How the Democrats Created the Financial Crisis
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How the Democrats Created the Financial Crisis

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    Senior Member SBjet's Avatar
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    Default How the Democrats Created the Financial Crisis

    The story below is making the rounds today.
    George Will also wrote a column about the their politicizing.
    There is plenty of blame to go around. Bush didn't cause the mess, but he didn't do a whole lot to stop it. Bush probably was not anxious to slow the economy down. If Bush gets the blame in the media, McCain doesn't want to look like he is protecting Bush.
    Clinton was on Letterman last nite, gave a fairly even handed explanation (did not mention "Bush"), but he left out the part about the Democratic goals of giving mortgages to people who could not qualify for regular loans.
    I'd like to see a few of those jokers do the perp walk.
    BTW, Neil Bush was supposed to be the star of the Bush brothers, but his bank bailout 20 yrs ago cost the US about $1 billion.
    Sigh.




    How the Democrats Created the Financial Crisis: Kevin Hassett


    Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

    Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

    But really, it isn't. 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. In addition, they held an enormous portfolio of mortgages themselves.

    In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

    The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

    Turning Point

    Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

    It is easy to identify the historical turning point that marked the beginning of the end.

    Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

    Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

    Greenspan's Warning

    The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 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.''

    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.

    Different World

    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.

    That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

    Mounds of Materials

    Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

    But we now know that 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.

    Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

    Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

    There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

    Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

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    Senior Member Ms Understood's Avatar
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    Enabler it happens everywhere....


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    Senior Member eliminatedsprinter's Avatar
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    And why did all the mortgage co's want to make all those bad loans in the first place?? Was it so they could lose money?? Nope it was to try to meet the quota's forced upon them by the Community Redevelopment Act of 1977.
    Free market greed my a$$. This is the fault of failed social engineering through stupid government regulation.
    Last edited by eliminatedsprinter; 09-23-2008 at 06:04 PM.
    Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.
    C.S. Lewis

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    E-7 Sheepdog (ret) SmokinLowriderSS's Avatar
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    I heard it was the Republican's fault, all of it (Bush's too).

    Quit blaming the innosent Democraps.
    "As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron."
    H.L. Mencken

    OBAMA: Some people deserve this.
    The rest of us are being dragged along kicking and screaming.

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    Senior Member Ms Understood's Avatar
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    Quote Originally Posted by eliminatedsprinter View Post
    And why did all the mortgage co's want to make all those bad loans in the first place?? Was it so they could lose money?? Nope it was to try to meet the quota's forced upon them by the Community Redevelopment Act of 1977.
    Free market greed my a$$. This is the fault of failed social engineering through stupid government regulation.

    Where were you when I was trying to explain this stuff...I was too young to pick up what happened in 1977.

    I caught your other post as well. Thanks


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    Quote Originally Posted by eliminatedsprinter View Post
    And why did all the mortgage co's want to make all those bad loans in the first place?? Was it so they could lose money?? Nope it was to try to meet the quota's forced upon them by the Community Redevelopment Act of 1977.
    Free market greed my a$$. This is the fault of failed social engineering through stupid government regulation.
    Now why do ya have to go that far back? Are you suggesting we might actually be paying now for policies past? Say it isn't so.
    Freedom Without Authority is Anarchy.
    Authority Without Freedom is Tyranny

    “The trouble with socialism is that you eventually run out of other people's money”
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    Red Blooded American The Doctor's Avatar
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    Keith Olbermann and Chris Matthews wanted to blame it on Sarah Palin but they both were dismissed from their duties before they could further embarrass their network.

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    Senior Member Ms Understood's Avatar
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    The cost of a mistake could be huge. It could result in a catastrophic collapse of the U.S. financial system that could ripple across the world or in a staggering clean-up bill for taxpayers.

    Cut and paste for the non-believers.


    http://www.msnbc.msn.com/id/26860018/


    The rest as if anyone cares...


