How the Democrats Created the Financial Crisis

BUMPED UP!

UPDATE 11:46 pm: Check this out. Obama is sending this around in his daily email. Now this is chutzpah. Someone ought to get access to his email list and send around the enormous dollars that this political corrupt Chicago hack took from the Fannie Mae, Freddie mac, Goldman et al

The failed economic policies and the same corrupt culture that led us into this mess will not help get us out of it. We need to get to work immediately on reforming the broken government -- and the broken politics -- that allowed this crisis to happen in the first place. (from Barack Obama our plan)

UPDATE 12:20pm HIGHLIGHT OF THIS MORNINGS HEARINGS AND THE ONLY HONEST MOMENT: As Dodd adjourned the hearing a great American was heard shouting  about the “fox guarding the henhouse”. The blood drained from doddering's face.

READ A PHONE CALL TO THE FED

UPDATE 11:30: BAIL OUT HEARING: CHRIS DODD IS BRINGING DOWN THE GAVEL? WTF is Dodd doing there? That's like Lucky Luciano presiding over the Al Capone trial. Fookin nutz! As chairman of the Senate Banking Commitee , Dodd  insisted that these ridiculous loans be made over the past 10 years!

UPDATE: Senator Jim Bunning, Republican of Kentucky, has emerged as one of the most strident enemies of the bailout proposal  “It’s financial socialism, and it’s un-American,” he said in his opening statement. On Friday, he offered a eulogy for the economy, saying, “The free market for all intents and purposes is dead in America.”

Are Americans, who are footing perhaps a trillion dollar bill, even remotely interested in how it really happened? I ask you. When we may very well be working 40-45% of the time for the government, will they inquire - how did I get here or will they listen to the complete line of bullshit the Obama, a chief moocher and looter, is inventing? I have to know.  The mainstream media is depraved. It does not do investigative journalism save to smear folks on the right.And even then it is invented. They should aspire to the journailstic standards of the Enquirer. Instead,  they have 14,000 trolls in Alaska tracking what feminine protection Sarah Palin uses so that they might tie her to global warming.

In his incredibly short stint in politics, Obama was the second highest recipient of  Fannie Mae/ Freddie Mac lobby dollars. Why isn't the media ripping him a new %$#hole?

Why is a first term Senator pulling down almost $300,000 a year from Goldman Sachs, Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, AIG, Countrywide Financial, and Washington Mutual? He has not even completed his fourth year in the Senate and received a total of $1,093,329.00 from these eight companies and their employees. (all data from OpenSecrets.org). John McCain’s numbers, according to OpenSecrets.org for the period 1990-2008 (i.e., 18 years worth of data) only collected $549,584.00. In other words, Barack is receiving $273,582.25 (and 2008 is not over) per year while McCain raised a paltry $30,532.44.

Want another shocker? Barack Obama has received more from one source–Goldman Sachs $542,252.00–than McCain has from all of the companies combined. Who the hell is more beholden to lobbyists? And why does a junior Senator from Illinois rate this kind of dough? (more here)

If shock of the crushing blow of 9/11 didn't wake America up to Islam, will this crushing financial implosion? McCain must take the damn gloves off. This is a good beginning: Steve Schmidt, a McCain campaign senior adviser, on a conference call with reporters Monday said  that The New York Times “is not a journalistic organization.”

“Whatever The New York Times once was, it is today not by any standard a journalistic organization,” Schmidt said. “It is a pro-Obama advocacy organization that every day impugns the McCain campaign, attacks Senator McCain, attacks Governor [Sarah Palin]. It excuse Senator Obama. …

“Everything that is read in The New York Times that attacks this campaign should be evaluated by the American people from that perspective – that it is an organization that has made a decision to deemphasize its journalistic integrity and tradition, to advocate for the defeat of one candidate – in this case, John McCain – and to advocate for the election of the other candidate, Barack Obama.”

Schmidt said later that the Obama campaign has been “abetted” by a compliant media that gives more scrutiny to the Republican than to the Democrat. (more here)

Schmidt is going to easy on the NY Crimes. Check out the financial back story.

