It's very clear what the priorities are. The Republicans are looking after the financial interests of the wealthiest individuals in this country ~ Ted Kennedy (2/22/1932 to 8/25/2009) United States Senator from Massachusetts and a member of the Democratic Party. Serving almost 47 years, he was the second most senior member of the Senate when he died and is the 4th-longest-serving senator in US history (11/7/1962 to 8/25/2009).
I was recently made aware of the fact that the Democratic Representative from Massachusetts Barney Frank "admitted that Fannie and Freddie were largely responsible for the economic downturn". I read about this shocking admission on Lisa's brand new Conservative blog.
The post, titled "The Problem with Leftists" contained a link to a 8/19/2010 article on the "RealClearPolitics" website (RealClearPolitics is a political news and polling data aggregator). (Note: see update below regarding Lisa's blog.)
According to Wikipedia RealClearPolitics (RCP) claims to be "non-partisan" and that "their goal is to give readers ideological diversity". I'm not buying it considering they also describe themselves "as frustrated with what they perceive as anti-conservative, anti-Christian media bias". Playing the victim is a typical Con diversionary tactic. They claim they're being discriminated against when the actual bias is in their favor.
For instance - on the 8/22/2010 edition of "Meet the Press", when Mitch McConnell remarked that President Obama "says he's a Christian, and I take him at his word", host David Gregory offered no pushback.
What Gregory should have objected to was McConnell's use of weasel words to suggest that President Obama MIGHT be a Muslim, but Mitch McConnel isn't sure... all he can do is "take him at his word". President Obama is suspected of being a Muslim - even though he attended a Christian church for 20 years - because he spoke out in favor of upholding the Constitutional rights of all Americans; regardless of what religion they practice? The corporate media (in this case "Meet the Press" and David Gregory) is lending credence to Republican talking points by allowing them to frame the debate.
The biased RCP article, "Barney Frank: Fannie & Freddie Must Go" accuses Congressman Frank of "dissembling and denial", and the Left of "blaming heartless Republicans and Wall Street for the crisis caused by Fannie Mae and Freddie Mac". Unfortunately for RPC these lies have been thoroughly debunked. Nobel prize winning Economist Paul Krugman, in a 5/31/2009 article titled "Reagan Did It", points out that "Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending - restrictions that... limited the ability of families to buy homes without putting a significant amount of money down".
Further deregulation shepherded through Congress by former Republican Congressman and McCain Campaign financial advisor Phil Gramm blew away the remaining FDR era protections. Republican deregulation caused the financial crisis, not Fannie and Freddie.
The problem with Lisa's claim that (according to the RCP article), Barney Frank "admitted that Fannie and Freddie were largely responsible for the economic downturn" - is that it's not true. RCP never states that Rep. Frank "admits" THEIR claim that "the crisis [was] caused by Fannie Mae and Freddie Mac" is accurate. The RCP article does contain several quotes from Rep. Frank, but none of them amount to an admission by Congressman Frank that Fannie and Freddie were responsible. This "admission" is one that Lisa either invented or imagined.
The RCP article quotes Rep. Frank as saying, "There were people in this society who for economic [reasons can't] be homeowners". If you apply for a loan but your income and/or savings suggest you won't be able to pay off the loan, clearly it is not wise for a bank to make the loan. This is simply stating what should have been obvious. Remember it was former President bush's "ownership society" that encouraged home ownership with new policies like the zero-down-payment initiative, "a government-sponsored program that allowed people to get mortgages without a down payment".
In another quote from the article Congressman Frank says he now believes that the two secondary mortgage market government-sponsored enterprises (GSEs) "should be abolished". RCP's response is, "better late than never", and concludes that it is "refreshing to hear a member of the Democratic Party admit his mistakes". The mistake RPC thinks Rep. Frank made was "stopping GSE reform in the early 2000s, at a time when such a move might have prevented the financial meltdown".
This claim is utter nonsense, as the Republicans controlled Congress during this time (1/4/1995 to 1/3/2007). The Speaker of the House sets the the legislative agenda, and during this period both Speakers, Newt Gingrich and Dennis Hastert, were Republicans. According to Rep. Frank, "I did not try to stop them from passing legislation to control subprime lending or to regulate Fannie Mae and Freddie Mac". In his book "Financial Shock" economist Mark Zandi reveals that it was President Bush who "readily took up the homeownership baton... [and it was the] Bush administration [who] put substantial pressure on Fannie Mae and Freddie Mac to increase their funding of mortgage loans to lower-income groups".
