The financial crisis is being labeled by all concerned as the most serious crisis since the Great Depression. People on the street, myself included, are scrambling to figure this out. Now Democrats are calling for more regulation of financial institutions. However, in the recent past, they blocked such regulations despite calls from the Bush administration, Alan Greenspan and John McCain. Watch this FOX News report for details.
Now examine the contributions of Fannie Mae and Freddie Mac to politicians. Senate Banking Committee Chair Chris Dodd leads the way. He also didn’t want McCain to come to town and mess up the deal he helped construct for the bailout.
The top four receivers of contribution were:
1. Dodd, Christopher J. (D-CT) $133,900
2. Kerry, John (D-MA) $111,000
3. Obama, Barack (D-IL) $105,849
4. Clinton, Hillary (D-NY) $75,550
Now I know John McCain’s campaign manager lobbied for Freddie and Fannie but it is clear that this role by Rick Davis did not prevent Sen. McCain from calling for more oversight. Forgive me if I am less than trusting of a Democratically controlled Congress speeding a rescue package through. I believe the answer has to be a bi-partisan effort but I also am skeptical that the one’s who have been saying everything is fine should be the one’s leading the charge.
See also Bill Clinton’s confirmation that the Democrats stonewalled regulation.
I hear what you’re saying, but am finding that “greed” is frequently being used as a safe and anonymous scapegoat. Blaming “greed” itself a useless excercise. I’d like to know the names of the greedy people who are actually to blame.
Marty,
The greed aspect of this is wanting the increase to continue at an unsustainable level while some are being used unfairly to maintain this increase.
Greed: Hoping the mutual funds in your 401k increase, not decrease in value, and the companies contained therin doing everything legally possible to accomdate your wishes.
Yep. It’s all my fault. Me and my greedy $24,000 401k.
Let’s face it; the blame rests with many. When someone makes $30,000, annually, they should know that they can’t afford to buy a $300,000 home. When you lie about your income or assets on a loan application, it’s not the fault of Congress. When people charge extravagant items on their credit cards that they can’t afford to pay, it’s not the fault of Congress. However, the Repubs could have pushed regulatory legislation through if they thought this was a very sever eproblem. And Dems could have agreed with their proposed legislation. But, in light of the fact that the Repubs controlled Congress for years before the Dems took over 18 months ago, I have to say that to blame Democrats for this fiasco is simply unfair.
I was hoping that people would pcik up on some of the nuances that created this mess – so as to avoid it. But if greed is the part you understood, that’s good, too.
“This is plain and simple greed at it’s worst. ”
Thanks Mary – very true!!!!
We can blame everyone involved. Those who required that sub-prime loans be made (btw – the lender on the money had a choice as to how that sub-prime loan would be under written), blame the the money changers who demanded a high return, blame the banks who hired the loan officers who made it part of their job requirement to sell certain loans (incentivized lending), blame the brokers who sold neg am loans with HUGE yield spreads (more incentive to sell those loans to an uneducated buyer) and blame the the consumer who believed every word their loan officer said.
I feel sorry that we are asked to trust others, put trust in others who supposedly have more experience but are as corrupt as the worst etc…
This is plain and simple greed at it’s worst. Legal folks saw an opportunity, lenders saw an opportunity, consumers saw an opportunity and no one heeded the advice of conservative financiers – who btw, lost their influence or jobs when the media reported what they said. People were told by their superiors to report to the media a story of good tidings or else – go somewhere else to work. And when the hard times started to roll, it made it even more necessary for those folks to keep the media machine smiling in the hopes that panic would not set in and stall the little dribbling in.
The people who have lost their homes to foreclosure are not really to blame. They did not know and many, many were lied to. The experts (the loan officer, the broker etc…) at the lowest levels should have warned people (have them sign a tangible benefits paper) advise them to read the note and explain the note to them in full, and if need be – sign something that states there is a risk associated with adjustable loans, the market value of real estate can increase or decrease, the future of incomes can increase or decrease affecting the ability to pay a loan back, and the the unforeseen economic dynamics.
Everyone wanted on the bandwagon and wanted to go down to the neghborhood meeting place, – bar, church, park or wherever and brag about their new home, car, furniture, vacation etc…
It’s not anyone person’s or institution’s fault. It is the incentivized payment plans that directors, brokers, loan officers, etc… worked for. It is the mob mentality of wealth and extravagance that glittered in everyone’s face that blinded many usually risk averse investors.
Some held back, or did not over buy. But not most.
Sure we can – I, like Ken, however, am getting pretty tired of each side working so hard to blame the other – such a political game. Its just wearing thin at this point. Each side has plenty to blame the other for and no one is going to win if we don’t get past this.
We can blame the govt for requiring lenders to make subprime loans.