How the Democrats Created the Financial Crisis Kevin Hassett Bloomberg hat tip JM

Back in 2005, Fannie and Freddie were, after years of dominating, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.M/P>

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

UPDATE: Doug over at Director Blue put this excellent photo journalistic montage together:

Any Questions? hat tip Larwyn

Five years ago, Republicans proposed "the most significant regulatory overhaul in the housing finance industry [in a decade]." (Source: New York Times)

Democrats on the House Financial Services Committee blocked efforts at fixing Fannie and Freddie. Rep. Barney Frank (D-MA) said, "Fannie Mae and Freddie Mac... are not facing any kind of financial crisis,"

At least 18 times since 2001 Democrats blocked efforts at overhauling Fannie and Freddie even as accounting scandals and executive ripoffs became public.

Why? For starters, the top two recipients of Fannie and Freddie campaign donations were Democrat fatcats Chris Dodd ($165K) and Barack Obama ($126K) (Source: Open Secrets)

And Fannie Mae paid well. Clinton-era Democrats, serving as the CEO, CFO and Vice Chairman, paid themselves $200 million in only six years even while a $10 billion accounting scandal was exposed. (Source: Wall Street Journal)

And Democrats like Chris Dodd also got favorable loans under a "VIP program." Dodd alone saved over $75,000 on his mortgage payments. (Source: Conde Nast Portfolio)

So where are former Fannie Mae CEOs like Franklin Raines ($90 million in salary) and Jim Johnson ($21 million in salary in one year)? As you might expect, they're serving as Barack Obama's key economic advisers. (Source: Washington Post)

Hiring Fannie Mae's two former CEOs as economic advisers? Barack Obama: not ready to lead.

UPDATE: MUST READ: Barack’s Wall Street Problem is Now America’s Larry Johnson

Comments

[jj]

pamela:

this is a brilliant post.

it is sort of nestled down in the middle of the front page, kind of lost down here, but it is very clear, very lucide, and, ... , it is not opinion only, but demonstrable fact.

connect the dots, as is said.

i hope you leave it on the front page, and promote it with some graphics & pictures or something, so that it can be more widely read. i know the various financial papers & analysts understand what happened, and why, but you reach a different readership that would greatly benefit from a wider understanding of the issues.

quite frankly, i have benefitted very much in my own understanding of this issue by your coverage of it for the past 4 or 5 days, and i am grateful.

i will send the permalink to this post to my entire mail list. it is that important. thank you.

john jay

[jj]

p.s. the photo montage. just brilliant. just brilliant.

p.s.s. a further comment. your readership and friends, amazing!! they see a good post, they know of stuff that will make it better, and they send it to you, because they know to you the story is the thing. it is a very, very good partnerhsip, you and your readership, as it makes for brilliant posts like this. absolutely incredible, just great!!!

[len613]

You show a tangled web but what is missing on Obama's involvement is a smoking gun -- an explanation of why so much money flows his way from Wall Street. Unlike Chris Dodd (Banking) Obama's three committees have nothing to do with banking or mortgages as far as I can see. They are foreign relations, homeland security and Health, Education, labor and pensions.
What could he do for Wall Street and FNMA in return for the largess?

[TINBH]

We get socialism (central government controlled by democrats) and likely a socialist dictatorship (although perhaps milder than the usual) any way we go from this point.
Isn't it slightly strange that this "financial meltdown" is occurring right now - at this exact time right before the election? The main problem - is a complete democrat-socialist creation -which Atlas excellently describes in this posting -and is the reason for all that has followed - e.g. "Wall Street" problems, credit mess, bank failures, "bail outs" with the democrats using "this sudden opportunity" for their maximum gains right now.
That this is all happening right now is "too good to be true" -especially for the democrat socialists who are in control of almost everything already. By shifting most of the remaining monetary power into their hands - the democrat-socialists will complete their goals.
The socialist-democrats have found that their attempts to gain control over all financial activity via the phony "global warming" and or the "free health care for everyone on planet earth", open borders, cultural marxism, and etc. plans have all failed - so far.
They now are seeing that they can't sell their man Hussein Obama to us either - as he will not be elected (the only way they can get him into office is for the most massive vote fraud ever -which even the democrat-socialists' media won't be able to hide).
They therefore are now making the alternate moves via their creation and manipulation of this current massive crisis -the financial mess.
The above added to the fact that Pelosi et al daily demonstrate that they have complete dictatorial control over all natural resources wealth (those most important to economic functions -oil).
And where is the "conservative resistance" from DC? Are there any "Republicans" plans to stop this move by Pelosi, Frank, Schumer, - who in addition to creating the mess, now not only call for the majority of monetary wealth of the USA (current and future), but also demand more "government" control over the remaining monetary wealth.
While the majority -who see right through most of these schemes have no voice and our civilized actions mean nothing.
The USA is being dissolved right before our eyes.

