“I remember 2008 that economic crisis that crash . . . housing markets and Fannie Mae and Freddie Mac . . . when that crisis hit us it caught us all by surprise . . . what if they saw it coming . . . and what if they knew how to prevent it from happening . . . and they decided not to because it just wasn’t good politics.”
Paul Ryan campaigning in Raleigh, NC on August 22, 2012
Grifters gotta grift and the Republican syndicate of grifters has been selling the idea that the Democrats were responsible for the 2008 economic meltdown for some time now.
Wait a minute. Obama wasn’t even President when the economic meltdown occurred. It was 7 weeks before the election when the economic crisis came to a head, McCain proclaimed that “the fundamentals of the economy are sound,” and then suspended his campaign to rush off to DC. So how could the Democrats have caused this mess?
The Republicans are using the logic fallacy known as "Post hoc ergo propter hoc," Latin for “After this then because of this.” If this logic always held true then we’d have to believe that a rooster’s crowing makes the sun come up. Cause and effect doesn’t correlate because of coincidence in time. But grifters gotta grift and the meltdown occurred after the Democrats gained control of Congress in the 2006 mid-term election. In January 2007 they were sworn in, with Nancy Pelosi as Speaker of the House and Harry Reid as Senate Majority Leader and 20 months later the economy hit a wall.
Try to get foaming-at-the-mouth conservative rightwingers who believe this to name the legislation the Democrats passed that could have caused the meltdown. Where are the bill numbers, the roll call votes, and the reasons why G W Bush would have signed legislation, if it was so objectionable. Congress can’t pass laws without the President’s signature. Until now it was a standoff with rightwingers who don’t care about logic, reasoning, facts, or figures.
The story about who did what, when and why was further embellished with the discovery of a G W Bush archive at the White House website. This is the only page at the extensive site that a rightwinger will ever visit. It suggests there were six years of unheeded warnings that G W Bush sent to Congress calling for reform of the Government Sponsored Enterprises (GSE) known as Fannie Mae And Freddie Mac. The documentation on the page specifically calls out Barney Frank, just as an audience member did today at Paul Ryan’s campaign event. This is wingnut lore that they know by heart. The only problem is that it references House committee hearings that were held in 2003 and the Republicans had a majority in the House that year. They controlled all the committees. In fact, there was a Republican majority in the House from January 2001 to January 2007. In 2003, Barney Frank was a ranking member of the House Financial Services Committee but the chair was a Republican. Six years went by and they did nothing.
Paul Ryan was doing some inside out grifting today when he wove his little tale, allowing the audience to believe the Democrats would stand by and do nothing about an impending disaster, when he was the one who was there and failed to act.
For the record, the real estate bubble began to inflate in 2003. In some markets there was 50% appreciation is 2005 alone. By April 2006 the market topped out. These are Case Shiller statistics, the standard for the real estate market. By January 2007, JPMorgan, Goldman, Citigroup, BearStearns, and LehmanBros, realized their portfolios contained huge amounts of subprime mortgage backed securities that would go worthless. They had been issued with an assumption, conventional wisdom at the time that real estate never goes down. What they did with those securities led BearStearns and LehmanBros. to go under, and the other three to get tagged with a total of almost a billion in fines by the SEC for defrauding their clients. Those events took over a year to play out. In the meantime, IndyMac Bank was closed in the second biggest bank failure ever and AIG insured the securities that wound up worthless and it didn't have the ability to pay the claims that were rolling in. Most people are aware of the meltdown on September 15, 2008 but there was a long train of events reaching back to the repeal of Glass Steagall and the Commodities Market Modernization Act. There's plenty of blame to spread around, if honesty matters.
While the bubble was inflating, Fannie Mae and Freddie Mac turned the subprime mortgages that were issued by private lenders (like Countrywide Financial) into investment securities because they were obligated to do so by law. It's why they were chartered. The bond rating agencies said the subprime mortgage backed securities were investment-grade because they were "government sponsored" a label that went on everything issued by Freddie and Fannie for decades. If anything were to go wrong, the taxpayer would be on the hook, not the private issuers. After six years of Republican inaction, the Democrats took over the House in January 2007, and Barney Frank promptly introduced the Federal Housing Finance Reform Act which established the FHFA and gave it oversight over Freddie and Fannie. The Democrats passed it in May 2007 but it was really too late by then. The damage was already done. When the Housing Finance Reform Act came up for a vote in the House, Paul Ryan voted against it. Now he rants about public officials who failed to act. You can’t make this stuff up.
Every Republican should be removed from office. Get out the vote. Tell everyone to vote the straight Democratic Party ticket in November.