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Remembering who caused the Fannie Mae and Freddie Mac meltdown

posted at 9:41 am on April 20, 2010 by

With President Obama, it’s always pointing the finger at someone else, making threats, and playing the blame game. Recently, he campaigned for tougher financial regulations, threatening that if he didn’t get them the taxpayers would be forced to pay for more bailouts. Opponents, he said, will only lead this country back into a crisis.

President Obama on Saturday challenged opponents of tougher financial regulations, saying the U.S. is doomed to repeat the economic crisis without new rules and that taxpayers would again be stuck with the bill.

The overhaul is the next major piece of legislation that Obama wants to sign into law this year.

“Every day we don’t act, the same system that led to bailouts remains in place, with the exact same loopholes and the exact same liabilities,” Obama said in his weekly radio and Internet address. “And if we don’t change what led to the crisis, we’ll doom ourselves to repeat it.

“Opposing reform will leave taxpayers on the hook if a crisis like this ever happens again,” the president said.

It’s interesting that he would lobby for tougher regulations now. Apparently, Obama would like us all to forget just who was responsible for the Fannie Mae-Freddie Mac meltdown. Democrats would have you believe it was Republicans who stood in their way as they tried to enact harsher regulations. They’ve repeated it over and over again for the past several years.

Presumably, this is because they don’t want anyone to remember the truth: that it was Democrats who blocked legislation that would force reforms upon Fannie and Freddie. The Wall Street Journal walks down Memory Lane:

The story is all too familiar. Politicians in positions of authority today had an opportunity to prevent this fiasco but did nothing. Now—in the name of the taxpayers—they want more power, but they have never been called to account for their earlier failings.

One chapter in this story took place in July 2005, when the Senate Banking Committee, then controlled by the Republicans, adopted tough regulatory legislation for the GSEs on a party-line vote—all Republicans in favor, all Democrats opposed. The bill would have established a new regulator for Fannie and Freddie and given it authority to ensure that they maintained adequate capital, properly managed their interest rate risk, had adequate liquidity and reserves, and controlled their asset and investment portfolio growth.

These authorities were necessary to control the GSEs’ risk-taking, but opposition by Fannie and Freddie—then the most politically powerful firms in the country—had consistently prevented reform.

The date of the Senate Banking Committee’s action is important. It was in 2005 that the GSEs—which had been acquiring increasing numbers of subprime and Alt-A loans for many years in order to meet their HUD-imposed affordable housing requirements—accelerated the purchases that led to their 2008 insolvency. If legislation along the lines of the Senate committee’s bill had been enacted in that year, many if not all the losses that Fannie and Freddie have suffered, and will suffer in the future, might have been avoided.

Why was there no action in the full Senate? As most Americans know today, it takes 60 votes to cut off debate in the Senate, and the Republicans had only 55. To close debate and proceed to the enactment of the committee-passed bill, the Republicans needed five Democrats to vote with them. But in a 45 member Democratic caucus that included Barack Obama and the current Senate Banking Chairman Christopher Dodd (D., Conn.), these votes could not be found.

Recently, President Obama has taken to accusing others of representing “special interests.” In an April radio address he stated that his financial regulatory proposals were struggling in the Senate because “the financial industry and its powerful lobby have opposed modest safeguards against the kinds of reckless risks and bad practices that led to this very crisis.”

Sometimes I wonder about Obama. I think that we must now have the most hypocritical president in American history. While he points the finger at everyone else for having special interests and catering to lobbyists in exchange for money, he ignores his own past. Does he think that if he doesn’t mention it, or attacks someone else, that no one else will remember?

As a senator, he was the third largest recipient of campaign contributions from Fannie Mae and Freddie Mac, behind only Sens. Chris Dodd and John Kerry.

Obama himself is no stranger to special interests or corruption or cronyism. Republicans warned that this crisis was coming, but senators like Obama did nothing to stop it. Heck, they actively blocked legislation to prevent the meltdown. And now, they’re pointing the finger at the GOP.

