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Saturday, October 04, 2008
The genesis of, and last clear chance to avoid, the national crap sandwich
The Townhall.com software and I are not good enough friends yet for me to have successfully embeded this video in a guest-post there, but I can do that here:
The video, from the Republican National Congressional Committee, is pretty good in pointing out Democrats who were simultaneously defending Freddie Mac and Fannie Mae, blocking reform efforts, and taking their contributions. It doesn't adequately credit either John McCain or Dubya for their efforts to bring attention to the growing problem. Every time Obama, Biden, or their proxies rail about GOP blame for the crap sandwich we just had to eat, the one-phrase answer should be: "Federal Housing Enterprise Regulatory Reform Act of 2005."
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[Copied here for archival purposes on November 5, 2008, from the post linked above at HughHewitt.com.]
(Guest Post by Bill Dyer a/k/a Beldar)
The NRCC has released an excellent campaign-season video, but unfortunately I can't manage to properly embed it here, so you'll have to follow this link to watch it.
The only improvement I could imagine for this spot would be at least a prominent mention of Senate Bill 190 in the 190th Congress, the Federal Housing Enterprise Regulatory Reform Act of 2005. First introduced on January 26, 2005, its first listed purpose was to establish "an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac)."
On May 25, 2006, Sen. John S. "Cassandra" McCain (R-AZ) — alarmed by intervening recent events — joined the original three GOP co-sponsors of S.190 and went on record predicting the exact crisis we're in now (boldface mine):
Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
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.
For a combination of reasons — reasons that reflect especially poorly on Democrats (who would not add bipartisan support and, as the ad shows, were vigorously denying any problems and taking contributions), but also on other Republicans (some of whom were also receiving contributions from Fannie Mae and Freddie Mac) — John McCain's call for reform was not heeded. Nor were similar calls for reform by President Bush. And the Federal Housing Enterprise Regulatory Reform Act died with the end of the 190th Congress when the GOP lost control of Congress.
Therein, friends and neighbors, lay the origins of the crap sandwich, and our last, best chance to have prevented the crisis which yesterday forced America to eat it.
Posted by Beldar at 08:16 PM in 2008 Election, Congress, Current Affairs, Politics (2008) | Permalink
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Comments
(1) Gregory Koster made the following comment | Oct 4, 2008 11:31:53 PM | Permalink
Dear Mr. Dyer: The trouble with citing the Federal Housing Enterprise Regulatory Reform Act of 2005, is that it didn't pass in a GOP-controlled Congress. When the original version of the c.s. failed last Monday, the GOP was perfectly within its rights to say, the Democrats have the majority, let them pass it. Consistency and basic honesty dicate we say them the same about FHERA of 2005. The GOP was in the majority and did not pass it. It is also worth noting that the 1995 Community Reinvestment Act amendments, which planted many of the seeds of destruction in this blowup, was pushed for by Billyboy---but passed by the then brand new GOP majority, which could not claim long years of being in power and hence corrupted.
Finally, we don't want to yell too loudly about FHERA's merits, as it would reflect well on the sponsor of the bill: Chuck Hagel, already writing his opening remarks for his testimony in his confirmation as Secretary of State to The One next year. Good God.
Vote for the Grumpy Old Man.
Sincerely yours,
Gregory Koster
PS--Unless Hugh is paying you big bucks, come back after the election. The level of comments, left or right, on Hugh's blog would make a maggot happy, but no one else.
(2) stan made the following comment | Oct 6, 2008 10:31:57 AM | Permalink
Greg,
I missed that time when the GOP had 60 votes in the Senate to overcome a filibuster.
Beldar,
Kurtz runs an article on media failure to report on the pending crisis. http://www.washingtonpost.com/wp-dyn/content/article/2008/10/05/AR2008100502562.html
I think something that has been missed in the housing bubble is the fact that the bubble missed most of the country. If you didn't live in California, New England, Florida condo country, or Vegas, you probably didn't experience the kind of run up in values that would feel like a bubble.
I confess to thinking that the bubble areas would likely see a correction, but didn't anticipate that the correction's impact would spread so far. Of course, I didn't know how toxic the credit ratings were or how irresponsible the rating agencies and financial firms that bought the junk.
(3) Carol Herman made the following comment | Oct 6, 2008 8:01:48 PM | Permalink
Ah, the bail out. When you pull the rip cord and "eject." Seems McCain didn't know what the voters were saying, here. But he did exit Bush's "big pow wow meeting" ... Which did panic the dems. And, Paulson. Who needed to have a "private office" to themselves. As they hunkered into the windowless Roosevelt Room.
