Right's frame: How the Democrats Created the Financial Crisis: Kevin Hassett

[spotbird]

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

....

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.
.....

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

[rusty charly]

1. Typical Republican Desperation

[mrcheerful]

2. Someone forgot to inform the numb nut

that in 2005 democrats had nothing to say in either house. Remember Bush rubber stamp congress? Or is this the rights selective memory syndrome showing up yet again?

[Indenturedebtor]

4. It will work on their base of mindless drooling vegetables

"Republicans have electrolytes. It's what plants crave."

:eyes:

[FVZA_Colonel]

9. I'll go with "selective memory."

[bemildred]

3. "Gee, who could have predicted this?"

"Nobody expected a non-traditional hijacking."

[katty]

5. typical ReTHUG, they f***k YOU-then claim YOU messed up

[Tandalayo_Scheisskopf]

6. Uh-huh.

And the AEI, who Kevin "Dow 32,000" Hassett works for, came out against McCain's bill to rein Fannie/Freddie in.

So what we have here is a convoluted mess, like most Washington messes, and ultimately, it was a failure by the regulatory agencies that oversaw those companies and others. Said agencies are administration entities, not legislative, and those agencies had plenty of regulatory tools at their disposal, tools they didn't use. In fact this all goes to the fact that this administration has rarely, if ever, used its powers under standing laws and regulations to mitigate the worst behaviors of the business community as a whole.

Now please, stop dragging rotten carcasses of dead repuke memes back here, ok? They stain the carpets and stink the place up terrible.

[FVZA_Colonel]

7. It's actually "Dow 36,000."

[Number23]

8. What the ****??

"Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter."

This was in 2005, a year before the Dems took over Congress and when Repubs passed any and everything they wanted to. What in God's name is this fool talking about??

[HughBeaumont]

11. A buncha horseshit. But since the Puke-favoring media controls the message, it's gospel.

I wouldn't be surprised to see him do a guest spot on the Hutchison/Forbes/Welch Networ . . . er . . . CNBC.

[creeksneakers2]

10. The Republicans are pulling a massive con

and I can't find anyone standing up to them.

Fannie Mae and Freddie Mac did not cause the latest crisis. Fannie and Freddie buy mortgages and mortgage backed securities on the open market, then guarantee the loans. Money is raised by selling bonds.

If Fannie or Freddie sold any loans to private enterprise, they'd be backed by the guarantee. No private entity has lost a dime to Fannie or Freddie. None will, since the US government is standing behind them. The government bailed Fannie and Freddie out, which exposes the public to incredible liabilities, but as far as I know, no public money has been lost yet.

The crisis is a result of the refusal of financial entities to lend money to firms from which the financial solvency can't be determined. Fannie and Freddie have nothing to do with this.

The Republicans want to blame the crisis on Democrats and the government as opposed to Republicans and free enterprise. They are using a twisted logic to pull this off. They say that because Fannie and Freddy purchased mortgages, they made the mortgage business more profitable for the outfits selling the shady loans. In fact, Fannie and Freddie mostly bought up legitimate loans and the private entities bought up the riskier loans because there was more of a markup on them. The Republicans say that its Fannies fault that private entities chose to buy risky loans. It makes no sense at all.

Its as if there was a disreputable watch vendor. The vendor sold good watches at a reasonable price and also sold fake Rolexes cheap. If one customer bought all the good watches at a reasonable price and other customers bought the fake Rolexes, by the Republicans reasoning it would not be the fault of the guy who sold the fake Rolexes, or the people who bought them if money was lost. It would be the fault of the legitimate customer because the vendor profited off the legitimate customer and that helped the vendor stay in business from which he sold fake Rolexes.

Its nutty, but the GOP keeps repeating this BS and if nobody stops them they'll soon repeat it enough to convince everybody and the Democrats will wind up being blamed for all this. I wish Democrats would speak up. Of course, nobody wants to be seen defending Fannie and Freddie but the alternative is much worse. Its easy to ignore now because most people are blaming the Republicans but that will soon change if nothing is done. The media is buying into blaming Fannie and Freddie.