Sunday, September 28, 2008

Frank's fingerprints are all over the financial fiasco (aka Barney's Rubble)


By Jeff Jacoby, Boston Globe

"THE PRIVATE SECTOR got us into this mess. The government has to get us out of it."

That's Barney Frank's story, and he's sticking to it. As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by "bad decisions that were made by people in the private sector," Frank said; the country is in dire straits today "thanks to a conservative philosophy that says the market knows best." And that philosophy goes "back to Ronald Reagan, when at his inauguration he said, 'Government is not the answer to our problems; government is the problem.' " ...

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits they weren't the ones who "got us into this mess." Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?"

Frank doesn't. But his fingerprints are all over this fiasco. Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he'll find one suspect in the nearest mirror.

-Jeff Jacoby


Rep. Barney Frank, who now vilifies Republican House members for questioning a policy of throwing another $700 billion on the bonfire, insisted to the New York Times during the 2003 accounting scandal: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."Partners at the Destruction by John Fund, WSJ

Also see: Barney's Rubble, Wall Street Journal

Barney 'Rubble' Frank was busy demanding Affirmative Action in mortgage lending and playing grab-ass while the country's financial system bloated with debt then burst apart. Frank is the powerful Chairman of the House Financial Services Committee, so he could have averted this disaster. He did not. All he can seem to do now is demonize his victim, the American free enterprise system. Thanks Marxist Massachusetts voters and Congressional Liberal Douchebags.

43 comments:

Freedom Fan said...

Barney 'Mush-Mouth' Rubble: more of the precious legacy from Massachusetts. (The same screwed-up state that gave us Ted 'woman-killer' Kennedy, John 'ketchup boy' Kerry, and Gay Marriage.)

clif said...

The largest share of blame goes back to one man: Alan Greenspan. People mainly fault the former Fed chief, who once enjoyed a near-saintly reputation because of his reputed "feel" for market conditions, for ushering in an era of easy credit that accelerated the mortgage mania. But the much bigger problem was Greenspan's Ayn Randian passion for regulatory minimalism. Under the Home Ownership and Equity Protection Act enacted by Congress in 1994, the Fed was given the authority to oversee mortgage loans. But Greenspan kept putting off writing any rules. As late as April 2005, when things were seriously beginning to go wrong, he was saying that subprime lending would work out for the common good—without government interference. "Lenders are now able to quite efficiently judge the risk posed by individual applicants," he declared at the time. So much for his feel. New regs didn't get put into place until this past July—long after the crash had come, under Greenspan's successor, Ben Bernanke. The new Fed chief's "Regulation Z" finally created some common-sense rules, such as forbidding loans without sufficient documentation to show if a person has the ability to repay.

Greenspan has tried to defend himself repeatedly, though as bank after bank has failed he's retreated to the shadows. But in a 2007 interview with CBS he admitted: "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late." This, from a man who once told me, in an interview, that he most enjoyed scanning economic reports for hours in his bathtub. Now, with Tuesday's $85 billion bailout of AIG adding to the hundreds of billions the government has already put up to rescue Bear Stearns, Fannie Mae and Freddie Mac, this apostle of free-market absolutism has realized his worst nightmare. He has given us the largest government intervention into the markets since FDR. Heckuva job, Greenie.


So if Alan Greenspan had done his GOD DAMNNED FUCKING JOB we wouldn't be in this mess.

Oh right, he's a reich winger so it's OK

Voltron said...

Greenspan backs McCain in 2005

"Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

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.''

What happened next was extraordinary. For the first time in history, 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.

Different World

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. 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."

Voltron said...

Obama's advisor?

..."Obama has no background in economics. Who advises him? The Post says it's Franklin Raines, for 'advice on mortgage and housing policy."...

..."Mr. Johnson and Mr. Raines aren't the only figures in the subprime mortgage scandal to be connected to the Obama campaign. Jamie Gorelick, rumored to be an attorney general candidate in an Obama administration, was vice chairman of Fannie Mae from 1997 to 2003. Penny Pritzker, Mr. Obama's national finance chairman, has been described as "the Michael Milken of the subprime mortage crisis" for her pioneering of the packaging of bad loans with good ones at her now defunct Superior bank in suburban Chicago.

"The financial engineering that created the financial meltdown was developed by the Pritzkers and Ernst and Young, working with Merrill Lynch to sell bonds securitized by sub-prime mortgages," said Timothy Anderson, a retired bank consultant.

These connections -- and Mr. Raines' own words -- contradict the notion he was the peripheral figure to the Obama campaign Mr. Dobbs, Mr. Kurtz and Ms. Tumulty would like you to believe."

Voltron said...

Hey FF,

Did you see what the Obama campaign is doing in Missouri?

