The great Winston Churchill said “those that don’t understand history are destined to repeat it.” The debate over to how to solve the current economic mess is all the proof one would need to substantiate what Churchill said. Here is an article I wrote during the last election (never published here) that I think explains how the economic mess was made. Once you understand how the disaster came to be, you will understand why the ‘fixes’ being proposed by the leftists will only perpetuate the problem:
We are told time and again that the current financial crisis was caused by the ‘shredding of regulations’ and ‘unbridled capitalism.’ We are told the blame for the mess resides on Wall Street, at the feet of ‘greedy’ CEOs and unscrupulous lenders. This is patently false. Let’s set the record strait. It was unintended, but painfully obvious, consequences of the Democrats’ social engineering schemes that created this mess.
In 1977 the Carter (coincidentally the worst President of the 20th century and not surprisingly, a Democrat) Administration passed the Community Reinvestment Act (CRA), with the noble intention of helping banks meet the borrowing needs of low and moderate earners. This practice went on steadily until the early 90s, when, President Clinton’s (Democrat) Department of Justice (DOJ), under Democratic Attorney General Janet Reno, threatened banks, warning that if 50% of all loans were not to ‘sub-prime’ borrowers the banks would be sued under civil right statutes. This of course set us on the path to where we are today; people who could never afford homes were given mortgages, not because of ‘Wall Street greed’, not because of ‘unscrupulous lending policies’ –because of liberal social engineering.
The story, however, has only begun. Next we have the oxymoron of a Government Sponsored Entity (GSE), Fonnie Mae and Fraudie Mac. These are the two largest mortgage lenders in the United States. They are publicly traded, but have always had the implicit backing of the government. The short story of how these mortgage giants fell is a tale of obscene corruption, unbridled greed and unparalleled stupidity. As Fannie Mae took on more and more debt they began to ‘cook the books’. They lied. They did the exact same thing as Enron, WorldCom and Tyco, only on an exponentially larger scale. As well, they swamped the market with tranches full of what turned out to be toxic paper. You may now be asking, what does this have to do with the Democrats? The answer is: Senators Chuck Schumer (D-NY) and Chris Dodd (D-Con) (the chairman of the Senate Banking Committee) and Congressman Barney Frank (D-Mass) have fought tooth and nail against any regulation of Fannie Mae and Freddie Mac. In fact, they pushed the lending giants to go further in promoting sub prime loans! While the Republicans controlled the Congress, they repeatedly attempted to rein in Fannie Mae ad Freddie Mac – they were opposed every step of the way by Democrats, who attributed this opposition to ulterior motives. President Bush and his former Secretary of the Treasury, John Snow, repeatedly warned of the impending economic disaster that Fannie and Freddie would cause. So did former Chairman of the Federal Reserve, Alan Greenspan. Who stopped any meaningful reform? You guessed it – the Democrats. But what does all of this have to do with the Presidential candidates? Sen. John McCain was the co-sponsor of a bill to regulate Fannie and Freddie. His bill was opposed on a strict party line vote, with all Republicans in favor of regulating the GSEs, and all Democrats opposed. Meanwhile after serving in the Senate for a paltry 144 days, Sen. Barrack Obama received the 2nd most campaign contributions in history from Fannie and Freddie (number 1 was the Senator of unimpeachable character, Christopher Dodd – chairman of the Senate Banking Committee).
But wait, it gets even better. Franklin Raines was the man who cooked the books for Fannie Mae. He lied to Congress, repeatedly telling them that investments in real estate were “riskless”. He walked away from Fannie with over 100 million dollars. That is greed you can believe in. what does Mr. Raines do now? He is Barack Obama’s economic advisor and in line for a cabinet position in an Obama White House. If Raines is Jesse James, Fannie CEO Jim Johnson is Frank James. Johnson helped cook the books, also made off with millions and was trusted by Obama to help select Joes Biden. Are these really the ones we’ve been waiting for? As John Adams would say “facts are stubborn things.”