Drowssap –
You’re sending us mixed messages – in one sentence you blame the Dems for too lax regulations and in another sentence you blame congress for messing with the free market
Drowssap –
I think you meant promoted by the Dems AND the Republicans – let’s not forget all the Republicans involved in this fiasco
Drowssap –
Sure – blame the government for Wall Street’s greed! LOL
Burning Down The House: What Caused Our Economic Crisis?
This video is getting so many hits it that it might take a while to download. When it does it is well be worth it.
It might as well be renamed, “Why politicians shouldn’t tinker with the free market.”
After watching this video I feel a little sorry for Wall Street. Evidently when banks didn’t offer enough Sub-Prime loans attorneys (including Barack Obama) would sue them. Banks HAD to offer these loans. At some point they must have decided that they might as well make money on the situation. When everything blew up they were called predatory. No wonder Wall Street wants it’s money back in the form of a bailout. They got screwed by the government.
Drowssap,
🙂
Maybe there is a certain amount of logic to what Ken said. If our uber-lax lending standards promoted by the Dems wrecked the economy why not make them fix it?
Warren said in post 129992
If you are not troubled that Chris Dodd, chair of the banking cmte, said everything was fine (when it wasn’t), got the most contributions from the FMs and is now the one pushing the bailout, then we see things differently.
Many things about this fiasco trouble me. Like the thought that the congress may try playing the blame game now rather than focus on fixing the problem. there are many (most) in congress who have a lot to answer for in this mess (including Dodd). And far to many people (including yourself) are looking for ways to blame the “other side” rather than talking about ways to fix this mess. I’m troubled by the idea that congresspeople (from both parties) are going to look at blogs and newscasts and start seeing that too many people are more interested in pointing fingers and assigning blame than on finding solutions.
You are right, we don’t see things the same way. I don’t just look at whether a congressman has an R or a D after his name when forming my opinion about his actions.
This crisis is real. The ones who were oblivious to it are now leading the bailout effort (at least until McCain got involved) and that bothers me.
As opposed to what, having the people who knew about the problem but weren’t willing to do what was necessary to fix it until it became a crisis leading it?
The reality is that Dems pushed these risky loans. The GOP fought back rather meekly and lost. They should have made it a huge issue when the Dems voted along party lines to keep lax regulations on Fannie and Freddie. When this whole thing blew up Fannie and Freddie were leveraged 80 to 1!!!!
The U.S. public is about to pay the price for people tinkering with the free market.
Rick Davis – who has been a supporter of Fannie Mae and Freddie is John McCain’s campaign manager, correct?
Warren,
Judging from all the political posts you’ve made on this blog, I think its become clear exactly what your agenda is.
“However, I realize that if Republicans wanted to fall on their sword over it, they could have.”
I think what you meant to say is that if Republicans WANTED TO DO SOMETHING ABOUT IT they could have, right? 😉
I haven’t seen a more blatant or desperate attempt to attack or malign democrats in a LONG time 🙂
jayhuck – I am less interested in what FOX News suggests and more interested in what Barney Frank and Chris Dodd actually said.
Read the link offered by Minty above…Bainbridge points out that the protection of Freddie/Fannie was bipartisan but abetted mostly by Democrats. Bill Clinton confirms this.
However, I realize that if Republicans wanted to fall on their sword over it, they could have. The political catch 22 was if you favored regulation of Fannie/Freddie, you were branded as anti-home-ownership. Listen to Barney Frank’s quote in the Fox clip and this is the stinging rebuke.
Now many of the people who got into homes without adequate financial foundation are probably losing those homes.
Let me ask Obama’s supporters on this thread, do you think it is wise for Obama to have Jim Johnson advising the campaign on economic policy?
If you bring up Rick Davis, I will agree with you. If it is confirmed that he lied about his firm being paid from Fannie/Freddie until last month, then he should step down.
“jayhuck – I know it is difficult for you but stay on topic.” – LOL
As I’ve said before, people better than me have already commented on the inane comments and suggestions made by Fox.
You say that the Fannie/Freddie demise is separate from the debate and others do not – to each his own 🙂
jayhuck – I know it is difficult for you but stay on topic. The debate is a topic and the Fannie/Freddie demise is another topic.
If I start a debate thread then you can comment on that.
From the Boston Globe:
“McCain has already brought discredit upon his campaign by shielding running mate Sarah Palin from hostile questions. This impulsive new stunt makes him appear unsteady and underprepared, too. America can work through a financial crisis and handle a campaign at the same time.
In politics as on Broadway, the show must go on”
McCain is using the bailout effort as another political stunt – THAT is what should bother all of us
Hmmmm – Republicans were in control of the congress when all of this was starting to take shape – we’ve had a Republican president for the last 8 years – but suddenly, according to Fox – not the most objective news source – its the Dems fault – LOL
jayhuck – So I guess you don’t want to address the issues raised.
