The Mortgage Meltdown – Why is McCain Afraid to Pin the Blame Where It Belongs?

Family Security Matters ^ | 10/10/2008 | Joel Himelfarb

[raybbr]

BTW, Which particular Republicans do you think we should blame? Which particular Democrats do you think we should blame?

Good questions. I would blame Bush, any republicans that did not PUSH for this bill and the same for democrats. There is plenty of blame to go around.

Bush pushed for expansion of purchasing GSE's in 2004 so he has to be on the list.

The idea of FAnnie and Freddie is not new. There could have been numerous challenges to it. Bush could have used the bully pulpit to help on this but he was too busy bragging about homeownership under his admin.

[raybbr]

BTW, thanks for the link.

[uncbob]

Bush could have used the bully pulpit to help on this but he was too busy bragging about homeownership under his admin.

Probably figured that it was proof that Compassionate Conservatism WORKED

[philetus]

I have a hard time believing this RINO wimp is our candidate.

[syriacus]

Here’s why I wouldn’t blame Bush...

http://www.whitehouse.gov/news/releases/2008/10/20081009-10.html

Today, the Washington Times incorrectly accused the White House of ignoring warnings of trouble ahead for government-sponsored enterprises (GSEs) and neglecting to “adopt any reform until this summer,” when it was too late. “Neither the White House nor Congress heeded the warnings, Fannie and Freddie retained strong bipartisan support during the 1990s and early part of this decade.” (Editorial, “Hear, See And Speak No Evil About Fannie And Freddie,” The Washington Times, 10/9/08)

Over the past six years, the President and his Administration have not only warned of the systemic consequences of failure to reform GSEs but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. In fact, it was Congress that flatly rejected President Bush’s call more than five years ago to reform the GSEs. Over the years, the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems with the GSEs.

2001

* April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.” (2002 Budget Analytic Perspectives, pg. 142)

2002

* May: The Office of Management and Budget (OMB) calls for the disclosure and corporate governance principles contained in the President’s 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

2003

* February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.

* September: Then-Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

* September: Then-House Financial Services Committee Ranking Member Barney Frank (D-MA) strongly disagrees with the Administration’s assessment, saying “these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” (Stephen Labaton, “New Agency Proposed To Oversee Freddie Mac And Fannie Mae,” The New York Times, 9/11/03)

* October: Senator Thomas Carper (D-DE) refuses to acknowledge any necessity for GSE reforms, saying “if it ain’t broke, don’t fix it.” (Sen. Carper, Hearing of Senate Committee on Banking, Housing, and Urban Affairs, 10/16/03)

* November: Then-Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004

* February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital and calls for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore … should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

* February: Then-CEA Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

* April: Rep. Frank ignores the warnings, accusing the Administration of creating an “artificial issue.” At a speech to the Mortgage Bankers Association conference, Rep. Frank said “people tend to pay their mortgages. I don’t think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren’t there.” (”Frank: GSE Failure A Phony Issue,” American Banker, 4/21/04)

* June: Then-Treasury Deputy Secretary Samuel Bodman spotlights the risk posed by the GSEs and calls for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005

* April: Then-Secretary Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)

* July: Then-Minority Leader Harry Reid rejects legislation reforming GSEs, “while I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process.” (”Dems Rip New Fannie Mae Regulatory Measure,” United Press International, 7/28/05)

2007

* August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, the White House, 8/9/07)

* August: Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd ignores the President’s warnings and calls on him to “immediately reconsider his ill-advised” position. (Eric Dash, “Fannie Mae’s Offer To Help Ease Credit Squeeze Is Rejected, As Critics Complain Of Opportunism,” The New York Times, 8/11/07)

* December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, the White House, 12/6/07)

2008

* February: Assistant Treasury Secretary David Nason reiterates the urgency of reforms, saying “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

* March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

* April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

* May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

o “Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow state housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)

o “[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

o “Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)

* June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

* July: Congress heeds the President’s call for action and passes reform legislation for Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

* September: Democrats in Congress forget their previous objections to GSE reforms, as Senator Dodd questions “why weren’t we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem? … I have a lot of questions about where was the administration over the last eight years.” (Dawn Kopecki, “Fannie Mae, Freddie ‘House Of Cards’ Prompts Takeover,” Bloomberg, 9/9/08)

[syriacus]

Bush could have used the bully pulpit to help on this

He tried.

I'll bet Barack Obama considered some of Bush's suggestions to be "racist."

I wish I had time to see how many people in the press said his suggestions to Congress were "racist."

[syriacus]

I guess we have to include Shelby among the "good guy" Republicans.

