HOT AIR has more on Senator McCain's attempts in 2006 to stop the Freddie and Fannie Mae excesses leading to the train wreck he saw coming. The Democratic Congress would not hear of McCain's attempts to pass legislation at reforming the profligate organizations.
In the speech below, McCain managed to predict the entire collapse that has forced the government (using our taxpayers' money) to resuce Fannie Mae and Freddie Mac, along with Bear Stearns and AIG. He hammered at how Fannie and Freddie falsification financial records year after year to benefit executives, including Franklin Raines and Jim Johnson, both who worked for these Wall Street disasters and personally took tens of millions of dollars and were fined and investigated in the process. Both men worked as advisers to Barack Obama this year. McCain also noted the power of their lobbying efforts to forestall oversight over their own despicable business practices.
We also know that Freddie and Fannie lobbyists paid $126,349 to Senator Obama over the past three years. What's wrong with this picture?
Mr. President,
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, 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.
I urge my colleagues to support swift action on this GSE reform legislation
John McCain
May, 2006
Wednesday, September 17, 2008
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5 comments:
What is wrong with this picture is that you fail to mention John McCain is a career deregulator who voted for his Phil Gramm's 1999 deregulation bill that put financial institutions in this mess. The same guy - Phil Gramm is now McCain's economic advisor. McCain's largest block of campaign contributors are from Merrill Lynch - that just went belly up and was sold to Bank of America. McCain has 83 Wall St. lobbyists on his campaign staff, and the former lobbyists of AIG, Merrill Lynch, Lehman Brothers, and Bank of America.
Ellen, I absolutely disagree with the idea that allowing mergers and acquisitions and deregulation of investment banks was the cause of this situation. Reagan deregulated the airlines and other things. Deregulation gives you and me as consumers a chance to shop for the a better price and product or service. Socialism is a regulated economy. Free markets are not overly regulated. Again, de-regulation is not the culprit here. That's the way of business and no matter what you and your lefties say there is no basis for this complaint.
Next, the campaign staffers who were lobbyists on McCain's staff are businessmen and so far, I see nothing there that concerns me.
The deeper issues that helped create this crisis are 1)the lax lending practices Congress forced upon banks back in the 90s under the Clinton policies of social engineering, 2)the many years of a devalued, cheap dollar with in large part with Bush's blessing and 3)excessively low interst rates a la Greenspan that made (sub prime) mortgage money cheaper than dirt and far too easy to come by.
All these policies were the result of both Democrats and Republicans and, again, a combination of things.
The point of this post again is that McCain as a US Senator saw this coming and attempted to sound the alarm and get some legislation passed to oversee some of the excesses at Fannie and Freddie that were legendary, but sadly to no avail.
McCain blasts Wall Street’s failure but neglects to mention his advisor Phil Gramm helped cause it. While chairing the Senate Banking Committee, Republican Sen. Gramm slipped a 262-page bill into a gargantuan, must-pass spending measure. Gramm’s legislation, written with the help of financial industry lobbyists, essentially removed financial products called swaps from any regulation. Credit default swaps have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions. McCain supported this. Biden did not.
And what's the difference between a risky loan mandated by the Feds and a risky security really when you get down to it?
Perhaps they should have had some regulation. But one thing is for sure, there would have been no bad loans in the first place had not Congress under Clinton made it mandatory for banks to make risky loans to unqualified buyers or else face stiff penalties.
So then the banks sold these loans---- the good from qualified buyers and the bad from unqualified buyers--- a financial product they had never had to deal with since this came from the Feds and was supposed to be guaranteed--- to insurance companies, brokerage houses, investment banks who then repackaged them and sold them to other institutions worldwide.
Bad loans would never have existed to such an extent had they not been mandated by the Feds for social engineering.
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