Obama’s Marxism steps out of the shadows and into the public realm
-By Judi McLeod Saturday, September 27, 2008

"imageWhile American politicians were trying to perfume the $700-billion Wall Street bailout with the smell of roses, and while average Americans were worrying about their future, something even more disturbing was in the works this weekend.

Marxism stepped out of the shadows to make its first bold public outing in St. Louis, Missouri.

Prosecutors and sheriffs from across Missouri have teamed up with something called the Barack Obama Truth Squad, announced KMOV’s News 4, at 6 p.m.

“The Barack Obama campaign is asking Missouri law enforcement to target anyone who lies or runs a misleading TV ad during the presidential campaign,” News 4 reported.

“They want to remind voters that Obama is a Christian who wants to cut taxes for those making less than $250,000 a year,” said KMOV reporter John Mills.

The Barack Obama Truth Squad is an initiative based on pure unadulterated Marxism, a Marxism where the end justifies the means. Through the Marxist dialectic, Marxists are taught to lie and to accuse their detractors of lying.

Let it be remembered that on Saturday, Sept. 27, 2008, Barack Hussein Obama became the only truth.

Check out the words of St. Louis County prosecutor Bob McCulloch (here), who says …”whether it is directly attributed to the campaign or to one of the soft money operations, if they’re not going to tell the truth, someone should step in and say `That’s not the truth, this is the truth’.”

Strangely enough News 4 did not include Gov. Matt Blunt’s charge that Obama’s campaign was making an “abusive use of Missouri law enforcement” in their televised coverage of the Barack Obama Truth Squad.

“St. Louis County Circuit Attorney Bob McCulloch, St. Louis City Circuit Attorney Jennifer Joyce, Jefferson County Sheriff Glenn Boyer, and Obama and the leader of his Missouri campaign Senator Clare McCaskill have attached the stench of police state to the Obama-Biden campaign,” Blunt said in an official statement released Saturday.

“What Senator Obama and his helpers are doing is scandalous beyond words, the party that claims to be the party of Thomas Jefferson is abusing the justice system and offices of public trust to silence political criticism with threats of prosecution and criminal punishment.

“This abuse of the law for intimidation insults the most sacred principles and ideals of Jefferson. I can think of nothing more offensive to Jefferson’s thinking than using the power of the state to deprive Americans of their civil rights.

“Barack Obama needs to grow up. Leftist blogs and others in the press constantly say false things about me and my family. Usually, we ignore false and scurrilous accusations because the purveyors have no credibility. When necessary, we refute them. Enlisting Missouri law enforcement to intimidate people and kill free debate is reminiscent of the Sedition Acts—not a free society.”

Meanwhile, the fawning mainstream media can add another first to what they consider their precedent-setting candidate: Obama is the first presidential candidate in history to resort to Marxism to get ahead.

Finally, Obama is telling the truth about something."

clif said...

Sorry duncetron, but Raines ISN'T an adviser for Obama nice try at LYING again boy. Or spreading reich wing lies ....

David Cutler, Jeff Liebman and Austan Goolsbee are advising Obama though.

Obama also seeks the council of Paul O'Neil and Paul Volcker, both of whom are supporting him.

clif said...

BTW numbnuts Raines himself said he isn't an adviser for Obama ......

Sucks to be LOSING so you have to LIE again this time eh dolty?

clif said...

National Daily Tracking Surveys
9/25-27/08

DailyKos.com (D) / Research 2000
1,100 LV, 3%; Live Telephone Interviews
Obama 50, McCain 43

Diageo / Hotline
905 RV, 3.2%; Live Telephone Interviews
Obama 47, McCain 42

Gallup
2,719 RV, 2%; Live Telephone Interviews
Obama 50, McCain 42

Rasmussen
3,000 LV, 2%; IVR
Obama 50, McCain 44

Three polls have Obama making 50%, might it be why you LIE so much now?

clif said...

Oh and duncetron here are a few more advisers on economic issues for Obama;

Warren Buffett, Larry Summers, Jamie Dimon (head of JP Morgan), and Robert Rubin.


BTW who does old grumpy have besides Phil Gramm and Carly Fiorina?

Voltron said...

"BTW numbnuts Raines himself said he isn't an adviser for Obama ......"

He may not be an OFFICIAL "advisor", but he HAS given Obama advice. Would the Washington Post lie?

"Franklin D. Raines has been quietly constructing a new life for himself," Ms. Huslin's story began. "He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health care companies and, more recently, taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing matters."

"I asked Huslin to provide the exact circumstances of that passage," wrote Michael Dobbs, who writes the Post's Fact Checker blog. "She said she was chatting with Raines during the photo shoot, and asked 'if he was engaged at all with the Democrats' quest for the White House. He said that he had gotten a couple of calls from the Obama campaign. I asked him about what, and he said, Oh, general housing, economy issues.'"

