it seems Bruce and I have been reading different sources to reach the same conclusion. It was not a failure of government to regulate which caused the current problems facing Wall Street, but an excess of government intervention which provoked it.
Bruce posts my friend Rich Miniter’s piece which I had not yet seen, but addresses many of the issues I’ve been learning about these past seventy-two hours or so.
A bill passed by a Democratic Congress and signed by a Democratic President (Jimmy Carter–can he do anything right?), the Community Reinvestment Act of 1977, basically forced banks to make loans to would-be home-buyers without good credit histories. Another Democratic President, Bill Clinton, expanded on the bill.
The two institutions at the heart of this crisis are Fannie Mae and Freddie Mac are GSEs. Some media sources sometimes fail to define GSE. Well, it means Government Sponsored Enterprises. Let me repeat they are Government Sponsored Enterprises. They are not the free market.
Republicans have been calling for reform of Fannie Mae and Freddie Mac throughout the Bush Administration, with the President himself calling for reform 17 times just in 2008.
As I mentioned before, John McCain co-sponsored legislation in the 109th Congress designed to fix the problem. Meanwhile, as per the video below, House Democrats thwarted reform while Republicans warned of the upcoming crisis.
And there is Barney Frank in 2004, saying all is hunky-dory at Fannie Mae.
It’s kind of like a guy who’s enjoying the warmth and comfort of a roaring fire in a nice house. People are feeding the fire with logs bought on government credit. The Republicans suggested we stop feeding the fire and put a grate in front of the fireplace. Led by Frank, the Democrats said we don’t need one, becoming almost belligerent in their opposition.
The Republicans, to their discredit, didn’t press the manner.
But, now the fire has grown out of control and the house is burning down. And the Democrats are blaming those who tried to contain it before it got out of hand.
Yet, if they bothered to heed the warning signs, the house will still be standing and we’d still have a fire in the fireplace.
More than anyone else in the U.S. House of Representatives, Barney Frank is responsible for the Wall Street meltdown. He should be ashamed of himself and should resign his position as Chairman of the House Financial Services Committee and take responsibility for the mess he helped create.