Senator Shelby vows to continue to press GSE reform in Senate

• Senate Banking Committee Chairman Richard Shelby (R-AL) said that while the future of a bill passed by his committee recently to overhaul regulation of the housing GSEs “remains uncertain,” he vowed to “continue to press the issue of GSE reform in the Senate,” saying it’s clear that the present housing GSE regulators are “woefully inadequate.” Shelby added, “Fannie and Freddie, the second and fifth largest financial institutions in the United States, are too important to have a regulator with less power than the regulator of a small country bank.”
• Shelby said, “It has been extremely difficult to create a consensus bill that will enjoy broad support among Republicans and Democrats, and is acceptable to the Administration.” He added, “The tight 12-9 vote on the committee demonstrated that even with the expansive affordable housing mandates and watered down receivership authority, we could not attract enough (support) from across the aisle to ensure enactment into law.”
• In a brief discussion with reporters, Shelby would not declare the GSE regulatory reform bill dead. “It is on the calendar,” he said. “We’ll see what happens.” Most observers have said, barring a GSE crisis or a compromise, they do not expect the bill to come up for a vote in the full Senate. (Dow Jones & Company, John Connor, 04/23/04; American Banker, Damian Paletta, 04/26/04)
• In an interview on CNNfn’s Street Sweep, Shelby said, “…if there’s another scandal, a restatement of accounting, and things like this in the future, I believe the climate would change. Then, we will have a good chance to pass a meaningful reform bill dealing with Fannie Mae and Freddie Mac and the Federal Home Loan Bank. But until then, I don’t see a lot passing this year, barring a catastrophe with these institutions.” (CNNfn Street Sweep, Christine Romans, 04/27/04)

[raybbr]

I have never said that all republicans are to blame. I agree there were some that tried. To date there is no evidence that ANY dem tried to stop this train wreck.

I cannot absolve Bush. His admin pushed for increasing the purchasing of GSE's in 2004.

[syriacus]

Congress is supposed to regulate Fannie and Freddie, but when they didn't get their act together, Bush tried to change things.

Playing chess with the GSEs: the Bush administration takes matters into its own hands

• Now that Fannie Mae and Freddie Mac have stalled Congress’ efforts to rein them in through regulatory reform, the Bush Administration is taking matters into its own hands. The White House is considering a three-way regulatory crackdown on the Fannie Mae and Freddie Mac by Treasury, HUD and OFHEO, which are all exploring tough new rules whose ultimate effect would be to limit the rapid growth of the GSEs.
• The Bush administration’s plan to take the regulatory route and bypass Congress caught Capital Hill Republicans by surprise and left some GOP leaders uneasy that they’re being cut out of the picture. Some lawmakers question if the plan isn’t just an election-year stopgap to insulate Bush from a financial crisis, should one arise as November 2 approaches. Calling for radical changes in GSE oversight in an election year, especially as interest rates start to rise, could roil the housing market and have the opposite of a calming effect. Thus, some Hill conservatives are warning the Administration not to overplay its hand.
• While the Bush administration still sees a need for legislation to clamp down on Fannie and Freddie, officials think regulatory steps will help constrain the GSEs in the meantime. By in effect “parking more tanks on the companies’ lawns,” the administration hopes to persuade Fannie and Freddie that they won’t be able to avoid tougher regulation by resisting the administration’s initiatives in Congress. What’s the endgame? Get Fannie and Freddie or their boards or even shareholders to cut a deal on reform. As the debate shifts from safety and soundness regulation to implied government guarantee and growth limitation, the GSEs may feel fewer incentives to deal, not more.
• “The administration has a lot of tools and leverage under current authorities to bring to bear on the process,” said Sheila Bair, a professor at the University of Massachusetts, who supports the Bush administration’s position. “But the question is -- how far do you push before Fannie no longer sees it in its interest to come to the table at all?” (Business Week Online, Paula Dwyer, 04/30/04; Wall Street Journal, James R. Hagerty and John D. McKinnon, 04/28/04; American Banker, Rob Blackwell, 05/03/04)

[alrea]

THE OBAMA CRASH

From community organizing to massive contributions from GSE's Obama was at the front of the line for handouts that ended up as bad loans. He would not be in office without the money he receieved from those that built the house of cards. Socialism works better in poor countries where the property redistributed doesn't require so much debt service.

[syriacus]

His admin pushed for increasing the purchasing of GSE's in 2004.

Do you mean purchasing by GSEs?

[raybbr]

Do you mean purchasing by GSEs?

Yes, that's what I meant.

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.

[driftless2]

"point a finger"

Maybe that's why senators are so rarely nominated and rarely win the presidency. They've accumulated too many "friendships" in government with people they should not be friendly with. McCain should cut this "working with the opposition" baloney. The opposition is wrong on practically everything. He should be telling his audiences he will be fighting the libs in congress. Unfortunately his past indicates he agrees with too much of what the opposition believes.

[sushiman]

” McCain has to decide if he wants to be a Senator or ...”

He is 72 . How many more years is he going to be a Senator ? If he loves America like he SAYS he does he’ll pull out all the stops and go for broke ! Wanna be a hero ? FIGHT !!!!

[bpjam]

I can’t disagree at all. Bush hasn’t even gone on Rush Limbaugh or Sean Hannity to lobby his case for anything which the democrats oppose.

Bush simply refuses to fight this opposition unless they are foreigners. McCain enjoys screwing over dirty Republicans but he holds his tongue when the dirt is covering a Democrat. Some asset to the party, huh?

McCain puts bi-partisanship above the party. That is like putting non-violence above your team in a football game. Not a great way to win.

[TigersEye]

Could it be because McCain is a nutless wonder?