perhaps someone could send the McCain campaign the YouTube video of the 2004 House Financial Services Committee hearing at which this took place.)
McCain could also go back to 2004 and read the written testimony of Roger Barnes, a Fannie Mae accountant who questioned the bookkeeping practices occurring under Raines and Fannie Mae chief financial officer Timothy Howard in 2002. Barnes said his warnings were ignored because of a culture of “intimidation” in which employees were encouraged to give Raines and Howard information that would please the markets, rather telling the truth about Fannie’s worsening financial condition. McCain should also focus on Frank, who scurrilously suggests that Republican criticism of the CRA is motivated by racial prejudice. Fox News reported last week that during the early 1990s, when Frank pushed Fannie and the Clinton Administration to loosen regulations on mortgages, the congressman‘s live-in boyfriend, Herb Moses, was an executive working to develop Fannie‘s “affordable housing” programs. (The couple broke up in 1998, a few months after Moses left the company).
I fully understand that talking about these sorts of things is very uncomfortable for John McCain, who would rather be talking about “bipartisanship,” and how he collaborates with liberal Democrats on the mortgage bailout, campaign-finance “reform,” climate change, and amnesty for illegal aliens. The problem is that if McCain follows his natural instincts, the election is over and Barack Obama will take the oath as president on Jan. 20, 2009. But if McCain were to take the gloves off and force Obama to choose between defending the likes of Madeline Talbott, ACORN and Barney Frank, or throwing them under the proverbial bus, the old war hero may still have a fighting chance.
If McCain wins, it will be in spite of himself. He has plenty of hard, documented evidence of who caused this financial crisis and who tried to sound the warning. He needs to use it over and over again. I have to laugh when OBAMA, of all people, tries to claim that HE was the one to warn against sub-prime loans! That would be so easy to refute, if McCain cared to try.
because John McCain has never had to point a finger at a Democrat in order to get where he is. He has never done it before.
The first time I can ever recall him actually saying the name of a democrat was this week when he mentioned Dodd and Frank in a campaign event (after being egged on by the crowd).
McCain points fingers at the GOP and names names all the damn time. But he doesn’t do it on the other side because it would hurt his chances of getting their support on his legislative priorities (amnesty, election protection, carbon taxes, etc).
I sometimes wonder if McCain has a secret deal with Obama and the Democrats:
“I’ll give you a pass on your mortgage fraud — in turn, you leave me alone about my role in the savings and loan scams of the ‘80s. Deal?”
One guess: He doesn’t understand the economy.
[What’s frustrating about the timidity of McCain and the congressional Republican leadership is that they have moral high ground on this mortgage-bailout issue, and Obama and the Democrats have huge political liabilities if Republicans have the good sense to exploit them.]
Indeed. Yet the repuclican party is useless and does not fight for the conservative principles anymore. They are liberal now and following the left, they bow down and shrink away from fighting for the conservatives of America.
They are as worthless as the left and have become the left.
I am completely stumped by McCain’s inability to tie all of the people and scandals to Obama. This acorn thing and the financial crisis alone should have been enough.
I really lost alot of faith yesterday when he told the crowd not to fear Obama. I think the crowd was stunned. Has he given up??
We could refer to this economic DEMbacle as the DEMron Scandal.
Or something better.
Please, someone, come up with something memorable.
” Has he given up?? “
I believe so . He has seen the internal numbers and knows it is over .
Bingo!!
McCain will be going back to the Senate if he loses.
He doesn't want to burn any bridges.
Perhaps it's because the GOP is just as to blame as the Jackass party. Note the years the purchasing ballooned. Who was in control of Congress and the White House?
When HUD released the next set of goals in 2004, it reported that after Cuomo's previous edict, there had been a sudden spurt of GSE subprime investment, "partly in response to higher affordable-housing goals set by HUD in 2000." Fannie had gone from $1.2 billion in subprime-mortgage and securities purchases in 2000 to $9.2 billion in 2001 and $15 billion in 2002. Freddie's numbers were murkier, but clearly also on the rise. In 2003 alone, the two bought $81 billion in subprime securities—which also count against the goals.