Ken – If you are not troubled that Chris Dodd, chair of the banking cmte, said everything was fine (when it wasn’t), got the most contributions from the FMs and is now the one pushing the bailout, then we see things differently.
This crisis is real. The ones who were oblivious to it are now leading the bailout effort (at least until McCain got involved) and that bothers me.
“The only way the dems could have blocked on their own would have been to filibuster it in the senate. The report makes no claim of that. So the only way to block the legislation was with republican support. Don’t you think it is odd that the “news” report doesn’t bother to mention that?”
Thanks again Ken 🙂
How about towing a specific party line? – supporting a specific candidate no matter what? Isn’t that a somewhat tired approach as well?
I think enough people have responded to what Fox says – at this point I would just be repeating them 🙂
jayhuck – attacking the messenger is a tired approach. How about responding to what the FOX report says?
“What about the problems with the private sector investment and lending institutions? How much do you think they contributed to this mess?”
Thank you Ken 🙂
FOX is so far to the right they have forgotten what responsible journalism really is – LOL
Warren is not a friend of Democrats – He is, in fact, a Republican supporter – do not be surprised with what he posts on his blog 🙂
Principled Republicans have been calling for the reform of Fanny Mae/Freddy Mac for a long time now. A black eye for Democrats, this is true.
http://www.stephenbainbridge.com/punditry/comments/the_imminent_fannie_mae_and_freddie_mac_debacle
But otherwise, I’m so disgusted with John McCain right now.
1) interjecting his clueless self into an urgent negotation
2) “suspending his campaign” – just like he did in 1999, and the media loved him for it! – a transparent attempt to get attention
3) a desperate attempt to forestall the Presidential debate
4) perhaps more urgently, to postpone the VP debates indefinitely. Palin’s interview with Katie Couric was a shocking disaster.
warren you claim (in the title) that” Democrats blocked reformed (sic) of Freddie and Fannie.”
How (and when) did they accomplish this Warren? What specifically did the democrats do to block reform? The democrats didn’t have a majority in either the house or the senate.
Note, the video clip says that some democrats were opposed to creating an agency to oversee the Macs. Then it says “the legislation was blocked.” But it doesn’t say by whom. The only way the dems could have blocked on their own would have been to filibuster it in the senate. The report makes no claim of that. So the only way to block the legislation was with republican support. Don’t you think it is odd that the “news” report doesn’t bother to mention that?
Now what Clinton says is that the democrats are partly to blame for this mess because of their resistance to regulating the Macs. Further, the democrats were saying you didn’t need to worry about the Macs, not that everything was good with the US economy. What about the problems with the private sector investment and lending institutions? How much do you think they contributed to this mess?
You want me to answer to a propaganda mill like FOX? Forget it.
Clinton is less on about what congress did and more what the Securities and Exchange Commission did with repealing the uptick rule in July 2008 (though the mortgage crisis is the trigger). That would have been an executive decision of the current administration. See:
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070910/FREE/70910009/1009/TOC
Yeah, I agree with that.
Odd, I’m finding my recent institutionalization and resultant cost to my savings to have at least gotten me some fair value when I had to liquidate my stocks and other securities to pay for my medcal bills. Though I’d still rather have not gone through that experience, thank you. Now if my antiquated phone line doesn’t bomb my connection again, I’ll get this posted……
But you are not addressing the observation of Clinton and the FOX report that had the Dems saying everything was good with McCain offering legislation to increase regulation.
I am not saying that the Repubs did enough but I am saying some of them were raising alarms and Bill Clinton agrees. Do you disagree with Clinton?
Yeah, and McCain thought everything was hunky-dory a week or so ago and now Palin is talking Greater Depression.
Passing bills means needing control of the congress and the republicans had if from 1994-2006 and in that time presidents who would have (assuming a lot here with “W”) signed legislation to create more controls.
So why not?
It is rather obviously logical that the republicans are to blame. And most of the propaganda now is thus republican based, in attempt to cover their collective rear ends.
And dangnabbit… that notification check-box again….
Lynn David – I do not know every detail, but I do think these reports are relevant and are hard to ignore.
Bill Clinton is pointing in the same direction. He is not a Republican but I guess you know that.
If there are other relevant facts, advance them.
Why I think this is relevant now is that Chris Dodds and Barney Frank are leading the charge to make a quick bailout and yet these two guys thought everything was fine, not too long ago.
So, the republicans had control of congress from 1994 and with Bill Clinton wanted reform and couldn’t get it done. And then from 2000-2006 republicans had control of congress and the presidency and couldn’t get the needed reforms through?
You’re putting out a lot of hot air now why not between 1994 and 2006?
What all the ills of the country can be traced to the democratic control of congress in the last year and three-quarters?
Sorry, no way….