Proof the Economy isn't Bush's Fault - From the NYTs of All Places

[James]

Proof the Economy isn't Bush's Fault - From the NYTs of All Places

Bookmark this page, so when the people you know who are “drinking the Obama Kool-Aid” tell you it was all Bush’s fault, print this and give it to them.

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Also it is well documented that President Bush and Senator McCain (and other Republicans) tried numerous times to stop this policy, and each time were stopped by threatened filibusters and other tactics. This policy was directly responsible for hundreds of billions of dollars in losses at Fanny Mae and Freddie Mac, which caused the “house of cards” to fall and confidence to plummet.

From Humanevents:

On November 12, 1999, President Clinton repealed the Glass-Steagall Act, which for 55 years had prevented banks, the nation's lenders, to get into the so-called "investment banking" business (stock brokers). With lots of pressure in Congress by the Democratic members of the New York contingent, the Senate and House caved in and trashed a law which had provided stability in both the banking industry and on Wall Street.

What follows next reads like a third-rate screen play.

Banks jumped into the fray, and, encouraged by the Wall Street Democrats, began buying up and merging with Investment Banks, swapping assets, creating new loan "instruments" and weakening both independent systems.

Also in 1999, Clinton appointed Franklin Delano Raines, a Harvard Law School graduate and his Director of the U.S. Office of Management and Budget (OMB), to become the CEO of the obscure but powerful Fannie Mae giant GSE (Government Sponsored Enterprise), which had been "privatized" and listed on the New York Stock Exchange.

Mr. Raines immediately went to work lobbying Congress for less regulation and more "flexibility" in creating the massive dodgy-loan portfolio of under-qualified home loans to fellow minorities which would continue to grow and was encouraged by Barney Frank, another...


http://www.notoriouslyconservative.com/2009/03/proof-economy-isnt-bushs-fault-from.html

[Decker]

Freddie/Fannie did not cause the worldwide economic collapse.  The collapse was helped along by subprime loans issued by private, corrupt, lenders.  FM does not issue subprime loans to anyone.  FM only purchases loans from private lenders who have already underwritten the loans.

In other words it's the same old story-the financial insiders act like they're at Vegas with other people's money and then they socialize their "costs" of doing business when they crash inevitably.  An old formula-time tested-it happens to work. 

The repeal of the Glass Act was a republican venture started by Phil Gramm - see the Gramm-Leach-Bliley Act.  The democrats caved.  What a surprise.

Sen. Russ Feingold didn't cave.  He saw the Gramm bill for what it was.  He's still the finest politician in the country.

Would Glass/Steagall have changed the development of the collateralization of loans?  Maybe.  It sure would have increased transparency.  But that guarantees nothing.

While it is politically expedient to claim that home loans to poor minorities caused the collapse of the housing market, that's not what happened.  How are home loans to minoritiese responsible for the poor decision making seen in the financial system. Who forced Bear Stearns to run with an absurd leverage ratio of 33:1, that instructed Bear Stearns hedge-fund managers to blow up hundreds of millions of their clients money, and that required its septuagenarian CEO to play bridge  while his company ran into trouble. Which provision of Fannie/Freddie's charter required Lehman Brothers to borrow hundreds of billions of dollars in short-term debt in the capital markets and then buy tens of billions of dollars of commercial real estate at the top of the market. I can't find it. Did AIG plunge into the credit-default swaps business with abandon because ACORN members picketed its offices? Please. How about the hundreds of billions of dollars of leveraged loans—loans banks committed to private equity firms that wanted to conduct leveraged buyouts of retailers, restaurant companies, and industrial firms? Many of those are going bad now, too. Is that Bill Clinton's fault?
http://www.newsweek.com/id/162789

Can we dispense with this notion that home loans to the working poor brought the USA to its economic knees?