Tracking down where it started

[jgaffney]

Oct 15, 2008 13:31:10 GMT -5 @bolverk said:

And what I am saying is absolutely nothing has been done about anything in the last two years of Congress. They have only been piling on Bush, that is it. They have neglected their duties for political gain, period, end of story. They got power and abused it.

It's almost like the Dems wanted to keep the issue alive as another club to use during the election, ya think?

[The Big Dog]

Oct 14, 2008 23:14:17 GMT -5 Mink said:

What I have been saying is, it is not just the Democrats fault on this issue. They are all to blame as our reps. but it seems most of you put 99.99% guilt on Democrats.

This would be because very powerful Democrats, Senator Chris Dodd and Representative Barney Frank in particular and with the impetus of President Clinton himself back in the 90's (which he has manned up and publicly admitted I might add), are who carried the water for Fannie and Freddie, as well as subpriming to those lowest classes who couldn't pay for the loans. They are the ones who stood in the way of meaningful reform in 2005... a bill co-sponsored by Senator McCain and supported by the Bush Administration.

Yes there were Republicans who went along. But the push came from Democrats, as has the sidestepping of blame save for Mr. Clinton's mea culpa for which I respect him. You'll remember it was just two months ago that Mr. Frank was telling us all that there was nothing wrong with Fannie and Freddie, that they were strong and fine. The left has been flinging poo at McCain for weeks now for his "fundementals are sound" remark, yet strangely silent on Mr. Frank's oratorical faux pas, let alone his complicity in it.

Had this happened under Clinton's watch, guess who's fault it would be solely?

It started on Clinton's watch, and as demonstrated above (and elsewhere repeatedly) it continued unabated thanks to Congressional Democrats.... which means that, in your postulate, the Republicans would be blamed, because that is who you are blaming endlessly now.

[jgaffney]

The Wall Street Journal has more background on the subprime mortgage meltdown here:

In each of the first two presidential debates, Barack Obama claimed that "Republican deregulation" is responsible for the financial crisis. Most viewers probably accepted this idea, especially because Republicans generally do favor deregulation.

But one essential fact was missing from the senator's narrative: While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector. Indeed, the only significant legislation with any effect on financial risk-taking was the Federal Deposit Insurance Corporation Improvement Act of 1991, adopted during the first Bush administration in the wake of the collapse of the savings and loans (S&Ls). FDICIA, however, substantially tightened commercial bank and S&L regulations, including prompt corrective action when a bank's capital declines below adequate levels and severe personal fines if management violates laws or regulations.

If Sen. Obama had been asked for an example of "Republican deregulation," he would probably have cited the Gramm-Leach-Bliley Act of 1999 (GLBA), which has become a popular target for Democrats searching for something to pin on the GOP. This is puzzling. The bill's key sponsors were indeed Republicans, but the bill was supported by the Clinton administration and signed by President Clinton. The GLBA's "repeal" of a portion of the Glass-Steagall Act of 1933 is said to have somehow contributed to the current financial meltdown. Nonsense.
<<snip>>
If Sen. Obama were truly looking for a kind of deregulation that might be responsible for the current financial crisis, he need only look back to 1998, when the Clinton administration ruled that Fannie Mae and Freddie Mac could satisfy their affordable housing obligations by purchasing subprime mortgages. This ultimately made it possible for Fannie and Freddie to add a trillion dollars in junk loans to their balance sheets. This led to their own collapse, and to the development of a market in these mortgages that is the source of the financial crisis we are wrestling with today.

Finally, on the matter of deregulation and the financial crisis, Sen. Obama should consider his own complicity in the failure of Congress to adopt legislation that might have prevented the subprime meltdown.

In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward.

Instead, by his own account, Mr. Obama wrote a letter to the Treasury Secretary, allegedly putting himself on record that subprime loans were dangerous and had to be dealt with. This is revealing; if true, it indicates Sen. Obama knew there was a problem with subprime lending -- but was unwilling to confront his own party by pressing for legislation to control it. As a demonstration of character and leadership capacity, it bears a strong resemblance to something else in Sen. Obama's past: voting present.

There's that decisive leadership we keep hearing about. Kinda like when Jay Rockefeller wrote a letter about torture but didn't send it.

Why is Obama so reluctant to go up against the Democrat leadership?