So, just saw this video on youtube: http://tw.youtube.com/watch?v=_MGT_cSi7Rs
I find it hard to believe that anyone would argue that Republicans are the pro-regulation team in this issue, but that seems to be what the video is arguing, that it was in fact the Dems. would rather let companies do as the pleased.
So, is it true that republicans tried to fix the fannie and freddie problems in 2004, and, if so, why didn’t they, being that they controlled the legislature and the executive?
The Republicans tried to pass two separate bills in 2005 - one in the House, and one in the Senate. In both cases, Democrats were the obstructionists. In the House, Barney Frank’s Finance committee opposed it, and in the Senate, the House Banking Committee couldn’t get it through. It was controlled by Republicans, but they still needed 60% of the vote to get it out of the committee, and it failed with the vote along straight party lines - all Democrats against, all Republicans for. This also sent a signal to Republicans that the Democrats would oppose it if came to a floor vote, and maybe even stage a filibuster. So instead the bill remained in committee. Then an amendment was attached to it to stall it, and eventually time ran out on that session of the Congress and the bill died. This was S.190.
President Bush issued repeated warnings against the excesses of Fannie and Freddie, almost from the day he was in the White House.
When the Democrats took power in the House and Senate, all legislative activity with regards to Fannie and Freddie came to a standstill.
To understand why Democrats behaved this way, you have to know that Fannie and Freddie were a social engineering project - their job was to underwrite risk so that low-income people could afford to buy homes. It was a form of social welfare for the poor and minorities, and therefore Democrats supported them, and saw attempts to regulate them as mean old Republicans trying to shut down social programs.
FYI, my impression (partly from Paul Krugman columns, I believe) is that Fannie and Freddie are not really the source of the problem. The claim is that they have been dragged into this mess…but overall their loan portfolio is a lot better than those of many others. In fact, I believe that Krugman said that pretty much the definition of a “subprime” loan is that it is one that Fannie and Freddie would not underwrite.
Of course, the general way that Fannie and Freddie was run…with the privatization of profits (and obscene compensation for the top managers) and socialization of risk…is not a good thing. But to blame them for the current financial crisis is apparently far off the mark.
As I said, this is just what I’ve read…and I would be happy to be corrected by someone more knowledgeable with harder evidence.
You might start by having a look at this document, which seems to say that as of November, 2007, Fannie Mae was exposed to some $60 billion in sub-prime loans and $360 billion in “alt-a” loans. I am speculating that this does not include loans where the risk was passed on to other investors. Also, I would not be the least bit surprised if Fannie Mae played around with the definition of “sub-prime” and “alt-a” to lessen the appearance of exposure to these loans.
From what I have been able to figure out, both Sam Stone and jshore are right; they each possess two halves of the truth:
It is unquestionably true that FNMA and FHLMC reform was proposed by GOP lawmakers and completely shut down by the Democrats. It is also beyond question that George W. Bush had been calling for reform for some time.
It is also true, however, that those two organizations did not precipitate the crisis by themselves, and it would be false to suggest that the failure to reform them caused this crisis. It just contributed to making it worse.
This was the gist of my Barney Frank thread that died an invisible death last week. link
What was the aim of these bills? I honestly don’t know*. I’m pretty much seeing blame everywhere by now. Were these bills “regulation” of the kind that everybody talks about now? Or was it more of a “cut me a piece of that pie too” Reform? The only defense I have heard is that with their “reform” proposals, the Rs were trying to have their way with the Ds like they had for 6 years. I’m not saying that excuses the Ds, cuz when they had control they could have worked with the Rs … or even working without them should have found a way to do something. But shutting down their bills could have still made sense.
(Guilty confession: Even if it caused everything…seeing the Rs treated like Ds in this case gives me that same warm and tingly feeling it must have given Barney.)
*And to be honest I may or may not understand, so a general idea is enough.
What is amusing is the revisionist history that is now flowing from righties.
Did Georgie Porgie not run on an ANTI-REGULATION platform?
Did Georgie Porgie not have a friendly congress his first 6 years as POTUS?
Did Georgie Porgie not inherit an economy on the upward swing from President Clinton?
What prevented Georgie Porgie from calling a series of press conferences to expose the so-called Democratic “obstructionists?” Could it be possible that because Georgie Porgie and his cohorts have lied so much to the American people that he recognized that they would ignore him like his own party have ignored him.
The outright nonsensical revisionist history tightie righties are trying to forward out now is balderdash. McCain and Palin simply are unqualified to lead America out of this mess by dint of the fact that they both come from a party that has lost favor with the American people.
So what is the youtube clip? CGI? There may be blame to pass around, but the fact is that Fannie and Freddie (more than half of the mortgage back securities in this country are associated with these institutions) were a big contributor, and the Republicans, this time at least, sounded the alarm, and the Dems–again, this time at least–stood in the way. Sorry.
You mean the same Republicans that where profiting from the mess we have now? The same ones that were telling America that the “fundamentals of the economy are strong?” Those same Republicans? Puhleeeeze. Give it rest already. Americans do not trust Republicans and that is why they will be told so come November.
Oh, okay. Must be CGI then. I’ll give it a rest now, since I have nothing to counter your response with except facts.
Factcheckingthe blame game.
FACT: The President, Henry Paulson and John McCain all said recently that “the fundamentals of the economy are strong.”
Were they all trying to wish away High unemployment, the Wall Street mess, the Credit Crunch or the Bank and Insurance failures?
Yes, GWB is bad. McPalin is bad. That doesn’t absolve everyone else from being bad at the same time. Lately, plenty of Ds have also been exposed to be either corrupt or incompetent right alongside the (very very bad!) Rs. It’s necessary to see them as they are.
Wins the thread IMO. That was exactly what I’ve been looking for, and I’ll know where to start in the future. (No disrespect to the SDMB or anything 
)
Thanks
While sounding the alarm is laudable, not keeping at it when Republicans were in the majority is what I see as the part that needs to be condemned (I’m not excluding the Democrats here, only that their options were limited). There were other ways for the executive to pressure Fannie and Freddie, what I see is that many regulations were reduced or oversight that was needed was not employed until it was too late. It was clearly not a priority for the Bush administration and the Republicans; war, eavesdropping and other items were more in their agenda.
What I’m arguing about here is the attempt to lay the blame on the doors of the Dems and by extension, Obama. Not gonna happen folks. There is blame to go around. Let me repeat it.
There is blame to go around even to the American people. Many benefited in their 401K’s and stocks when a lot of this crap was in its heyday. Many supported these politicians who are bought and paid for by lobbyists and of course a great many of them elected Georgie Porgie. Ronald Reagan left office and left the country in an economic mess. George Bush Sr. left us in an even worse mess. Bill Clinton cleaned it up considerably. Georgie Porgie is in there and look where we are again.
Thank you very much sir.
Could you repeat it somewhere else? This thread is specifically about Fannie Mae and Freddie Mac, not about who deserves the blame for everything that is wrong with the world. You are talking almost completely at cross purposes with everyone else, and it’s derailing the thread just as you successfully derailed Peanut Gallery’s one.
This thread is about who is to blame for Fannie and Freddie. Are you a mod?:dubious:
Cite? The factcheck article stated: “But saying that Democrats killed the 2005 bill “while Mr. Obama was notably silent” oversimplifies things considerably. The bill made it out of committee in the Senate but was never brought up for consideration. At that time, Republicans had a majority in the Senate and controlled the agenda. Democrats never got the chance to vote against it or to mount a filibuster to block it.”