Becky Fenger | October 8, 2008
Covering Freddie’s Fannie
Analysts and pundits have gone to tree-killing lengths to expound on the whys and wherefores of the mortgage and financial meltdown. Boston Globe columnist Jeff Jacoby has distilled the cause down to one sentence: “Affirmative-action policies trumped sound business practices.” Quite so.
Jacoby quotes from a manual issued by the Federal Reserve Bank of Boston that advised mortgage lenders to throw financial common sense out the window. “Lack of credit history should not be seen as a negative factor,” it stated. Unbelievably, lenders were ordered to accept welfare payments and unemployment benefits as “valid income sources” to qualify for a mortgage! “Failure to comply could mean a lawsuit,” it threatens.
Could there have been any other outcome when, starting with the Jimmy Carter administration, the goal of the do-gooders was to see that every American had his own home whether or not they could afford the payments? This reminds me of the argument of economist and author Thomas Sowell who claims we do a great disservice to minorities who are not academically qualified but are given slots in prestigious universities by lowering admission standards for them. Both are there to meet a numbers goal. Neither has a chance of succeeding.
Liberal politicians are really outdoing themselves in the bailout blame game. The culprits who were part of the problem now appear on TV and pretend to be our saviors. It’s enough to drive a dog off a gut wagon.
It is difficult to choose a winner in the Bad Actor Awards. Perhaps it is U.S. Rep. Barney Frank, D-Mass., Chairman of the House Financial Services Committee, who blames Republicans for the failure of the bailout to pass the first time around. Good lord, man, twelve of your own Democrat committee members voted “No.” That would have been enough to put the package over the top. The press fails to note that not one vote was needed from Republicans in order for the Democrats to have single-handedly “saved America” and gotten the glory.
Then there is U.S. Senator Christopher Dodd, D-Conn., who last week had the gall to say: “What is lamentable is that the entire calamity was foreseeable and preventable.” The man who, along with Sen. Ted Kennedy made human sandwiches of waitresses, did everything in his power to protect his cash cows of Fannie Mae and Freddie Mac by making sure the public did not see what was foreseeable or prevent what was preventable.
Directors of the Free Enterprise Project, Tom Borelli and Steve Milloy, are especially wary of Treasury Secretary Henry Paulson for “engineering the sale of Bear Sterns at a fire sale price and allowing Lehman Brothers to go bankrupt while making efforts to save Goldman Sachs.” Borelli and Milloy remind us that under Paulson’s leadership Goldman Sachs made millions by creating the mortgage crisis. Paulson should resign, but instead Congress could give Paulson the power to choose who lives or dies financially. Worse, he is known for using his power to get back at people he views as enemies. Yikes!
It is instructive that three former Fannie Mae executives who extracted tens of millions for themselves by cooking the books, misstating profits, and taking illegal loans are financial advisers for Barack Obama: Franklin Raines, Tim Howard and Jim Johnson. Joe Biden claimed during the vice presidential debate that Obama tried to regulate Fannie Mae. Sure he did. He regulated how fast he could suck out money for his beloved fraudulent ACORN, the Association of Community Organizers for Reform Now. This should be all a voter needs to know.
Honorable mention must go to former U.S. Attorney General Janet “The Toast of Waco” Reno, who threatened legal action if banks didn’t loan to deadbeats. Bill Clinton certainly picked a pip there.