[OFB Cafe] How the Democrats Created the Financial Crisis

[Fred A. Miller]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

" ...

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 <http://banking.senate.gov/public/>. The bill gave a regulator
power to crack down, and would have required the companies to eliminate
their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In
2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out
of the Fannie and Freddie clouds, burying many of our oldest and most
venerable institutions. Without their checkbooks keeping the market
liquid and buying up excess supply, the market would likely have not
existed.

But the bill didn't become law, for a simple reason: Democrats opposed
it on a party-line vote in the committee, signaling that this would be a
partisan issue. Republicans, tied in knots by the tight Democratic
opposition, couldn't even get the Senate to vote on the matter. YES!
John McCain DID co-sponsor this legislation!

That such a reckless political stand could have been taken by the
Democrats was obscene even then. Wallison wrote
<http://www.aei.org/publications/pubID.22514/pub_detail.asp> at the
time: ``*It is a classic case of socializing the risk while privatizing
the profit.* The Democrats and the few Republicans who oppose portfolio
limitations could not possibly do so if their constituents understood
what they were doing.''

...."

-- 
"While addressing the [GOP convention], Sarah Palin criticized
Barack Obama for not having enough 'specifics.' Obama was
reportedly angry about the claim, but didn't say
exactly why." -Conan O'Brien