Little Bit Tired, Little Bit Worn

From Human Events:
The Text of the letter is below, you can view an image of the actual letter and the signatures by clicking here.

Sen. John McCain’s 2006 demand for regulatory action on Fannie Mae and Freddie Mac could have prevented current financial crisis, as HUMAN EVENTS learned from the letter shown in full text below.

McCain’s letter — signed by nineteen other senators — said that it was “…vitally important that Congress take the necessary steps to ensure that [Fannie Mae and Freddie Mac]…operate in a safe and sound manner.[and]..More importantly, Congress must ensure that the American taxpayer is protected in the event that either…should fail.”

Sen. Obama did not sign the letter, nor did any other Democrat.

NO DEMOCRAT would lend their signature to the letter, yet if you listen to them today during this financial melt down it was they who were sounding the clarion call. In reality it was they who were putting ear plugs in their ears so as not to hear the call.

The text of the letter:

Dear Majority Leader Frist and Chairman Shelby,

We are concerned that if effective regulatory reform legislation for the housing-finance government sponsored enterprises (GSEs) is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. Therefore, we offer you our support in bringing the Federal Housing Enterprise Regulatory Reform Act (S. 190) to the floor and allowing the Senate to debate the merits of this bill, which was passed by the Senate Banking Committee.

Congress chartered Fannie and Freddie to provide access to home financing by maintaining liquidity in the secondary mortgage market. Today, almost half of all mortgages in the U.S. are owned or guaranteed by these GSEs. They are are mammoth financial institutions with almost $1.5 Trillion of debt outstanding between them. With the fiscal challenges facing us today (deficits, entitlements, pensions and flood insurance), Congress must ask itself who would actually pay this debt if Fannie or Freddie could not?

Substantial testimony calling for improved regulation of the GSEs has been provided to the Senate by the Treasury, Federal Reserve, HUD, GAO, CBO and others. Congress has the opportunity to recommit itself to the housing mission of the GSEs while at the same time making sure the GSEs operate in a manner that does not expose our financial system, or taxpayers, to unnecessary risk. It is vitally important that Congress take the necessary steps to ensure these institutions beefit from strong and independent regulatory supervision, operate in a safe manner, and are primarily focused on their statutory mission. More importantly, Congress must ensure that the American taxpayer is protected in the event either GSE should fail. We strongly support an effort to schedule floor time this year to debate GSE regulatory reform.

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Was the Pelosi speech just before the vote on the bailout more than just an attack aimed at Bush?

Could the speech have been planned to do just what it looks like it did, namely kill the bailout?

I honestly do not know where I sit on this bailout. I don’t like the idea of it, it seems very socialist to me. But what else to do?

Okay. So here is my conspiracy theory.

Pelosi and other Democrats wanted the bill to fail today.

I envision Pelosi and company sabotaging today’s vote via her speech and previous collaboration so that Mr. Obama might come in sometime midweek, conduct a meeting with his fellow Dems thereby convincing them to pass this bill. Or he may well do it by way of a speech on the floor.

The bill passes, the Dems announce that the bill would never had passed were it not for Mr. Obama and he suddenly looks much more Presidential than he currently does.

I honestly think this could happen.

Don’t look at me that way, it’s not like I said I just saw Bigfoot walk through my yard.

One way or the other we know a new vote is to come in the days ahead and we will see how this plays out.

Quickly I want to highlight a portion of the Pelosi speech and then ad to that some quotes concerning the current state of the economy.

Pelosi’s opening statement

Madam Speaker, when was the last time someone asked you for $700 billion? It is a number that is staggering, but tells us only the costs of the Bush Administration’s failed economic policies — policies built on budgetary recklessness, on an anything goes mentality, with no regulation, no supervision, and no discipline in the system.

All the fault of GWB and his administration.

The American people did not decide to dangerously weaken our regulatory and oversight policies. They did not make unwise and risky financial deals. They did not jeopardize the economic security of the nation.

She is right. We the American people did not, rather Bill Clinton and the Democrats did.

And they [The American people] must not pay the cost of this emergency recovery and stabilization bill.

We’d rather not, but we are going to.
Some quick quotes from this IBD article.

It was October 1992, nearly 15 years before the housing meltdown and subprime crisis. Republican Rep. Jim Leach of Iowa was on the floor of the House, talking about something that no one at the time seemed to care about: the potential danger that Fannie Mae and Freddie Mac posed to the economy.

Leach warned that Fannie and Freddie were changing “from being agencies of the public at large to money machines for the stockholding few.”

Led by top Democrats, including Rep. Barney Frank in the House and Sen. Chris Dodd in the Senate, Congress not only did nothing about the growing risks at Fannie and Freddie, it in essence doubled down on their risks.

The Democrat-led Congress of the early 1990s eased capital limits on the two mortgage lending giants, letting them use enormous leverage — 2.5% of assets at Fannie and Freddie, vs. 10% for banks — to expand lending to low-income, minority communities.

In 1994, the Democratic Congress again moved, passing the Community Reinvestment Act — an update of the original 1977 law.

For the first time, homeowners that previously didn’t qualify — either because they couldn’t put any money down or had bad credit — were made eligible for government-backed loans.

Still, even after the GOP won control of Congress in 1995, Democrats in both houses worked with President Clinton as Fannie and Freddie’s enablers.

Clinton, bypassing Republicans in Congress, had HUD rewrite the rules for Fannie and Freddie to let them get involved in the subprime market for the first time.

Robert Rubin’s Treasury got involved too, reworking its own rules to crack down on banks that didn’t make enough loans to distressed, minority neighborhoods.

Undersecretary Gary Gensler went to Congress in 2000 seeking an end to the companies’ special status — especially the “implicit” federal guarantee of their now-$5.4 trillion loan portfolio — and more power for regulators to boost the companies’ capital requirements.

Democrats raised a ruckus. So did Fannie and Freddie, which were both headed by politically well-connected CEOs who knew how to strategically reward — and punish — those who crossed them.

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A great video about the current economic crisis.

How did the problem start?

Who recognized what was coming and tried to stop the looming crisis?

Who ignored the crisis?

After the video read this editorial from Investor’s Business Daily.

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From 1989 to 2008 Barack Obama is the second biggest political receiver of money from Fannie May and Freddie Mac.

$126,349 to be exact.

That is a serious accomplishment considering that he has only been in Washington four years.

McCain in contrast has collected $21,550 from the two institutions during his time in Washington.

A difference of $104,799.

Read the data here.

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