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    E-7 Sheepdog (ret) SmokinLowriderSS's Avatar
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    Quote Originally Posted by The Doctor View Post
    Keith Olbermann and Chris Matthews wanted to blame it on Sarah Palin but they both were dismissed from their duties before they could further embarrass their network.
    You mean they COULD further embarass their network?????
    "As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron."
    H.L. Mencken

    OBAMA: Some people deserve this.
    The rest of us are being dragged along kicking and screaming.

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    Senior Member eliminatedsprinter's Avatar
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    Quote Originally Posted by Gravyboat View Post
    Now why do ya have to go that far back? Are you suggesting we might actually be paying now for policies past? Say it isn't so.
    Oh it be so.. 30 years of a f#d up policy has finally bit us in the a$$...
    Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.
    C.S. Lewis

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    TPC
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    Quote Originally Posted by eliminatedsprinter View Post
    Oh it be so.. 30 years of a f#d up policy has finally bit us in the a$$...
    There it is.

    We can solve it with more home brewed oil.
    The savings to the treasury would be incredable and we could easily back outta hell pretty quick.
    In the long run McCain would be the better choice to get this all behind us because he's hell bent for leather.

    But in the meantime both parties are trying to shove it up each other ass.
    Your direction, not your intention, leads to your destination



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    Senior Member Ms Understood's Avatar
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    Quote Originally Posted by SBjet View Post
    The story below is making the rounds today.
    George Will also wrote a column about the their politicizing.
    There is plenty of blame to go around. Bush didn't cause the mess, but he didn't do a whole lot to stop it. Bush probably was not anxious to slow the economy down. If Bush gets the blame in the media, McCain doesn't want to look like he is protecting Bush.
    Clinton was on Letterman last nite, gave a fairly even handed explanation (did not mention "Bush"), but he left out the part about the Democratic goals of giving mortgages to people who could not qualify for regular loans.
    I'd like to see a few of those jokers do the perp walk.
    BTW, Neil Bush was supposed to be the star of the Bush brothers, but his bank bailout 20 yrs ago cost the US about $1 billion.
    Sigh.




    How the Democrats Created the Financial Crisis: Kevin Hassett


    Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

    Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

    But really, it isn't. 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. In addition, they held an enormous portfolio of mortgages themselves.

    In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

    The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

    Turning Point

    Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

    It is easy to identify the historical turning point that marked the beginning of the end.

    Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

    Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

    Greenspan's Warning

    The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 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.''

    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.

    Different World

    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.

    That such a reckless political stand could have been taken by the Democrats was OBSCENE even then. Wallison wrote at the time:"It's the classic case of socializing the risk " while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

    Mounds of Materials

    Now that the collapse has occurred, the roadblock built bySenate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found theirPropoganda convincing.

    But we now know that 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.

    Throughout his political career, Obama has gotten more than 125k in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, Second only to Dodd, the Senate Banking Committee chairman, who received more than 165k.

    Clinton the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than 75k from the two enterprises and their employees. The private profit found its way back to the Senators who Killed the fix.

    There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

    Oh, and there is one BIG FOOTNOTE to the story that's WORTH KEEPING IN MIND while Democrats point (pass blame) fingers between now and Nov. 4:Senator John McCain was ONE of the Three cosponsors of S.190, the bill that Would have Adverted this mess.
    The Dems helped create this so the could campaign on HOPE! Hope hotline has been broke since it started ringing. FACT


    This is one I wanted to email you Lucky.


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    TPC
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    I miss reading all the threads about board members buying new cars and trucks, homes, boats,, their vacation pix.
    Stories about their thriving businesses, investments and bright futures.
    All gone.

    I think we're the only couple that bought a new car in PB & RDP in quite some time.

    Regardless of who was asleep at the wheel, we need to fix this now, and the bailout with real regulations and a payback plan is a good start.

    Their are still alot of bad loans out there and we need to start cleaning it up. It all depends on the state of the economy which doesn't look too good so lets get on with it.
    Your direction, not your intention, leads to your destination



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    Senior Member Ms Understood's Avatar
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    Agree, lets get on it with it. It is a whole big generation that is not going anywhere yet.


    If I was not determined to keep my house, I would of gave up and went somewhere a long time ago.


    What is the game plan and everyone take responsiblity and action to prevent it in the future.


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