Wallison takes a closer look:
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.
Barack Obama--afraid to cross the party line--not ready to lead.
Related posts:
2004 video shows Dems defending Fannie Mae
Jim Johnson still acting on behalf of the Obama campaign
New McCain-Palin ad: "Jim Johnson"
New McCain-Palin ad: "Advice"
Technorati tags:
Election 
Democrats 
economy 
business 
Obama 
Barack Obama 
Fannie Mae
1 comment:
For those who really care about this issue, only Bob Barr, the Libertarian Party candidate is moral enough and conservative enough to deal with this issue and the rest of the current mess.
Here’s a recent press release from Bob (who has the backing of Rep. Ron Paul):
Press Releases › Wall Street Benefits Twice from Bailouts
October 11, 2008 11:36 am EST
Senator John McCain attempted to disguise reality by calling the $700 billion Wall Street bailout a “rescue,” but it’s obvious that the only people he and his colleagues were rescuing were the executives who had made bad investment decisions, as well as the politicians who had pushed increased mortgage lending, irrespective of cost, triggering today’s crisis. Now it turns out that the companies getting bailed out will benefit twice.
Most everyone has seen the story of how executives at AIG partied at a resort after the taxpayers were stuck with the bill for an $85 billion bailout—now being supplemented with another Federal Reserve loan of $37.8 billion. But what’s $440,000, including more than $23,380 for spa services, among friends when the taxpayers are paying?
Normally politicians wouldn’t have any business complaining about the cost of a corporate retreat, but what might be unexceptional for high-flying companies in a booming economy becomes outrageous when taxpayers are getting stuck with the bill. In this case they are paying twice, with the company collecting a new loan because its bottom line is even worse than originally thought.
Loan-two to AIG is small change compared to the extra benefits that Wall Street will receive. Many of the largest firms will be going to the spa, figuratively, at least. You see, someone has to manage all of the securities and other assets that the government plans on buying with taxpayer funds. And who better to manage them than the very companies that bought the bad paper in the first place!
The Treasury Department has requested proposals for asset managers, and according to the Wall Street Journal, the government “wants large, established firms with significant assets to work for the government’s program.” That means managing at least $25 billion, and in some cases at least $100 billion, in private assets. There will be a lot of money in fees—typically 1 percent of the assets managed, which could come to as much as $7 billion a year or more if government purchases go past $700 billion, as is widely expected.
Wall Street is looking forward to milking this latest cash cow. Since government jumped into the investment business, the Journal tells us that “a range of firms—from large investment banks to boutique real-estate companies—have been angling to grab some of the advisory business.” Representatives of some companies showed up in Washington to lobby even before Congress approved the bailout. And who can blame them? The Journal reports that “sales, financing and other traditional forms of real estate business have dried up with the credit crisis.”
Of course, most of these firms helped cause that very crisis. Most of the companies bidding for government business are suffering big losses and preparing to unload lots of bad paper on the government. Bad paper that other big companies with big losses and lots of bad paper will manage.
And so the circle will go on endlessly, at taxpayer expense.
The only problem is potential conflicts of interest, since companies will, notes the Washington Post, “be managing the assets while also selling their own troubled securities to the government.” But officials say they will attempt to “minimize” any conflict. No doubt, Washington won’t let a little thing like ethics stand in the way of letting everyone on Wall Street profit.
Indeed, politics are starting even before the president’s signature on the bill is dry. One analyst predicts that the Treasury Department will focus bailout funds on regional banks and thrifts, thereby providing “critical political support for Treasury’s efforts.” After all, “Congressmen who had to swallow hard to vote for this think will feel a lot better about it if they see the impact in their local communities.” Which is just another name for pork, like the spending programs and tax preferences loaded into the $700 billion bailout bill to win votes for passage.
All of this is politics as usual in Washington, and it won’t change whether Sen. Barack Obama or Sen. John McCain is elected president. Both of them supported the $700 billion Wall Street bailout, as well as the many other bailouts that preceded it. Both of them are part of the political establishment that helped create today’s economic problems. Neither of them will take the steps necessary to ensure that this sort of economic crisis doesn’t hit again. Only Bob Barr and the Libertarian Party are offering the sort of fundamental change that the American people need and deserve.
And here’s an article about the upsurge of interest in Bob Barr from the Atlanta Constitution:
The Wall Street debacle and the Barr effect
Friday, October 10, 2008, 04:20 PM
The Atlanta Journal-Constitution
Just checked in with Russ Verney, the campaign manager for Libertarian presidential candidate Bob Barr.
Verney said the Wall Street crash and bailout has revived Barr’s standing as a factor in the 2008 presidential race.
“We’re seeing an enormous amount of activity coming in from the web site, from people opposed to the bailout,” Verney said.
Many are die hard Republicans, he said. “They’ve had it, they’re coming over and they’re bringing their friends.”
This low-key but effective criticism of the $700 billion Wall Street rescue, videotaped in Barr’s Smyrna headquarters and posted on YouTube, is driving much of the traffic.
Verney said Barr’s new standing in the presidential campaign remains hard to measure. “Most of the polling eliminates us,” he said — under the label of “other.”
Here’s Bob’s Web site: http://www.bobbarr2008.com/
Post a Comment