Voltron said...

What, you don't wanna talk about Johnson or Gorelick?

How about 'ol Alan Greenspan backing McCain on that 2005 bill regarding Freddie/Fannie?

We could discuss the brownshirt "truth squads" the Obama campaign has enlisted in Missouri. District attorneys, county prosecutors and sherrifs ready to nab anyone for perceived libel and slander against Obama ONLY?

clif said...

Would the Washington Post lie?

Yes, their reporters have been known to lie, think Dana Milbank, or their less then honest reporting in the run up to the illegal Iraq invasion.

clif said...

Give it up dolty boy

OBAMA is going to WIN

Deal with it son.

McCain is a angry old man far past his prime, aND THE VOTERS DON'T WANT HIM, .... his idiot of a side kick is just what you wingnuts deserve this year.

clif said...

I HOPE YOU PUT AWAY THAT ROPE FROM 2006.

BTW does TT wanna make anymore bets?

clif said...

Get used to saying;

President Barack Hussein Obama

cause you'll be saying that for a while .....

LOL

Voltron said...

Yeah, if all the states go the way Missouri is, I'm figuring it'll be for the rest of our lives.

clif said...

Even Real clear politics has it;

Obama 301

McCain 237

if there are no toss ups.


It's all over but the wailing and gnashing of teeth in GOPerdum.

Hope the kool-aid hangover don't hurt as bad this year as it did in 2006.

clif said...

You ain't gonna become a cry baby about it are ya

clif said...

BTW don't look at 538, they are saying it is gonna be even better.....

clif said...

Franny can always build another garage.

Voltron said...
This comment has been removed by the author.
Voltron said...

I wouldn't gloat so hard just yet Cliffy. It's a long way yet to the only poll that matters.

Like I said earlier, I MIGHT be in for a surprise but I'll get over it.

You've got a looong way to drop if you're wrong. You just might find yourself on that water tower Rusty keeps talking about...LOL

clif said...

Far from it son, I have endured much worse then a lost election ....

crusty is just a big mouthed pussy

clif said...

Aw come on duncetron don't delete your posts, say what ya thunk son.

Voltron said...

Nothing deleted Cliffy, It was a double post.

clif said...

After Palin eats her foot,

Thursday,

McInsane is TOAST.

clif said...

Nobody in their right mind will want that twit a heartbeat away from the nuc-u-lar button.

clif said...

Today in Philly she contradicted McCain's policy.

But then again, she wandered away from her baby sitter.

clif said...

Do you thunk the GOPers pulling her strings are thinkin' about asking Tina Fey to do a cameo role Thursday night?

Couldn't be much worse could it?

Voltron said...

It'll be interesting that's for sure.

She'll do fine if the campaign will let her be herself. I think they're coaching her sincerity and personality out of her.

Still don't discount Biden. He's ate a foot or two before. He could do it again.

Voltron said...

Well I'm gonna go get a bite of dinner. Be back later.

clif said...

But biden knows he has foot in mouth disease, she don't.

and she thinks the earth is 6000 years old.

was created in 7 days and some old guy worked on it and split, only to phone in telepathically from time to time .. ..

Oh and before you run for office you need any witches expelled.

clif said...

Enjoy.

sara said...

Uhh whats wrong with like Massachusett's and whats wrong with Kennedy, we need more liberals and progressives, what we fricken need is lots more states like Massachusets and California, Keith Olberman's on every channel and health care and free education for everyone.

sara said...

You fricken goons cant like just lie an make shit up, maybe thats like why you fricken LOSERS are like losin big time.

I do believe theres been like a fricken 20 point swing in the polls to Obama.

Frickin deal with it goons.

sara said...

Oh an Voltron my dear, the polls say like 68% of America think Obama kicked mcLOSER's tail all over the stage in that frickin debate, so much for a draw, wake up an smell the coffee you frickin goon.

Your goon is like goin down faster than you frickin goons do on each other.

sara said...

Oh an one more thing Voltron, keep me out of your frickin wacko fantasies with the bull dykes, cause i like dont roll that way dude.

Unlike your frickin Barbie doll idiol Sara The Twit Palin, I aint afraid to kick tail, i've had a frickin dyke mess with me before and just like the frickin conservotard goon chick that like tried jumpin me cause she like didnt like my shirt it wasnt pretty, although in their case they werent frickin pretty either.

I like know martial arts as well as dancing and aerobics and am in top frickin shape unlike you frickin conservotard goons, so kiss my sweet snatch you chauvinistic frickin lOSER.

sara said...

Sorry dude, but i believe pole burns are like your area of expertise.

clif said...

We could discuss the brownshirt "truth squads" the Obama campaign has enlisted in Missouri. District attorneys, county prosecutors and sherrifs ready to nab anyone for perceived libel and slander against Obama ONLY?

