McCain Explains Government’s Role in Current Financial Crisis
John McCain today (via The Corner):
The financial crisis we’re living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.
These quasi-public corporations led our housing system down a path where quick profit was placed before sound finance. They institutionalized a system that rewarded forcing mortgages on people who couldn’t afford them, while turning around and selling those bad mortgages to the banks that are now going bankrupt. Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington’s failure.
Two years ago, I called for reform of this corruption at Fannie Mae and Freddie Mac. Congress did nothing. The Administration did nothing. Senator Obama did nothing, and actually profited from this system of abuse and scandal. While Fannie and Freddie were working to keep Congress away from their house of cards, Senator Obama was taking their money. He got more, in fact, than any other member of Congress, except for the Democratic chairmen of the committee that oversees them. And while Fannie Mae was betraying the public trust, somehow its former CEO had managed to gain my opponent’s trust to the point that Senator Obama actually put him in charge of his vice presidential search. {Johnson resigned over the controversy –ed.}
This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary and bonuses for services rendered to Fannie Mae, even after authorities discovered accounting improprieties that padded his compensation. Another CEO for Fannie Mae, Mr. Raines, has been advising Senator Obama on housing policy. {This charge is based on Washington Post reporting and the Post now says it’s a stretch, apparently, it is doubting its own veracity — ed. This even after Fannie Mae was found to have committed quote “extensive financial fraud” under his leadership. Like Mr. Johnson, Mr. Raines walked away with tens of millions of dollars. {All links added — ed.}
Interesting how John managed to keep his economic adviser Phil Gramm’s name out of his tirade since it was Phil’s direct actions that got us into this mess.
Google: Enron Loophole
This speaks volumes…. The Real Culprits In This Meltdown INVESTOR’S BUSINESS DAILY Posted 9/15/2008 Big Government: Barack Obama and Democrats blame the historic financial turmoil on the market. But if it’s dysfunctional, Democrats during the Clinton years are a prime reason for it. Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the “trickle-down” economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend. But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions. Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties. The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.” Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck. And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America. As soon as Clinton crony Franklin Delano Raines took the… Read more »
Marc,
I’m glad that I wasn’t the only one who caught the Post’s reversal.
In July, the Post wrote that former Fannie Mae CEO Raines had “taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters” in the lead paragraph of a major story describing Raines’ rehablitation to power after being caught in a billion dollar accounting scandal.
Now the Post is downplaying the relationship. Either the newspaper exaggerated Raines’ “rehabilitation” in the original article by implying to readers that he had strong ties to Obama or they’re trying to ensure that Obama isn’t hurt by the article. Either way, it only damages the Post’s credibility.
Everyone who is paying attention knows that Obama has been in bed with Fannie Mae for a long time.
In addition to Raines involvement in Obama’s campaign, Obama chose yet another Fannie Mae CEO, James Johnson, to lead his vetting effort of VP prospects.
Obama is the second largest recipient of Fannie Mae and Freddie Mac campaign contributions (second only to Dodd who chairs the Senate banking committee) and when broken down by yearly average, Obama is the single largest recipient of Fannie Mae and Freddie Mac campaign cash.
So much for “Change”.
Greg,
In 2005, John McCain called for a major reform of Fannie Mae and Freddie Mac in a very public speech delivered on the floor of the Senate.
The Democrats prevented any attmept to reform them.