What's up with McCain?
Right now, it's hard to tell who is gonna win in November. But McCain's numbers have been shooting down, just like a pilot who pulled the rip cord; thinking his ass is saved. While the plane "crashes."
So at least, as a topic, this may yet get analyzed after 11/4?
What surprises me? How did McCain escape scrutiny?
Seems like a lot of the Bush staffers have raced over to McCain. And, got "absorbed." (Did you know that ENRON staffers got absorbed by Bush? And, hired to his staff in DC?)
How come, when so many voters got so angry; not only didn't McCain listen, he didn't call Rudy Guiliani, either.
Guiliani's reputation was made by putting Michael Milken in jail.
Now? Bush staffers are convincing McCain to "go negative." And, also to send Palin out into "lock & load" mode.
You'd have to be "old enough to know this." But in 1964, Reagan's first foray to the republican party, Reagan gave the best pitch for Goldwater. Goldwater, however, was a real "lock & load" guy. So, he told Reagan to can "the good feelings."
Goldwater than took a bath. And, LBJ won in a landslide.
However, we got deeper into Vietnam. A country without ports. So? We sent men in. And, then couldn't even get them any supplies.
This gave rise to container shipping. (In the same way WW2 gave rise to penicillin.) Benefits people don't expect.
While Vietnam became a boondoggle.
Later, for political reasons, Nixon would cancel the draft. And, now Nixon doesn't even get credit!
Politicians play these games.
While McCain? He's not really so close to victory. He seems like a guy who gets mad, easily. And, who has a tin ear, just like Bush.
So, if you're frustrated? Believe it or not, it's the Bush team that's pushing McCain. And, yes. McCain can lose. He can even "blow up" on ya.
If you think Obama can't handle McCain in a debate? We get to see more, t'marra.
But this stuff about Ayres, is so old, it's just another example of the dirt McCain wants to throw. Since it's old dirt. What an old man.
Too bad he didn't just say that he wasn't going to vote for the bail out. But there were enough democrats who could.
I think if he had done that, he wouldn't be in the trouble he is in, today.
What kind of trouble?
Just as the stock market prices drop ... And, you could consider this "just paper losses." McCain's stock has dropped. He's gone from a much better position to one where he doesn't seem to be attracting 50%.
Good to remember, in our democracy you need to do "better than half." And, you win.
McCain seems no more "in touch" than Bush. And, I think this country is sick and tired of Bush.
Does McCain also hurt Palin? Well Reagan survived Goldwater! Reagan, in 1966, became governor of California. And, ran for two terms.
Today, Sarah Palin IS in her first term as governer of Alaska. And, she can certainly win a senate seat from Alaska, "afta" her two terms are complete.
She has a good future in American politics.
But for the democrats? Wow, has McCain been their biggest bonus! And, nobody seemed to know McCain was such an oddball character. He's been on stage since 1988, when, in New Hampshire, through hanky-panky, the elder Bush "won" the primary. McCain? Where anger was needed, he seems, instead, to be a mini-me of the Bush family.
Who knew?
(4) Gregory Koster made the following comment | Oct 9, 2008 6:32:33 PM | Permalink
Dear Stanley: It is the business of the majority to govern. Get on with it, should be their battle cry. If a filibuster does happen, McC is in a remarkably weak position with his "Gang of 14" compromise on filibustering. To be sure, said compromise is not strictly applicable to regular bill filibusters, but McC would still look silly if ANY bill gets filibustered. That is what the nasty word "compromise" means. But in any case, the lack of 60 votes does not matter, as THOMAS will tell you:
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN00190:@@@X
The bill never made it out of committee. I must have missed the Senate rule that allows filibusters in committee, a committee that at that time had a GOP majority. It is not enough to mean well feebly. This was a time for McC's vaunted "reaching across the aisle" skills to go into action. He made a choice, that was easily defensible at the time, but looks less so now, to move on to something else. Finally, when Chuck Hagel tried again in 2007, the bill languished in Committee. No more Democratic filibusters with a Democratic majority. All that's needed is reaching across the aisle.
So far as your argument about "most of the country" missing the bubble goes, it is silly. The areas you name are enough all by themselves to get a bubble going. There was a whale of a lot of dough in those areas. Now there's a whale of a lot of lousy mortgages. What's your next stunt: whoever wins the biggest geographic area of the nation is the next Prez? If that's true, no wonder you bawl so loudly for Palin. She'll bring Alaska in, and under the Stanley Electoral College, McC will cruise home. Bah.
Sincerely yours,
Gregory Koster
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