Fannie also developed a "flexible" product line, providing up to 100 percent financing and requiring borrowers to make as little as a $500 contribution, and bought $13.7 billion of those loans in 2003. In addition to subprime loans and securities, both banks burst into the "alt-a" market, making alternative products easily available to borrowers who had slightly better credit histories than subprime borrowers, but were unwilling to provide full documentation of their financial histories. (It was the "alt-a" investments that recently brought down the private bank IndyMac.) These risky adventures, according to the 2004 HUD report, prompted Freddie to claim that "the increased goals created tension in its business practices between meeting the goals and conducting responsible lending practices," a self-serving attempt to plant the blame back on HUD.
After this initial uptick, the two banks purchased $434 billion in securities backed by subprime loans between 2004 and 2006. The Washington Post noted this June that the GSEs' aggressive acquisitions "created a market for more such lending" by others, feeding the fire. No one knows just how big a bite the subprime mess is now taking out of the GSEs, or how much of that portfolio will ultimately go bad, but it has become axiomatic that, whatever the total, it is too much, since it will have seriously shaken confidence in these two linchpin institutions.
From here.
Like most of the Republicans in DC, he's afraid of being labeled a racist... so he embraces “political correctness”. He's afraid of calling the ignorant, ignorant.... and he's afraid of calling Marxists, Marxists. He will stand up to our enemies abroad... but will turn a blind eye to the ones within.
I agree. I think part of the problem with the stock market these past couple of weeks has been that noone (Paulson/Bush/McCain etc) has said OUT LOUD what the real problem is, perhaps thinking that it is too esoteric/inflammatory. I dunno.
But I also am beginning to think that McCain’s campaign can’t win for losing. There are still undecided voters out there and if they haven’t seen the stark differences by now then they never will, and McCain is at the mercy of the Dow these next 3 1/2 weeks.
I like it. I have to admit I was thinking of blaming Democrats in general. But your idea is better.
We know he was directly involved in fostering some of the bad loans that got the housing bubble going..
BP,
What has me flummoxed both with McCain and GWB is the power of the Presidency The Podium and It's Microphone has not been used properly since Ronald Reagan and even Clinton.
Case in Point...
The Anti-War Wackos. Murtha, Durbin. Why wasn't their rallies with the CIC even at the smallest Guard Facility and then go on local talk shows in that area and stick it to them. Call them out, put them on the defensive for their actions.
Have we become that B@!!!e$$ as a society to try to sway them into what is right? The pressure to bear could be made unbearable, but it would take a 24/7 Clintonian Campaign Strategy. Obviously GWB and McCain are and have been unwilling to do this. I hate to say it it equivivates to surrender if you don't.
Im beginning to see How regular people in Germany must have felt When Adolf was Rising to Power . Seeing all these Brown Shirts runnung through the streets ,hearing these Bombastic Speeches on the radio .
What can you do, cast a vote? I guess ,but pulling a lever leaves you feeling like is that it ? Talk about Frustration ,the Left it seems does an awful lot more than that. Whitaker Chambers sure had it right when he said he was Leaving the Communist side, The Winning side ,to join, The Losing side , thats us because the Communists are ruthless and Obsessesd .
Well what they needed is a populace that is ignorant and Moronic as this one has become ,Talk about Idiots ,the stupidity of the American People Knows no Bounds
Perhaps part of that plan is to let the anger of fellow voters like me rise several levels before he hits the hornet's nest again like he did naming Frank and Dodd. That was very satisfying, but...he named them only after feeling the frontal assault of an angry voter and that was the last of it. Yesterday, he was telling a voter what a good guy 0bama is.
I keep bouncing between being frustrated at him for not doing anything and momentarily being happy when he finally says or does something. When it's all on the line, what good is a good soldier who won't fight?
My co-worker believes that John McCain is intentionally throwing the election.
One thing that’s interesting, though, is that he believes the assertive stance is making Sen. McCain look like an angry old man, and that choosing Sarah Palin was a stunt forced upon him by the RNC when he wanted Joe Lieberman.
This is a bright guy and generally conservative, but what I found was that the MSM has given him these impressions.
McCain is doing nothing to put the blame where it belongs, and I have no idea why. Governor Palin is going to have to drag him to victory and that is a sorry state of affairs.
She has already brought him back twice and he is fumbling the ball again.
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