Gasbag CYA moment of the day

posted at 5:30 pm on September 25, 2008 by Ed Morrissey

I guess the source shouldn’t surprise anyone, as former Treasury Secretary Paul O’Neill has a habit of saying some fairly stupid things.  Today’s criticism of the Bush administration bailout plan, from an interview with ABC News, starts off well enough.  O’Neill thinks that the White House and Congress have both panicked, and that neither Barack Obama nor John McCain know what they’re talking about.  Unfortunately, O’Neill reveals himself as a clueless idiot when he tries to toot his own horn:

O’Neill said we got into this mess because bankers were not making prudent decisions, because they believed that by reselling mortgages to Wall Street they weren’t going to be stuck with the problems.

“We suspended disbelief and said we can take people with no known source income or wealth generation and we can give them a $500,000 mortgage,” he said. “I think there’s a very important thing: When you violate fundamental principles of economics you can get away with it for a while, but eventually it’s going to get you.”

Does O’Neill wish he was still in office?

“I wish I was there two years ago became I think I would have blown the whistle of these unbelievable loan practices and we would never gotten to today,” he said. “That might be wishful thinking. It’s not possible to really know that. But I’m a detail guy and I think I would have been paying enough attention to the details that I would have stopped the music.”

Say what? These lending practices and the sale of securities from these mortgages go back ten years.  Paul O’Neill served in office in 2001 and 2002, leaving at the end of the year.  In 2003, with John Snow at the helm, the Bush administration first discovered the problem and tried to get Congress to act.  Barney Frank and the Democrats insisted that any attempt to tighten credit was just a sign of latent racism, and Congress balked.

If O’Neill is such a “detail guy”, how did he not catch the 1998 Clinton effort to force lenders into making these bad loans and the Fannie Mae/Freddie Mac effort to buy up all the bad paper and resell it to Wall Street?  Is he so clueless that he thinks this started in 2006?  What exactly did O’Neill do in office?

This is such a bald and ridiculous attempt to cover his own rear that it almost qualifies as comedy.  At any event, it’s absolutely possible to know whether O’Neill would have discovered the problem in 2006, because he slept through it in 2001 and 2002.


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All I can say is, Bush hired him.

D0WNT0WN on September 25, 2008 at 5:33 PM

Ya know, at least Clinton knew to bite his lip after 9/11…

Maquis on September 25, 2008 at 5:34 PM

I don’t think what he is saying is too unrealistic. How people can get loans without collateral, job history and some way of paying them back is way over my head. My wife and I work very hard, save, budget and do the best we can. I knew that living on welfare became an option, but nobody told me about getting huge loans that we don’t deserve. Maybe being white, legal and educated disqualifies us?

Hening on September 25, 2008 at 5:35 PM

What exactly did O’Neill do in office?

Pout!

Texas Gal on September 25, 2008 at 5:35 PM

Maybe being white, legal and educated disqualifies us?

Hening on September 25, 2008 at 5:35 PM

That pretty much covers it.

*eats*

Grue in the Attic on September 25, 2008 at 5:38 PM

All I can say is, Bush hired him.

D0WNT0WN on September 25, 2008 at 5:33 PM

And fired him quickly.

And that’s all you can say, douchebag, because every one of your very special friends in the Demorat party was pushing their social engineering policies up our azzes through this smoke and mirrors CRA crap, aka “institutional racism”.

Go look at a mortgage application, and ask yourself – since “redlining neighborhoods” is such a virulent form of racism (per the FDIC) – then why does the government demand to know your race and gender on every loan?

Jaibones on September 25, 2008 at 5:39 PM

What exactly did O’Neill do in office

?

He sharpened his pencil, wrote a book, re-sharpened it and stabbed Bush in the back.

He never should have been hired. Who advised Bush to do that, I wonder?

Sloan Morganstern on September 25, 2008 at 5:39 PM

try 1999 h/t nro

gh on September 25, 2008 at 5:39 PM

He is just pissed. If guys like this had done their jobs back when…we might not be here today.

Hening:

So why didn’t he put his foot down back then? Or try to anyway?

And as for no downpayment loans, some of them are not so bad, like the VA loans we make for veterans.

Terrye on September 25, 2008 at 5:40 PM

Paul O’Neill served in office in 2001 and 2002, leaving at the end of the year.

I bought my first house and applied for my first mortgage in 2000. No one ever asked for a pay stub. No one ever called my employer. O’Neill is full o’crap.

Cuffy Meigs on September 25, 2008 at 5:43 PM

How much of this ‘panic’ is due to the fact that our bloodsucking incompetents are lusting to get out on the road and secure their sinecure for one more term versus real concern for economy?

thegreatbeast on September 25, 2008 at 5:43 PM

Sure, but O’Neill got to hang out with Bono, so Obama might hire ‘im. [/snark]

Wasn’t there a rumor recently that President Obama might retain Paulson?

