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September 24, 2008
Bloomberg Explains How Corrupt Democrats Caused Financial Crisis
Bloomberg.com, hardly known for its right-wing point of view, lays out in simple terms what — and who — caused the current financial meltdown:
The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.
The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.
There were those who saw this train wreck coming years in advance and tried to stop it, including John McCain. After Alan Greenspan warned in 2005 that the situation placed "the total financial system of the future at substantial risk,"
a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.
That such a reckless political stand could have been taken by the Democrats was obscene even then. [Peter] Wallison wrote at the time: "It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Yet these socialists try to spin the mess they made as the fault of capitalism, and call for more socialism as its solution.
On a tip from Burning Hot.
Posted by Van Helsing at September 24, 2008 8:41 AM
Comments
Great explanation in black and white. Rush's version is not fact-ish enough. I have struggled to explain this to my S.F. lib in-laws but they just click their tongues at me, their troglodyte Repub son-in-law.
This issue is confusing enough so that the public's default conclusion will be that it's Bush's fault. It also has something to do with money, which is a Republican area. This has been the #1 front-page item on HuffPo for weeks, so they have already successfully twisted this into their "McSame" story.
Let's ensure that Dem culpability is clearly and loudly proclaimed on this increasingly election-endangering issue.
Posted by: Air2air at September 24, 2008 9:04 AM
"But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years. "
Funny how I find this little nugget on this site, however, when I was reading the paper this morning, the headline in the paper was "Obama, McCain react cautiously: McCain campaign manager financially linked to Freddie Mac."
WTF!!!! not one mention of how Obama is tied in deeper to the Freddie/Fannie debacle. This is ridiculous, I can't believe how far in the tank the media is for Barry Barack Insane Hussein Soetero Oprah-Ma Uh-Bama bin Biden. I just cannot wait until this election is over and McCain wins, so we can go back to the MSM just bashing the president, not trying to coronate him.
Posted by: Chad at September 24, 2008 9:10 AM
Apparently by a 2:1 margine people believe that republicans are responsible for the mortagage crisis. This represents a potential landslide of ignorance that may determine the general election, especially if more seismic recessionary events occur over the next month. This level of ignorance is a testament to the strength of liberal propaganda and tenacity, and to the very large number of people who prefer to insert their heads into their (or some leader's) posterior.
Rush put this very well today when he said that we are teetering between socialism or capitalism.
Posted by: Fiberal at September 24, 2008 11:44 AM
"Apparently by a 2:1 margine..."
When I read this I thought it said "migrain". Maybe it's just the way I feel about the finger-pointers and blame-throwers.
Posted by: KHarn at September 24, 2008 1:27 PM
Excuse me, need to butt in again. BIG OOPSIE on the "Bloomberg said" typo you fellahs made, I know it wasn't intentional, that you'd never just omit parts of an article, or ascribe comments to the wrong person, unless you were just in an awful hurry, trying your damnedest to just do your dang best. For your country, no less!
So anyway, I'm here to help:
It wasn't exactly that hippie Bloomberg who wrote this article, fellow Cartmans, it was actually written by a paid McCainanite. Here's the direct copy/paste telling who REALLY wrote the article:
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
Y'all need to watch yourselves, now, or somebody else might do it for ya.
Posted by: Carly Corday at September 24, 2008 4:43 PM
And of course, if someone connected to the McCain campaign wrote it, then it must be false. Thanks for the clarification.
The quintessential liberal debating tactic -- try to discredit the messenger while doing nothing to address the issues raised.
Posted by: ent at September 24, 2008 6:10 PM
The demacreep party of socialists demacreeps i mean they are absolutly positivly without any morals and are as unsruplous as ever SCREW THE DEMACREEPS
Posted by: Spurwing Plover at September 25, 2008 6:57 AM
I am getting so sick of the republicans trying to play nice on this. McCain should have been talking about this in the damn debate because there is no other way it will make it to the mainstream of america. The Libs are working their magic of lieing while we take the moral high ground right to defeat? No way!
-- Robert
Posted by: Robert Simmons at September 28, 2008 9:58 AM
ent: "And of course, if someone connected to the McCain campaign wrote it, then it must be false."
Actually, he didn't say that and I don't even think that was implied. In fact, their mis-quote is a huge journalistic mistake and it's right to correct it.
ent: "The quintessential liberal debating tactic -- try to discredit the messenger while doing nothing to address the issues raised."
How ironic that the very statement you use to condemn this tactic is, itself, the same tactic.
Posted by: flobear at September 28, 2008 2:40 PM
I would have to disagree. If Carly wasn't trying to imply something about the credibility of the source, then there would be little point in bringing it up. The sarcastic prose makes it quite clear that she thinks Van was trying to mislead.
You have a point about the title, but the first sentence begins with "Bloomberg.com, hardly known for...", which makes it pretty clear that he's talking about the website and not the person. If I mention that I read something on "Drudge", I don't necessarily mean that it was from Matt Drudge himself.
I would also have to disagree about the pot and the kettle. Mine was not an ad hominem attack. I was pointing out a flaw in her implicit logic that the content of the article should be regarded differently becauase of who wrote it. If there are inaccuracies in the article, then let's hear about them. As for me ignoring the issues, none have been raised, so I can't very well address them; I don't have a problem with the original Bloomberg article.
(Note how I just said "Bloomberg". I'll bet that you didn't assume that I meant Michael.)
Posted by: ent at September 28, 2008 9:38 PM
