« Burning Down the House | Main | If Europeans could vote... but they can! »
October 12, 2008
The McCain letter
During the second presidential debate at Belmont University in Nashville, Tennessee, Barack Obama repeated the charge that deregulation was the cause of the credit crisis that has triggered the global economic meltdown. He said,
"Sen. McCain, as recently as March, bragged about the fact that he is a deregulator. On the other hand, two years ago, I said that we've got a sub-prime lending crisis that has to be dealt with.
I wrote to Secretary Paulson, I wrote to Federal Reserve Chairman [Ben] Bernanke, and told them this is something we have to deal with, and nobody did anything about it.
A year ago, I went to Wall Street and said we've got to reregulate, and nothing happened.
And Sen. McCain during that period said that we should keep on deregulating because that's how the free enterprise system works."
Contrary to Obama's charge, Senator McCain and nineteen other senators urged the Senate Majority Leader, Bill Frist, and Senate Banking Committee Chairman Richard Shelby to take up legislation, not to deregulate, but instead to provide stricter oversight of Fannie Mae and Freddie Mac. An image of that letter follows.
|
According to Obama's Senate webpage, Senator Obama did in fact write a letter to Paulson and Bernanke as he claimed. But the import of Obama's letter was to urge them to convene a summit. Said Obama,
Obama complained at the debate that he wrote his letter but nobody did anything about it. "Nobody" includes Obama. By writing his letter he was essentially jumping on an already moving band wagon. On top of that, he wrote his letter nearly a year after the McCain letter urged legislative action. Unlike Obama's letter, the McCain letter resulted in action. Unfortunately, Democrats were the ones who geared up for action, and once again they blocked improvements to oversight of Fannie Mae and Freddie Mac. Update: New Hampshire residents, please note that John Sununu was one of the nineteen other senators who recognized the risk posed by Fannie and Freddie. |
Posted by Tom Bowler at 10:55 AM | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451ece669e201053579ea81970b
Listed below are links to weblogs that reference The McCain letter:
Comments
I find it strange that you, a "libertarian", has been mum on the bogus 700$ billion dollar bailout, supported by Bush, McCain, and Obama, that is suppose to help here.
Here is the actual Conservative take on this mess:
"Who’s to blame for the unfolding financial crisis? According to many (so-called) "conservatives", poor black people and, of course, Democrats.
National Review Online indicts President Carter’s Community Reinvestment Act for the meltdown. The CRA emboldened community organizers—like you-know-who—to force banks to make loans to uncreditworthy minorities, you see. Terry Jones of Investor’s Business Daily blames Clinton’s “multicultural housing policy” and his mandates to increase home ownership among blacks and Hispanics.
But as economist Michael Barr points out, about half of subprime loans came from mortgage companies that were unaffected by CRA’s mandates. Perhaps only a quarter of all subprime loans were made by banks governed by “multicultural housing” policies. Nothing excuses politically correct credit, but did community organizers really force lenders to infect all financial markets by repackaging their bad mortgages into securities? Did poor blacks invent credit default swaps?
Of course not. While these so-called conservatives criticize the misguided do-goodism of Democrats past, they ignore the present Republican administration that is pioneering socialism for the rich.
http://www.amconmag.com/article/2008/oct/06/00004/
Posted by: Smithington | Oct 12, 2008 11:32:59 AM
Conservatives blame poor black people? Spoken like a true Democrat.
Posted by: Tom Bowler | Oct 12, 2008 11:48:21 AM
That was not my writing.
Those 4 paragraphs were not my words. The quote was taken directly from "The American Conservative" article, and I provided the link.
Now, apparently, the writers for the "The American Conservative" are democrats.
How about a few words from you criticizing this bogus bailout supported by your two fake Conservative friends, Bush and McCain.
Posted by: Smithington | Oct 12, 2008 11:54:50 AM
Ah, Smithington, I was in banking when the CRA was instituted and the effect had bankers shaking in their boots. Along with so many Carter blunders when it came to the country's economy (remember 20 percent prime, double digit inflation and double digit unemployment?) CRA was in fact the beginning of it. Little mention, however, is made of Janet Reno's threat of regulatory violation charges if too few loans were made in the target areas. Let's not forget being required by the same administration to count unemployment compensation as income for mortgage qualification even though it lasts only a fraction of the mortgage term. Yes, there is blame in a lot of places. If there wasn't a secondary mortgage outlet for this paper, though, most of the problem loans of today wouldn't have been made. It was a back door plan for welfare housing. Business people seize profit opportunities. That's their job. Very little was illegal and most of it was forced initially.