Failure may be an orphan, as the saying goes, but there’s a whole lotta DNA we could start testing.

Terrie on September 25, 2008 at 5:43 PM

Hening on September 25, 2008 at 5:35 PM

Sleepyhead O’Neil isn’t wrong on the cause of the problem,..he’s just Monday morning quarterbacking a bit in an effort to avoid any smelly splash on his own suit lapels. Lack of accountability is very important to him.

a capella on September 25, 2008 at 5:47 PM

This guy sounds even more clueless than some of the trolls on this blog….

Neither a Dem nor a Repub Congress or administration is willing to put him under the lights at a hearing or indict him, so why doesn’t he just STFU ?

Ego? He’s still fishing for a big-bucks job ? WTF?

Janos Hunyadi on September 25, 2008 at 5:47 PM

We suspended disbelief

Oh goody, the old “willing suspension of disbelief” scenario…

Mr_Magoo on September 25, 2008 at 5:49 PM

This guy sounds even more clueless than some of the trolls on this blog….

Janos Hunyadi on September 25, 2008 at 5:47 PM

S/b quote of the day.

Entelechy on September 25, 2008 at 5:50 PM

Sleepyhead O’Neil isn’t wrong on the cause of the problem,..he’s just Monday morning quarterbacking a bit in an effort to avoid any smelly splash on his own suit lapels. Lack of accountability is very important to him.

a capella on September 25, 2008 at 5:47 PM

Being sure you have a job with no measureable goals is a very important part of standard Harvard MBA teachings… seriously.

CC

CapedConservative on September 25, 2008 at 5:51 PM

Maybe Letterman can have him on his show later so DL can get a few more McCain “he’s a great war hero but come on I’m Letterman!” digs in. I think he only insulted him a couple of hundred times last night.

Mr_Magoo on September 25, 2008 at 5:52 PM

I bought my first house and applied for my first mortgage in 2000. No one ever asked for a pay stub. No one ever called my employer. O’Neill is full o’crap.

Last time we moved I was starting to think I was going to have to turn over my bowling scores for the last decade…

taznar on September 25, 2008 at 5:54 PM

Breaking on CNBC: McCain says THIS deal is dead.

TheBigOldDog on September 25, 2008 at 5:57 PM

We bought our current house in 2003. I’m a 1099 contractor and couldn’t pre-qualify because of the 1099. Bought a new home with a builder who had their own mtg co. Qualified on credit rating, stability and “stated income”. I offered tax returns and they said no thanks. Mortgage was sold to Countrywide after closing.

They lucked out with us. Still paying on time! But it could have just as easily gone the other way.

Mr_Magoo on September 25, 2008 at 5:57 PM

Maybe being white, legal and educated disqualifies us?

Hening on September 25, 2008 at 5:35 PM

That pretty much covers it.

*eats*

Grue in the Attic on September 25, 2008 at 5:38 PM

I am becoming increasingly convinced that the “new affirmative action” Obama refers to is precisely this concept.

Damiano on September 25, 2008 at 5:58 PM

That is just a crock. While O’Neil was Secretary, Sheila Bair was Assistant Secretary for Financial Institutions. She is now the head of the FDIC. She tried to get people to start paying attention to bad lending practices. I went to several meetings with her and her staff. Nobody wanted the music to stop. Treasury had no regulatory authority to do anything, just some moral suasion which Ms. Bair tried to use. I guess O’Neil was so stupid he didn’t even know what hos own department was doing.

In 2000, Rep. Bob Ney introduced a subprime lending bill that would have preempted state law and provided a uniform national standard for subprime lending. He couldn’t get enough cosponsors to even get it heard in the committee. If that bill had been supported by O’Neil it might have made a difference. I’m sure he was asked.

There’s a big assumption on the left and right that Republicans generally didn’t care about lending standards. It’s not true. Democrats blocked two different bills on subprime lending because they did not want to preempt states. The lax regulation by states led directly to the devlopment of the monoline subprime lenders who produced so much of the bad paper we are now getting to buy.

rockmom on September 25, 2008 at 5:59 PM

Feb 9 2001

WASHINGTON — The political heat on Fannie Mae could be cooling, following comments by Treasury Secretary Paul O’Neill that were supportive of the housing-finance giant.

All kinds of nice quotes in the article:

“I consider Frank Raines to be a close personal friend of mine,” Mr. O’Neill said in the interview, adding the two had served 10 years ago on the board of a nonprofit organization, which Fannie Mae said was Manpower Demonstration Research Corp.

http://online.wsj.com/article/SB981680536590781645.html?mod=googlewsj

Buddahpundit on September 25, 2008 at 6:00 PM

There was a reason O’Neill was ridiculed by nearly one and all during his tenure as Secretary. Apparently all has been forgiven and forgotten.

