Well, there are lots of areas I’d disagree with Rep. Shays on, but, on his website right now, he presents some interesting history, including:
“How did things get this out of hand? Banks, brokers and Congress encouraged people to buy homes they couldn’t afford, often with little or no documentation, and compelled institutions to extend credit to individuals incapable of making their payments. Members of Congress put tremendous pressure on Fannie Mae and Freddie Mac to buy subprime loans. Subprime, by its very definition, is a loan extended to high-risk borrowers.”
Note that line: “Members of Congress...” It sounds to me like Shays could absolutely name names. What do you want to bet Barney is one of them?
More at: http://www.house.gov/shays/news/2008/september/septshaysfinancialcrisis.shtml
And then there’s this, on Bill O’Reilly, Frank says: “The fact is it was 1994 that we passed a bill to tell the Fed to stop the subprime lending. We tried to get them to do it. The first time we were in power again in 2007, we passed the bill to regulate Fannie Mae and Freddie Mac.”
Huh??? “Stop the subprime lending”?! What a bald-faced lie!! Just HOW the heck could the FM’s have existed and functioned as they did, without pushing banks into excessive subprime lending?
As I understand it, there’s actually nothing wrong with a subprime loan, as long as somebody’s backing it with adequate and REAL assets, and it’s only a small portion of one’s portfolio. (Ie., you can afford to default on it.) But when the system has been pushed so far out of kilter that (if I read this right, elswhere) HALF of the U.S. mortgage market value is in subprime loans, and 70% of new mortgages are subprime, sheezo, man, that is obviously asking for a problem.
Transcript of O’Reilly and Frank here:
http://www.foxnews.com/story/0,2933,432173,00.html
The scary thing is, from the transcript alone I’d say O’Reilly WAS boorish, ranting, bullying, yelling, dumb, and irrational in spots, and he still comes off as being more in the right than Frank. Yikes!
Oops, I meant to say “you can afford a default on it.”
I agree that BOR would have been more effective to just keep confronting Frank with the truth, playing the clip, putting the quotes up on the screen.
However, the fact is that that would not have garnered nearly as much attention as this smackdown-—so it’s six-to-one, half-a-dozen to the other on this one, I guess.
I also am not the biggest Shays fan, but he has been smart on this for a long, long time, and he seems willing to go out there and tee this up for the sake of our country.
I encourage people to support Shays on this-—look at the committees he is on, including the one Waxman chairs.
Good catch about Shays’ website. However, I wish he would go on to say that “Members of Congress aggressively, affirmatively and explicitly STOPPED and DEFEATED attempts to regulate Fannie and Freddie so as to limit the risk their business practices posed to the entire economy.”