Rep. Frank says he "sought directly to regulate subprime lending", but the legislation he and Michael Oxley (R-OH) worked on, the Finance Reform Act of 2005, was "defeated because, in the words of Mr. Oxley, the Bush administration gave his efforts the one-finger salute". According to Media Matters, when the Democrats regained control of the House in 2007 Rep. Frank (who became the new chairman of the House Financial Services Committee), "sponsored HR 1427, a bill to create the Federal Housing Finance Agency (FHFA), granting that agency general supervisory and regulatory authority over Fannie and Freddie and directing it to reform the companies...".
President bush signed the bill on 7/30/2008, but only because it was clear by that time that there was a problem (the housing market peaked in 2006). Five weeks later FHFA seized temporary control of Fannie and Freddie.
bush's excuse was that "Wall Street got drunk", but according to Portfolio.com "bush neglected to add that he was behind the bar, pouring the tequila shots for most of the night, and refusing to cut off the drunks before they'd reached their limits".
The Republicans have some nerve thinking the American people will believe the Democrats were responsible for the housing bubble when they weren't in the majority when the Republicans, as part of the bush administration's "aggressive housing agenda", passed legislation like the American Dream Downpayment Assistance Act, the "Minority Homeownership Initiative", and (the previously mentioned) "Zero Down Payment Initiative".
Rep. Frank warned of the potential danger of a deregulated subprime lending market, but "House Republicans blocked any efforts to legislate against it" and "Alan Greenspan refused to use congressional authority he'd been given in 1994 to regulate it". The reason was because gouging lower-income minorities (and non-minorities) was very profitable for the fat-cat bankers pulling the administration's strings. Republicans looking out for the interests of the upper-class lead directly to the economic downturn - any other assertion is revisionist propaganda.
Instead of "admitting" Fannie and Freddie are to blame, Congressman Frank defended the two GSEs by pointing out that "private companies sold Fannie and Freddie loans or securities based on fraudulent documents", and that "these transactions created private profits at public expense". In other words, Fannie and Freddie are the VICTIMS of fraud, and the federal government should go after the banks that sold them the bad loans and attempt to recover some of the money they lost.
The reason why Rep. Frank is now in favor of abolishing the GSEs is because he believes there should be "no more hybrid private-public", and because "if we want to subsidize housing then we [should] do it upfront and let the budget be clear about that".
I agree completely. Fannie and Freddie suffered such huge losses because of the bush initiatives which were designed to increase the profits of their banker buddies, and because the GSEs had been partly privatized. If they had been acting in the public interest using a not-for-profit model - I think it is highly unlikely they would have been swept up in the derivative fever.
But because the GSE CEOs were seeking to increase their profits (and their bonuses) Fannie and Freddie didn't do their due diligence in researching the soundness of the loans they purchased. They were blinded by the profit motive in exactly the same manner as the other financial institutions that we bailed out. And let us not forget the fraud that Rep. Frank mentioned, which wouldn't have occurred either if not for Republican deregulation.
I agree with Rep. Frank that Fannie and Freddie should be abolished and REPLACED. Let the shareholders suffer some of the losses while the federal government puts a new, not-for-profit 100% public agency in charge of providing financial support to the secondary mortgage market. Homeownership is a good thing, and should be encouraged, but (obviously) should only be an option for people who can afford it. And we can do our best to make it more affordable by returning to the not-for-profit model Fannie Mae operated under after it's founding in 1938 until it "was converted into a private shareholder-owned corporation" in 1968 (by Democratic President LBJ, although for non-ideological reasons).
Unfortunately Fannie and Freddie being "partially private" allowed the Republicans to corrupt the institutions from within. If the Cons can't get rid of a popular government program they hate they will attempt to convert it into a money making vehicle for the wealthy elites. Which is exactly what the bush administration did - the wealthy bankers profited (and collected record bonuses) while the American taxpayer got shafted to the tune of (approximately) $248 billion.
When the hell are the voters going to wake up and realize that Republican thieves are robbing us blind? Their campaign to extend the bush tax cuts is just the latest example of their continuing reverse-Robin Hood master plan to destroy the middle class and create a land of gentry. Perhaps I'm being a wee bit hyperbolic, but significantly less so than Righties who claim the Obama Administration is plotting a Marxist "fundamental transformation" of our country.
1/13/2011 Update: Lisa deleted her blog and started over, creating a new blog with the same name... Originally I updated the link to her post with a link to the page as cached by Google, but the Google cache has since expired. Fortunately I copied down the text and have posted it in my comments section. You'll just have to take my word for it that I didn't make any alterations.
See also: America Without A Middle Class by Elizabeth Warren, The Huffington Post 12/3/2009.