[IPOPA]

The root causes of the financial crisis and each Senator's role in contributing to those causes are all fair game and great questions. But this post raises questions.

First, is the following statement just inartful?

"If shock of the crushing blow of 9/11 didn't wake America up to Islam, will this crushing financial implosion?"

It sounds like you're saying Islam is connected to the foreclosure crisis, and if so, I have to conclude that you are a loon. Disavow me of this notion, please.

Also, it bothers me when people get credit for what they claim to support when they don't really, such as deregulation and free markets.

As I read this story, Republicans WANTED regulation, and Democrats stopped it, right? That means Republicans KNEW deregulation failed. Seriously, why would Republicans WANT regulation in any context? I thought the free market always delivers the right result? Have we been led astray?

Also, I thought the point of the free market was to have people live with the consequences of their individual choices. Why are we bailing anybody out now?

I'd appreciate any thoughts anyone would like to share to clarify.

www.ipopa.blogspot.com

[Pamela Geller]

IPOPA, I did not, in any way, imply that islamic jihad was responsible for the financial meltdown.

WHAT I SAID (asked) was if 9/11 didn't wake the folks up, would this catastrophic financial event wake them up to the failed financial system and the results of regulation and government intervention in financial and housing markets?

On the question of short selling, financial terrorism must be considered but that is addressed on a different thread here .

[SlimGuy]

IPOPA

Not only are you wrong , you are as bad at history as Biden is.

The problem is over regulation not under.

Regulation from the CRA created under Carter and pushed by Cuomo regulated and required participation in low quality ant red lining loans that no businessman in their right mind would have made.

ACORN and other of their ilk pushed for and got from a compliant and beholding congress just what they wanted and also ended up with a source of continuing government funding for about 40% of their activities.

Please do try to keep up.

[SlimGuy]

Also let us see how long the press can try to avoid the bull in the china shop of Penney Pritzker being on the Obama team.

Her families failed bank in the early 90s originated sub prime (back then predatory loans as they were called) on both mortgages and auto loans.

This is the member of one of the richest family groups in America that had to be the GodMother to bless the assent of 'The One'.

Even the Daley family kisses their ring.

Hyatt , TransUnion and Royal Caribbean Cruise lines are only part. Other parts are being sold to the likes of Warren Buffett.

60% of one group was just sold for 4.5 Billion with the balance to be sold over 5 or 6 years with price determined by profitability of the entity.

So the Queen of Sub Prime sits right there holding court and in close track of her investment in 'The One' no strings (yeah right) some assembly required.

[SlimGuy]

Geeze I mean like it is not bad enough for 'The One' that he is starting to get noticed about his masterful association with CAC and the 'Ayers head family' but we get to hear how that was such an epic fail.

Years ago considered a resume plus, now not so much.

But then when it bellied up another organization stepped in to take over the spot and save the day.

Wonder who ran that replacement...lets see I wrote it on the back of this matchbook cover...P ah pr oh yeah Pritzker..Penney Pritzker.

Must be one of them there coincidinks thingys.

[wxjames]

Great, Pam and Slim.
You guys are ahead of the storm, so keep pounding the drum and wake up the silent masses. The multi headed hydra is the donkey party, let's slay that bad boy.
Attack, Attack, Attack !

[USpace]

.
Well done, excellent! It’s a shame politicians forced banks starting back in the 80s to give home mortgages to poor people who weren’t credit worthy enough. Then, they just started lending mortgages way beyond many people's credit abilities. That’s where all this mess started. And also that they didn’t regulate Fannie Mae and Freddie Mac like they do other banks.

Alan Greenspan should be exposed for the problems he helped cause by allowing credit quality to be ignored.
Scary, will sanity ever prevail?
.
if money were free
it would have no value
- extreme inflation

.
ignore credit scores
give everyone homes
- like musical chairs

to deny a mortgage
must be due to racism

.
absurd thought -
God of the Universe says
forgive all debts

settle all accounts
no one owes anything

.
absurd thought -
God of the Universe says
make housing costs look cheap

go paint a rosy picture
just get people to sign up

.
All real freedom starts with freedom of speech. Without freedom of speech there can be no real freedom.
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