How the Democrats Created the Financial Crisis

[_bcspace]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

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.''

[_Angus McAwesome]

Wait, so a complex series of mistakes starting with the repeal of Glass-Steagall in (three separate bills from 1980 to 1999 killed it, all three bills written and sponsored by Republicans with the 1988 and 1999 bills receving Greenspan's endorsement I might add), deregulating the industry in the first place, combined with a bunch of greedy morons thinking it'd be a good idea in the first place to loan money to people unable to pay the loan back is the fault of the Democrats how? Also, S.109 (Federal Housing Enterprise Regulatory Act) never got past the introduction stage, it was never even debated on in the first place so how exactly are the Democrats to blame? Even worse, at the time S109 was introduced the Republicans held a majority over both houses of Congress, so if anyone is to blame for the failure of S109 to even get to the debate stage it lies with the Republican party.

Get your facts straight in the future, BC.

[_Yoda]

I officially have a crush on Angus. ;)

[_bcspace]

Get your facts straight in the future, BC.

They are. I also notice that Obama is one of the largest recipients of campaign donations from Fannie Mae and Freddie Mac and is advised by their executives.

While McCain tried to get regulatory reform imposed on them, the Democrats balked preferring instead to preserve those organization's quasi-governmental status in order to reward their best (most corrupt) operatives lucrative positions which keeps the money flowing the Democrat's way.

[_moksha]

Wasn't "Trying to shift the blame versus taking responsibility" on Piaget's list.

[_Angus McAwesome]

They are. I also notice that Obama is one of the largest recipients of campaign donations from Fannie Mae and Freddie Mac and is advised by their executives.

Yes, because Obama the Magic Negro caused the Republicans party to shelve a bill they created while they also had the majority in both houses of congress... Never mind that it was the Republican partyy's members that authored and primarily sponsored every single bill that deregulated the the financials and allowed them to start handing out credit to anyone that filed out an application regardless of if they could pay the note or not.

While McCain tried to get regulatory reform imposed on them, the Democrats balked preferring instead to preserve those organization's quasi-governmental status in order to reward their best (most corrupt) operatives lucrative positions which keeps the money flowing the Democrat's way.

Once again, the bill you mentioned in the OP was written and sponsored by Republicans and never made it past introduction despite the GOP having the majority in both houses of congress. Yet this is somehow the fault of the Democrats? The GOP had the numbers to push the bill through and get it signed by a sitting Republican President, yet somehow Barack "Magic Negro" Obama and the Democrats are at fault for it not passing...

No, seriously, get your facts straight, BC.