Really duncetron?

I guess your pulling that factoid outa Rush's asshole .......

Analysis: Who's afraid of the big bad truth?

Last Tuesday without any fanfare, the Barack Obama campaign announced Jennifer Joyce and Bob McCulloch, the top prosecutors in St. Louis city and St. Louis County, were joining something called an Obama truth squad.

They plan to respond immediately to any misleading advertisements and statements that might violate Missouri ethics laws.

"We want to keep this campaign focused on issues," Joyce told me. "Missourians don't want to be distracted by these divisive character attacks."

The truth squad's plan is to indentify false attacks and respond immediately with truthful information, Joyce and McCulloch say.

Truthful information like: Obama is a Christian who plans to cut taxes for anyone making under $250,000 a year.

The Obama campaign says prosecutors from the Kansas City area and some rural areas are also joining the truth squad, and Jefferson County Sheriff Glenn Boyer was also expected to be part of the team.

"Whether it is directly attributable to the campaign or one of the soft money operations," McCulloch told me, "if they're not going to tell the truth, then somebody's got to step up and say 'wait a minute, that's not true, this is the truth.'"

For reasons that are still not fully clear, prosecutors promising to tell the public the truth have sparked outrage among supporters of John McCain.

Three days later, I got a call from KMOX radio talk show host Mark Reardon. (I'll paraphrase.)

That story you did last night is really getting a lot of attention, Reardon said.

I was off yesterday. What story? I asked.

The one about the Obama truth squad, he said.

Oh, that story I did Tuesday at 6, I responded.

Well, Rush Limbaugh just talked about it, and the blogoshpere has it, and it's getting big. It's really going to get big, Reardon said.


Reardon was correct.

More than 90,000 people from across the country watched my report on KMOV.com.

When I returned to the office on Saturday, I spoke with callers from New York to Florida who had heard about Obama's truth squad and were outraged about it.

One caller said he was angry, because people were going to be "prosecuted" and "indicted" for stating their political views.

Another caller said Obama was planning to send police to the homes of elderly women because of their political statements.

A third caller said he wanted information about Obama's "storm troopers."

Members of law enforcement never said anyone would be prosecuted, indicted or punished for saying anything, only that they were prepared to tell the public the truth.

By Saturday afternoon, outgoing Missouri Gov. Matt Blunt, a McCain supporter, was also outraged and accused Obama of "police state tactics" that would "intimidate people and kill free debate."



In a written statement on the governor's official Web site, Blunt said the basis for his statement was prompted by "news reports."

"The only conceivable purpose of Messrs. McCulloch, Obama and the others is to frighten people away from expressing themselves, to chill open debate," Blunt said in the statement.

Prosecutor Jennifer Joyce said: "We're here to respond to any character attacks, to set the record straight."

"Barack Obama needs to grow up," Blunt continued. "Usually, we ignore false and scurrilous accusations, because the purveyors have no credibility. When necessary, we refute them."

Isn't that what Joyce and McCulloch say they plan to do?

If we follow Blunt's argument, what does that say about his opinion of the John McCain Truth Squad and those responsible for it?

Yes, McCain has a truth squad, too.


Wanna tell another FUCKING LIE again .... or is telling the truth a brown shirt operation now a days?

District attorneys, county prosecutors and sherrifs ready to nab anyone for perceived libel and slander against Obama ONLY?

Members of law enforcement never said anyone would be prosecuted, indicted or punished for saying anything, only that they were prepared to tell the public the truth.

Well now we all know your as full of SHIiTe as Rush the drug addict is .........

Will "take no prisoners" Hart said...

The problem withn Keith Olbermann's show is very simple. He doesn't allowing dissenting view-points. Look, the guy is intelligent and entertaining, and I actually agree with him 50% (or so) of the time. But I find it very uncomfortable watching something as slanted as "Countdown" has become. Hey, if anything, a debate (as opposed to a propoganda) show makes for better viewing. Unless, of course, Mr. Olbermann is scared. That could be a deterrant.

Voltron said...

"“The Barack Obama campaign is asking Missouri law enforcement to target anyone who lies or runs a misleading TV ad during the presidential campaign,” News 4 reported."

Clif, Just WHY do you think the CAMPAIGN went out of it's way to mention they were asking LAW ENFORCEMENT to target people?

They may not have SAID they'll prosecute just anyone who bad mouths Obama, but they sure as hell are insinuating it.

Think that'll stifle free speech any?

clif said...

Sorry duncetron, but your reich wing spin don't work any more,

remember

President Barack Hussein Obama

in 37 days and counting.

sara said...

There's like no frickin problem with Olberman my dear, you need to like get frickin laid an stop hangin out with the frickin conservotard goon squad an maybe you'll like see whats frickin goin on the world around ya you frickin LOSER.