Re: Democrats embarrassing display of the Clintonesque denial techniques

On Mon, 5 Jan 2009 21:43:37 -0800 (PST), mg <mgkelson@xxxxxxxxx>
wrote:

On Jan 5, 5:24 pm, Jim10...@xxxxxxxxx wrote:
On Mon, 5 Jan 2009 15:54:01 -0800 (PST), mg <mgkel...@xxxxxxxxx>
wrote:



On Jan 5, 12:44 pm, Sordo?<sordo?@prolefeed.org> wrote:
. . .

The tape clearly shows President Bush warning of the dangers in April
2001 and again in 2003, upgrading the problem as possibly going beyond
housing.  Calls by the White House to Congress to create an agency to
regulate and supervise the two GSE?s were met with resistance from the
House Finance Committee Chairman, Barney Frank, who vehemently denied
any problems with the two entities saying there was ?no crisis.? The
requested legislation for controls was blocked by House Democrats and
killed.

Meanwhile, in April, 2005, Federal Reserve Chairman, Alan Greenspan
pointed out the dangers to the entire government financial system if the
GSE?s were not reined in and sanctioned.  But in the Senate, also in
April, 2005, Charles Schumer a liberal Democrat senator from New York,
testified at the Senate Banking Committee hearing that Fannie Mae and
Freddie Mac ?did a very, very good job.?

Then in the Senate in May, 2006, Sen. John McCain worried that he had
been concerned about the regulatory structure that governs Fannie and
Freddie which needed reforms without delay.  Legislation for action at
that time was also killed by the liberal Democrats.

I wonder why the Republicans didn't pass legislation fixing the Fannie
Mae and Freddie Mac problem?

You did not watch the items posted here.  Such efforts were blocked.
It takes more then 60 in Senate to pass a law and not all in either
party will stick with their party on all policy.  Certainly not all
Bush appointees and GOP legislators supported changes as many were
also from financial industry or they were being paid massive amounts
of money by those institutions.  Financial institutions became a place
for members out of Congress or a job with administration to go to make
millions.  Watch where some Republicans go in coming months.  It is
not all one party.  But, Dems did dig their heels in the deepest on
bad lending practices.  It is not just the number of loans Freddie and
Fannie made.  It was their size in the market and how their actions
and CRA requirements and enforcement pushed all lenders to become more
creative and competitive.  

When the market is growing in new directions (creative lending to
marginal candidates), how can a lender survive by insisting they will
follow old standards.  They will be left behind competitively and they
will be sued for redlining.  And they will be nailed by CRA
requirements including being hauled up before courts and Congress.  DC
pulled out many tens of millions of dollars from such lenders doing
just that.

At least you responded.  More then I recall in the past.

I've never heard anyone that, I personally, consider reliable claim
that Fanny and Freddie were the cause of the meltdown, although they
were part of it.

Then we agree. I believe the causes are very complex and go to our
desire to have a growing economy and have more then we can afford for
50 or so years. The demand for such has grown over time and
institutions accommodate us including banking and government. Fannie
and Freddie and CRA were very important elements in amplifying the
problem and accelerating it's growth. But, without investment
bankers, politicians, and others complicit in leveraging flawed debt
to hide the rot, the mess would have collapsed much sooner is my
guess. A lot of hands in this mess. But, a few politicians like
Barny Frank have had their hands in many different segements of the
problem. The problem would have been much less severe had we not had
Frank, the CBC and others insisting there was no problem and
preventing any truth to come to the issue.

Politicians would have suffered is my guess had they taken responsible
action 2, 5, or even 10 years ago on this mess. Action would have
depressed housing and necessarily reduced the percentage of families
owning homes. There would have been a price to pay in the economy is
my guess.

The great problem we have is we have to find some sectors that will
help fuel our economy providing jobs and wealth. Manufacturing has
been in decline for decades. Service industry has seen many IT and
related jobs move offshore. Housing was the big engine for Clinton
and Bush and the nation.

The problem now is housing is probably still overvalued compared to
historical relationship between inflation and housing trends.
Increasing the number of homeowners above sustainable trends is what
drove housing (and lumber, concrete, and other building materials) up.
It will be painful but we should allow all of these foreclosures to
procede and only those who can afford new loans, based on real lending
criteria should be allowed to refi. Government interferance is the
problem once again.

If memory serves, Paulson and Bernanke actually said
they weren't in a Congressional hearing on the bailout. My impression
is that the following were probably the main causes:

1. Bush administration allowing investment banks to leverage at ratios
up to 40 to 1.

The leveraging was a big element. I don't know where it started, who
were the big players in the move, or specifically who decided what.

2. Bush administration blocking efforts by the states to put an end to
the predatory, unregulated lending practices.

I have never seen or heard of any big push by states. As a reader of
WSJ, IBD, business section of three local papers, and having a real
interest in business, I can't recall ever seeing news on this. I
don't know what states were proposing. Was it really better?

I find the noise calling people who took loans they could not afford
as 'victims' is a bit silly. A niece and her boyfriend got into this
mess down in Louisiana buying a 130k house with subprime loan. She
and he had no work consistent work history or income. If there is a
victim in that purchase, it is the purchasers of that loan and others
who believed they were buying a package of good paper. Obama will be
president soon. If this really was a major element in this mess, can
we look forward to him bringing cases forward on such lending
practices? I would hope so and believe Bush should have pursued the
matter.

3. Greenspan's mismanagement of the Fed.

I agree and was saying for years here the government was trying to
regulate market swings and not serve their stated purpose. I believe
it all changed when Bush 1 lost and blamed Greenspan for decisions
that made economic performace ripe for Clinton team to claim "It's the
economy, stupid". Just an observation.

In regard to passing the GSE reform bill, my understanding is that it
doesn't take 60 votes to pass a bill unless there is a filibuster. The
Republicans had control of the congress and the White House for years,
so I still don't understand why they didn't put it up for a vote once
in all those years.

Did you really watch the House and Senate hearing video's with Waters
and others battering federal officials on their efforts to report
truthfully?

Both Republicans and Democrats agreed about the need for for a
stronger, more powerful regulator the the GSEs. The hangup was that
The Republican-backed measure put a poison pill in the legislation
that would require Fannie Mae and Freddie Mac to sell portfolio assets
unrelated to their mortgage securities businesses.
http://www.allbusiness.com/government/532756-1.html

I agree with some of your comments. But, I believe you are seeing
things thru political filters seeking to place all the blame on
parties you don't agree with. That seems to be at the root of any
effort to find remedies. My view is that until we can see things for
what they are, and not how they fit our political filters, we can't
fix anything.

The same people who helped create this mess and profited from it are
supposed to fix it? Sorry, I believe we are in a bigger mess now as
we try to move forward.

Until we recognize that some home buyers are unsuitable to purchase a
home based on income, history of saving and paying their bills, and
other factors; we can't come up with fixes. Politicians telling
people they were victims, while still insisting they have the 'right'
to buy a home, is a lie. It is pandering.
.

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