Dems ignored the early warnings

Back in 2003, during hearings on a Bush Adminstration proposal to do a better job regulating Freddi and Fannie, Barney Frank, who is now in charge of the committee overseeing this mess, said the following:


Hearing from September 2003 on an administration proposal to alter the regulation of GSEs like Fannie Mae and Freddie Mac. See Congressman Barney Frank's opening statement, It's rather amusing. Here's an excerpt of his opening statement:

I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. WRONG We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury.WRONG I must say we have an interesting example of self-fulfilling prophecy. Some of the critics of Fannie Mae and Freddie Mac say that the problem is that the Federal Government is obligated to bail out people who might lose money in connection with them. I do not believe that we have any such obligation.WRONG And as I said, it is a self-fulfilling prophecy by some people. So let me make it clear, I am a strong supporter of the role that Fannie Mae and Freddie Mac play in housing, but nobody who invests in them should come looking to me for a nickel--nor anybody else in the Federal Government.WRONG And if investors take some comfort and want to lend them a little money and less interest rates, because they like this set of affiliations, good, because housing will benefit. But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own. Now, we have got a system that I think has worked very well to help housing.WRONG The high cost of housing is one of the great social bombs of this country. I would rank it second to the inadequacy of our health delivery system as a problem that afflicts many, many Americans. We have gotten recent reports about the difficulty here. Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable,WRONG both in general through leveraging the mortgage market, and in particular, they have a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing, and that is what I am concerned about here. I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. WRONG WRONG WRONGI worry frankly that there is a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. WRONGI think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn't bail them out.WRONG But the more pressure there is there, then the less I think we see in terms of affordable housing.

Pay special attention to the line: 'I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals'.

Basically, what he meant was 'we have not done enough to force banks to make bad loans'.

Also: The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see.

WRONG - WRONG - double WRONG.

Now this guy is in charge of the House effort to 'fix' the problem. Which, in true Socialist style, they are trying to blame on a failure of Capitalism..... Grab your wallets..

Now - for McCain - who proposed the kinds of reforms we needed back then. You NEED to pin the tail on the Donkey here. This started under Carter, got worse under Clinton. Yes, the Repubs share some of the blame. But --- you MUST point our YOUR attempts to head this off.