We could have avoided the current financial mess we’re in, but certain key Democrats (including all-time Fannie Mae/Freddie Mac political contribution leaders Chris Dodd) killed it.
…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. . . .
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.
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.
The connections between Demcorats and the housing mess are significant, and being overlooked.
Former Fannie Mae CEO Franklin Raines (who left the company after using accounting voodoo to line his pockets with undeserved bonuses) worked for the Clinton administration. He’s also advised the Obama campaign.
The majority of the political money Fannie Mae and Freddie Mac have given to politicians has gone to Democrats, with Senators Chris Dodd, Barack Obama and John Kerry topping the list.
It has been liberals, and not conservatives, who have in the past demanded that mortgage lenders be forced to loan to subprime borrowers. Jimmy Carter signed the Community Redevelopment Act into law, and Bill Clinton amplified that legislation creating the market for subprime loans that is causing all of these problems now.
If government, at the behest of liberals, had kept their noses out of the mortgage industry from the start these companies that are suffering now would have long since failed due to poor businesses practices, and we wouldn’t be facing the problems we’re facing now.