It isn't often that public outrage peaks so close to an election, but this
is a rare moment in history when "we the people" can exact a price from the
political leadership that has duped, scammed and lied to them, contributing
mightily to the current financial mess.
At the Senate Banking Committee hearings Tuesday, Democrats, led by Chairman
Chris Dodd of Connecticut, seemed to think the mortgage crisis, aided and
abetted by Fannie Mae and Freddie Mac, AIG, Bear Stearns, Lehman Brothers
and other disasters, occurred on someone else's watch. Dodd, joined by
ranking Republican Richard Shelby of Alabama, criticized what he said was
the ad hoc nature of the government's response to the financial crisis and
complained that the Bush administration's proposals lack detail.
Some history is important. It was pressure from the Carter and Clinton
administrations that forced Fannie and Freddie to grant more high-risk loans
to people who otherwise would never qualify. They mostly wanted to promote
not only new home ownership numbers, but also more home ownership in the
minority community. That was a noble goal, but the cost turned out to be too
high.
Democrats would love to blame the Bush administration for a disaster they
mostly helped to create. But, according to the White House, as early as
April 2001, the administration warned that the size of Fannie Mae and
Freddie Mac was "a potential problem," because "financial trouble of a large
(government-sponsored enterprise) could cause strong repercussions in
financial markets, affecting federally insured entities and economic
activity." As recently as June of this year, President Bush asked Congress
to take the necessary measures to address growing foreclosures. "We need to
pass legislation to reform Fannie Mae and Freddie Mac," he said. In July,
Congress passed reform legislation, but it was too late.
It is an affront to the nation that some of the people who brought on the
crisis (and financially and politically benefited from the status quo) were
asking the questions at the Banking Committee hearing. They should have been
in the witness chair. Dodd said the crisis was "entirely foreseeable and
preventable." Then why didn't he try to prevent it? He should have been
answering questions about the PAC contributions he received from Fannie Mae
and Freddie Mac, (according to opensecrets.org, he's the Senate's no. 1
recipient of campaign contributions, $133,900, Barack Obama is no. 3,
$105,849), his sweetheart Countrywide Financial mortgage rate and whether
they influenced his inattentiveness to the growing mortgage crisis.