Unfortunately, there’s video proof against them.

Here’s Barney Frank, saying that Fannie and Freddie were “financially sound”, and that even if they did collapse, the government would not bail them out.

Here’s another video of Democrats, led by Maxine Waters, covering up for Fannie Mae and Freddie Mac when Republicans were trying enact tougher regulations on the Democrats’ cash cow.

And, from Kathleen McKinley, a video where Stephen Moore, from the Wall Street Journal, questioned Maxine Waters on the Bill Maher show, and she lied right to his face about campaign contributions from Fannie and Freddie.

As Kathleen pointed out, why would Democrats do anything to harm their cash cow? It was such a lucrative one for them.

As you can read at the link,The Center for Responsive Politics’ OpenSecrets.org reported on how much money members of Congress had received from Fanny and Freddy since 1989. Their report on September 11 said that Maxine Waters had indeed receive $15,000 from Fannie and Freddie (and, as Michael Moore pointed out, so did Chris Dodd and Barney Frank). In fact current members of Congress received a total of $4.8 million from Fannie Mae and Freddie Mac, with Democrats collecting 57 percent of that.

Now, of course, the narrative has changed. Democrats and the mainstream media, led by Obama, would have you believe that it was Republicans who were against tougher regulations, Republicans who stood in the way of the financial reforms that could have prevented this economic crisis. It’s a blatant lie, and if the parties in this situation were switched, I would bet you anything that the drive-by media would be all over it. Republicans haven’t exactly been little fiscal angels as of late, but this is one instance where they tried to do the right thing and were stopped by Democrat scumbags trying to protect their cash flow.

Hypocrisy, corruption, lies, cronyism, cover-ups… all of it led by our Dear Leader, the Corruptocrat-in-Chief, and prime hypocrite, President Obama. Is it any wonder that the American people don’t trust their government?

Cross-posted from Cassy’s blog. Stop by for more original commentary, or follow her on Twitter!

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Don’t forget that Barney Frank’s boyfriend until 2000 was a senior executive at Fannie Mae. (In fact, Fannie fired him shortly after he and Barney broke up, and he was so lacking in qualifications he couldn’t find another job and ended up moving to California.) Fannie was known as the gay employer of choice in Washington for years. I know what I’m talking about here. There is a bigger reason why Barney was such a water-carrier for Fannie Mae all those years. He had a hell of a lot of friends working there. They very skillfully employed associates and friends of a lot of important members of Congress at lower levels, in addtion to the high-profile people like Tom Donilon and Jamie Gorelick. The whole place was one giant political operation disguised as a mortgage company.

rockmom on April 20, 2010 at 10:07 AM

The hypocrisy of the media regarding this is what really astounds me. This is one of the most vivid examples of perfect “gotch” journalism setups and it’s not being used.

It’s just downright sad the average American doesn’t know this has happened. I have preached this story since the meltdown occurred and nearly every time people look at me dumbfounded and don’t believe it until I point them to the videos.

ButterflyDragon on April 20, 2010 at 1:49 PM

These Dems caused the housing bubble and we sre still feeling the effects. Just imagine what might(not) have been had the Hill shown some common sense and foresight. It amazes me how few people know this though. I think we can guess why that is too. Now they plan to do it with health care—subsidize far more that they will take in. The proportions of this bubble might outstrip housing altogether.

jeanie on April 20, 2010 at 4:06 PM

Mentioning Obama’s past is raaaaacist. There is no history before his inauguration, when everyone would have gotten a unicorn that poops Skittles if not for those obstructionist rethuglikkkans.

malclave on April 20, 2010 at 5:26 PM

Democrats would have you believe it was Republicans who stood in their way as they tried to enact harsher regulations. They’ve repeated it over and over again for the past several years.

Hmmmm repeating the same lie over and over until it becomes accepted as the truth – didn’t some very infamous figure from history express that thought once?

Chip on April 20, 2010 at 5:45 PM