Ok. WOW. Hot Air.com just posted a SCATHING piece on Democrat’s indifference to regulatory oversight of Fannie and Freddie Mae — oversight the Bush administration championed and which was denounced as unnecessary by Democrats.
Here is an excerpt from a New York Times article five years ago:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago…
The new agency would have the authority… to set one of the two capital-reserve requirements for the companies… and it would determine whether the two are adequately managing the risks of their ballooning portfolios.
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
Thank you; Barney Frank, Melvin Watt, and the rest of the Congressional Democrats. But this isn’t the end of the story. Not ONLY did Democrats stonewall regulatory reform of both institutions, but they also enacted legislation which created greater risk to both instiutiion’s portfolios.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.
What can we say, then? Basically, Democrats concerned about creating “affordable housing” — in other words, using quazi-government institutions to essentially provide well-fare to low income families in the form of below-market loans– created a pyramid-scheme where by increased home-buyers caused housing inflation–which allowed for the sub-prime loans to work–which caused more people to get subprime loans… which crashed the financial system when housing prices hit a market limit. In other words, ‘concerned liberals’ under the guise of providing low-income loans created a monster–a financial system built around loans that were never designed to be repaid.
Look where “good intentios” gets us… well, it gets us with the most expensive taxpayer bailout in US History. And we keep electing these jokers. It’s just a matter of time before Medicare, Medicade, and Social Security meet the same fate, Folks… let’s not let “concerned” democrats ruin our economy again.