I just received an email from a much-loved, very sincere, Republican relative, with a link to a video. The video used CSPAN footage from 2004, and blamed House Democrats resistance to increased regulation of Fannie Mae and Freddy Mac for the Wall Street meltdown.
http://www.youtube.com/...
I had already seen multiple right-wing apologists try to lay the blame on the CRA, the Community Reinvestment Act, passed in 1977.
Here is my response:
Two questions:
1.) In 2004, (the year referenced in the video), Republicans controlled both the House and the Senate, as well as the White House. If a majority of Republicans really wanted greater regulation over Fannie and Freddie, why couldn’t they push that legislation through?
2.) If McCain was involved in this push for greater regulation, (uncharacteristic, given his ‘deregulation’ mantra of the last 26 years), where is the video of McCain pushing for this legislation?
I understand that this video is from a house committee meeting, but Senate hearings are also on CSPAN. Where’s McCain?
By the way, as a television editor, I can tell you that this video has been heavily edited, with ham-handed text spelling out what the editor wants you to think about each exchange.
With regard to Fannie Mae and Freddie Mac, here’s a link to a 2002 speech by President Bush announcing a program to loosen regulation on Fannie and Freddie to promote minority home ownership, straight from the horse’s mouth:
http://www.whitehouse.gov/...
Quotes from Bush’s speech in 2002:
“Freddie Mac recently began 25 initiatives around the country to dismantle barriers and create greater opportunities for homeownership. One of the programs is designed to help deserving families who have bad credit histories to qualify for homeownership loans.”
“If you put your mind to it, the first-time home buyer, the low-income home buyer can have just as nice a house as anybody else.”
???? Gee, next, can we make a law that says homely women can date just as many rock stars as supermodels do? (Seriously, can we?)
Bush mentions Franklin Raines several times in the speech as a key ally in his program. Could the fact that the risky loans made by FM & FM were an integral part of a high-profile Bush program have more to do with the 2004 failure of the regulators, than the relatively powerless minority party Democrats?
I’ve seen McCain as recently as this fall saying that more deregulation is the solution to all our economic problems. His plan for health care:
“Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”
McCain's chief economic advisor, Phil ‘Nation of Whiners’ Gramm, was instrumental in the deregulation of the energy and banking industries. His ‘Commodity Futures Modernization Act of 2000’ deregulated energy commodity trading, and enabled the Enron debacle. His wife, Wendy Lee Gramm, was on the board of directors of Enron, and was actually on the audit committee. She was specifically named in many of the subsequent lawsuits.
Gramm also wrote the Gramm-Leach-Bliley Act of 1999 that repealed the Glass-Steagall Act, which had been in place since just after the Great Depression. Glass-Steagall, among other provisions, had mandated the separation of commercial banks from investment banks and insurance companies. We went 60 years without major bank failures thanks to Glass-Steagall, but Gramm and the Republicans, (who controlled the House and Senate from 1994 through 2006), knew better.
Gramm’s legislation also allowed Swiss Bank UBS to purchase several American institutions. Gramm later became a vice president and lobbyist for UBS, collecting over 750,000 USD in fees. UBS alone issued over 18 Billion USD in subprime mortgages.
UBS also recently admitted that they had actively aided and abetted criminal tax evasion by wealthy Americans and Europeans.
Links here:
http://www.nytimes.com/...
http://www.ft.com/...
Republicans were also responsible for the deregulation of the Savings and Loan industry, which ended up costing taxpayers about $125 billion. (Small change, by current standards.) In one of his first acts in the Senate, John McCain interfered with a federal regulatory board’s investigation of his close friend and contributor, Charles Keating. Keating’s Lincoln S & L alone cost of $2 billion to taxpayers. In addition, 23,000 Lincoln bondholders were defrauded and many elderly investors lost their life savings.
In more recent history, in 2003, state attorneys general noticed an epidemic of predatory lending that the federal government was ignoring. When the states adopted regulations and passed laws to protect consumers, the Bush administration took action. The Treasury’s Office of the Comptroller of the Currency issued rules nullifying state predatory lending laws over the objection of all 50 state banking superintendents. The OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks.
Link:
http://community.marketwatch.com/...
In addition, a 2004 change in SEC regulations under the Bush administration allowed five financial firms to leverage their assets at up to 40 to 1. That means you can borrow/bet $39 for every $1 you actually have. Who could have predicted that THAT would end badly? The firms? Goldman Sachs, Merrill, Lehman, Bear Stearns, and Morgan Stanley. Three of those five have since gone under.
http://www.rgemonitor.com/...
Final thoughts:
Fannie and Freddie had already been taken over by the Feds before Bush/Paulson came forward asking for the $700 billion dollar bailout. There is far more going wrong in our financial sector than FM & FM’s mortgage defaults. The primary problems are overleveraging, derivatives, irresponsible risk, and insane levels of compensation. And the disaster was not only predictable, but was, in fact, predicted:
Warren Buffett warns on investment 'time bomb'
The rapidly growing trade in derivatives poses a "mega-catastrophic risk" for the economy and most shares are still "too expensive", legendary investor Warren Buffett has warned.
http://news.bbc.co.uk/...
As President Bush said, “Wall Street got drunk.” So says bartender Bush. Our current Treasury Secretary, Henry Paulson, had a cute little Wall Street nickname when he was CEO of Goldman Sachs. He was known as ‘Mr. Risk’. Indy Mac, Bear Stearns, Lehman Bros, Merrill Lynch, Wachovia and a host of other financial companies have been distributing tens of billions in bonuses and compensation to their execs, even as their companies failed.
There are a plenty of people involved in shady dealings and criminal negligence in addition to Franklin Raines. Blaming this meltdown entirely on FM & FM is a typically cynical piece of Republican misdirection. With the inescapable evidence of the failures of their policies all around them, they are flailing for a way to blame this on Democrats. May I point out that the Dems have held the House and Senate for less than two years, and by the slimmest of margins? In the face of Republican congressional stonewalling and a Republican White House, they have produced very little meaningful legislation, for good or ill. (The most significant legislation they have passed, unfortunately, is the Bush/Paulson bailout bill.)
In an election with the first African American major-party nominee in history, the Republican strategy is to put a sinister black face, Raines, on this disaster. Right-wing pundits have also been trying to blame the meltdown on the Community Reinvestment Act of 1977, a program that tried to end discriminatory banking practices against minorities. Do you really believe that minorities and the poor are the prime movers behind the Wall Street meltdown? Really?
It is obvious to most observers, including many conservatives, that 28 years of Republican-led “anything goes, let corporations police themselves, the magic hand of the free market will fix everything” have had far more to do with this collapse than anything one shady black man did.
And speaking of the sacred ‘free market’, how exactly do we justify privatizing profit, and socializing loss? Why does the ‘magic hand of the market’ only apply when poor and middle-class people lose money, while government handouts are mandatory when the very wealthy stand to lose?
With love,