Posted by: Ol' BC | Oct 13, 2008 8:45:48 PM
Fannie has been around since 1938, Freddie since 1968, the CRA has been around since 1977 -- suddenly, all of housing goes in the toilet in 2005, and then credit collapses 2 years after -- and the best explanation some people can come up with is Fannie, Freddie and CRA? And apply them to loans that were outside their scope?
While I understand that reducing the complexities of economic history into bumper sticker phrases is politically expedient, it does not help us understand the root cause of the problems. And, it gets in the way of helping us fashion a solution for the future. Hence, why I hold the weasels who are attempting to obscure reality and rewrite history in such disdain.
For the non-partisan, non hacks amongst you, for the policy makers and academics and economists who are truly interested in how this came to pass, and what we can do to fix it, the bottom line remains: The CRA was irrelevant to the current crisis, and Fannie Mae and Freddie Mac were mere cogs in a very complex financial machine, with many moving parts.
If you want to dispute what economist Michael Barr states in the article referenced above, you are free to do so.
But reasonable people are going to listen to a well known economist referenced in an article by a legitimate Conservative web site who provides clear logical arguments as opposed to your erroneous drivel.
Posted by: Smithington | Oct 14, 2008 7:50:39 AM
"...suddenly, all of housing goes in the toilet in 2005, and then credit collapses 2 years after," and you choose to ignore all federal policy changes in housing finance requirements from 1977 to 2005 and blame it all on the Bush administration. Truly brilliant Smithington, truly brilliant.
As for Michael Barr, he is a Senior Fellow at the Center for American Progress, a very left wing think tank. He's hardly a neutral observer, and his article is intended to solve a political problem, not a housing problem. He is desperate to shield fellow liberals from their well deserved blame for the mess that began with CRA, Fannie Mae, and Freddie Mac.
By the way, Smithington, why is a nice "conservative" like you be subscribing to the drivel that comes out of a left wing outfit like the Center for American Progress?
Posted by: Tom Bowler | Oct 14, 2008 11:27:39 AM
The article referenced is from "The American Conservative web site." Not the center for American Progress.
And the article is not written by Barr. He is simply referenced in an article that articulates the Conservative position.
Posted by: Smithington | Oct 14, 2008 11:44:07 AM
From the American Conservative Mission Statement:
We will be different.Many voices will appear in the pages of The American Conservative — often in disagreement with one another. We are of course in considerable part Buchananite—well disposed to the web of ideas that drew millions of voters during three Buchanan presidential bids. But our magazine’s mission is broader: to ignite the conversation that conservatives ought to have engaged in since the end of the Cold War, but didn’t.
Maybe Pat Buchanan is your conservative ideal. He is not mine.
Posted by: Tom Bowler | Oct 15, 2008 8:53:43 AM
Of course he isn't. He was a senior advisor to Ronald Reagan.
You don't have any use for Ronald Reagan or his ideals.
And you don't have any use for the following:
Secretary of State under Ronald Reagan Alexander Haig: "The neocons hijacked the Republican party, my party."
General William Odom director of the NSA for Ronald Reagan.
Secretary of Treasury for Ronald Reagan James Baker (a surrender monkey)
Lawrence Korb Assistant Secretary of Defense for Ronald Reagan. (Another person you claim spouts "Democratic talking points."
Peggy Noonan: Now apparently a traitor as well.
By no means a complete list.
All of these people, according to you, are Democrats.
Posted by: Smithington | Oct 15, 2008 11:38:41 AM
What a surprise. You're right about something. Aside from Reagan none of the names you mention do anything for me.
Posted by: Tom Bowler | Oct 15, 2008 2:01:59 PM
"Update: New Hampshire residents, please note that John Sununu was one of the nineteen other senators who recognized the risk posed by Fannie and Freddie."
Remembered, and noted.
Documented hard facts are ALWAYS easier to hold onto, unlike constant mimeographed scripts posted to our (de facto) State newspaper, by our cousins in the vastly migrant- labor/tax expat Democrat Party from Mass., that settled toward the "urban", "academic", and bureaucratic, bottom of our State.
It's the same forces of gravity and erosion that pulled down the Old Man of the Mountain.
Posted by: CaptDMO | Oct 16, 2008 12:45:53 AM