JM Hanes on September 25, 2008 at 6:05 PM

The 700 Billion dollar-plus Houseflipper and No-down Payment Illegal Alien Protection Bill is the end of the line for us.

TexasJew on September 25, 2008 at 6:34 PM

taznar on September 25, 2008 at 5:54 PM

Similar experience last year. When I moved to Florida from Kansas in ’01, I gave them my name and SSN, then signed papers at closing. Moved from Bonita Springs, FL to Cape Coral, FL in ’05. Just told my current mortgage company what I wanted to do… that was it. Then signed papers at closing. Did a re-fi last September. That time, I was subjected to a full body cavity and then they wanted to measure my johnson because I put down a number that was a 1/4″ different that a brag I made on an Internet site 3 years ago…. Things have tightened up a bit.

CC

CapedConservative on September 25, 2008 at 6:47 PM

I was pretty amazed when the bank financed my place back in 1998. Although I had only a credit history going back 4 years, I was self employed at the time and the only thing I going for me was that I has saved enough for a 20% down payment. Of course I didn’t tell them that I owed more than half of that down payment to Uncle Sam for that years taxes. Sheesh. Now I know the story….

JimK on September 25, 2008 at 6:55 PM

Another excellent post, Ed.

I can’t recall a single time where this jackass didn’t make me squirm.

Buy Danish on September 25, 2008 at 6:56 PM

Breaking on CNBC: McCain says THIS deal is dead.

TheBigOldDog on September 25, 2008 at 5:57 PM

Now maybe the dems will pass the bailout without Republican votes, just to prove McCain wrong.

Right_of_Attila on September 25, 2008 at 7:18 PM

O’Neill has been asked by the Obama campaign “on several occasions” to take part in conversations with the candidate on the economy with the understanding that his participation doesn’t represent an endorsement. He said he would be willing to offer the same help to McCain but hasn’t been asked.

Well, DUH.
That right there is enough to vote for McCain. Obama has surrounded himself with these losers and creators of finance disaster. Only Buffet has any cred.

shooter on September 25, 2008 at 8:34 PM

Just like Huckabee, Dodd, Harry Reid and Barney Frank, the scum is rising to the top. O’Neill is no exception in this case.

Just scrape off the scum and move on with the brewing process.

Mike D. on September 25, 2008 at 9:03 PM

Absent Minded Professor
Wayside Theater
How to discover an oil reserve through academia terrorism.

maverick muse on September 25, 2008 at 9:19 PM

Hening on September 25, 2008 at 5:35 PM

I worked as a mortgage loan officer from 2003-2007. The only people that got No Income/No Asset loans were people who had squeaky clean credit. People with crappy credit had to prove their income or at least that they were employed.

I think the real problem is that they gave people with crappy credit 100% financing deals and told them to refinance two years down the road. During those two years, those people were supposed to work on their credit so they could get a non-subprime loan to replace it. It was assumed that the house’s value would increase and the closing costs on the refinance could be rolled in. When the bottom dropped out of housing prices, people couldn’t do this and found themselves with a payment that shot through the roof.

I’ll also bet that a lot of these defaulted loans happened on investment properties. People with crappy credit were given 90-95% financing on those properties as well. At that loan-to-value, you could not charge enough rent to cover the mortgage payment, taxes, and insurance, especially if the property went unoccupied for a couple of months.

Also, nobody was given a low interest rate. People with crappy credit were paying 2-4% more than those with good credit. I assumed the lenders did this as a type of insurance policy to cover the higher number of defaults. I guess I was wrong.

Kafir on September 26, 2008 at 7:22 AM

Excuse me, I just had to wipe his spittle off the monitor. YUK

Fuquay Steve on September 26, 2008 at 7:56 AM

If Barney and O’Neil ever spoke to one another, they’d need windshield wipers for their glasses.

Fuquay Steve on September 26, 2008 at 9:09 AM

I bought my first home at the beginning of the housing down turn last year. It had been foreclosed but had sat that way for about a year (it was some kind of investment property, they rented it out before giving up on it I guess). Anyway, as prices started to fall we snatched it up.

Before applying for the loan, I heard about all of these loans where they don’t document anything, and I had a hard time believing it after our experience. Our lender needed documentation on anything and everything, including proof that certain credit cards were paid off, what apartments I lived in and for how long (almost four years ago), etc. Perhaps they needed to look so closely because my, and my wife’s, credit are excellent.

thequeball on September 26, 2008 at 9:53 AM

Just read a comment above about people with excellent credit receiving no income/no asset loans. Perhaps we had to document so much as first time buyers and/or because we bought at the beginning of this mess?

thequeball on September 26, 2008 at 9:56 AM

You mean that’s where Paul O’Neill went after he retired from baseball?

(Chuckles under breathe.)

Wildcatter1980 on September 26, 2008 at 11:50 AM