Freddie, Fannie and the left
I hope every Eagle County resident had the opportunity to watch “Saving Our Economy ” What’s Next” on Fox News Sunday, Oct. 5. In fact I hope every American watched it, but I know there’s a brooding left that refuses to watch Fox at any cost. Too bad!
The program traced the development of ever easing credit for unqualified home buying dating back to the early years of the Carter administration. These practices intensified and became ever more political during the Clinton administration.
It outlined the development of Freddie Mac and Fannie Mae, eventual poster children for corporate welfare. Their liabilities, with mortgage backed security guarantees and borrowing total $3.7 trillion dollars, have more default risk than all other U.S. corporations. And it traced the myriad of increasingly risky schemes on Wall Street as the housing markets in the U.S. became a central cause for politicos buying votes with sweet deals; low down payments, no down payments, adjustable rate mortgages or “pay later, don’t worry now” deals.
As early as 2000, Louisiana Republican Richard Baker became concerned by the risks posed by Freddie and Fannie and introduced legislation to augment their regulator. It didn’t gain traction. And later, when attempts were made to rectify what was becoming a point of concern for Alan Greenspan, Republicans in Congress and leaders in the financial sector, new regulatory legislation was offered. And the ensuing votes in D.C. fell strictly along party lines. In 2005 and again in 2006, bills that could have avoided a 2008 meltdown were met with “yes” votes from every Republican in Congress and “no” votes from every Democrat.
The liberals did not want reform. They preferred to ignore a potential meltdown. But once the meltdown was a reality they had Speaker Nancy Pelosi to label it the result of “failed Bush economic policies”. In fact, the Bush administration in 2004 opposed a bill by Richard Shelby (R-Ala.), Senate Banking Committee Chairman, because it had been watered down by Democrat opponents on the committee and was not a tough enough reform measure.
Even the $700 billion bailout, a flawed notion in the opinion of many Americans, couldn’t escape Pelosi’s deceit. She and her Senate counterpart, Harry Reid, had thought at the outset that Republicans in the House would support the bill … support it, then get thrashed by the Democrats for doing so, just before the election.
The Democrats had sufficient votes to pass the bill, but most California congressmen did not support it. Nor did 12 Democrats, the exact number needed to pass the bailout, who were all members of Democrat Barney Frank’s “Financial Services Committee”.
If Reid, Pelosi and Frank were concerned about the bill’s initial passage they should have rounded up their Democrat voters and held their toes to the fire instead of playing “gotcha.” And they should have done it long ago.
Peter J. Wallison, American Enterprise Institute fellow and former chief counsel for the Treasury Department, was asked for his learned opinions throughout “Saving Our Economy ” What’s Next.” He was specific and illuminating as he detailed the accounting misdeeds of Freddie and Fannie and made the case for reducing their portfolios as a central feature of the debate.
If you want to learn more about the bailout and its origins, Mr. Wallison will be speak in Eagle County on Tuesday, October 14. Call 328-3049 for additional information.
Randy Milhoan is the chair of the Eagle County Republicans.
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