There's an email going around claiming that Barack Obama has three former Fannie execs as key advisors; a reader just emailed me to ask if it was true. No. John McCain is going to have to bear his humiliating connections to lobbyists alone.
John McCain is going to have to bear his humiliating connections to lobbyists alone.
That's a bit strong of a statement considering that Jim Johnson was the head of the VP search for Sen. Obama. It's no longer a "humiliating connection" once the adviser resigns from the position?
It does seem in general that Sen. Obama has claimed to have lots and lots of advisers in various articles. Then opponents seize on one of these people, mentioned in one article as an adviser. The campaign then claims that the person was never an adviser, that the person is no longer an adviser, or that the person is somewhat of an adviser but not a "key" adviser.
It happened with Jim Johnson, with Franklin Raines (there was a WaPo article claiming that he was an adviser), with Samantha Power back during the primaries, etc.
Yes, it's only two out of three that his campaign has turned to for advice. Obama's connections aren't with the lobbyists, but with the principals. Not the guys making hundreds of thousands of dollars to persuade us that the GSEs are a good idea, but the guys mismanaging and looting them for millions.
Yes, and Franklin is the one who, with the help of the Obama campaign, denied that he advised the campaign. Yes, Jim Johnson left in 1998. So what? Enron blew up in 2001, but people still talk about. Jim Johnson manipulated disclosures to hide his pay. He was in charge when senior executives manipulated earnings to maximize bonuses. He made $21 million in his last year there--and that's in 1998 dollars.
Are you that far in the tank that you have to come up with stupidity like this because some person sent you an email? Advisors? I guess it depends on what the definition of is, is.
Obama, god love him, has all your typical stank that dirty politicians all have when they come from a machine such as Chicago's.
Yes, you are right, that his basically being the largest groveller of funds from the long list of bankrupt companies behind this crisis is all just a coincidence. The most amazing part is he did it in less than four years. Now that's what I call legislative accomplishment, hey he has one! Oh and who can forget today's FBI raid on his poker buddy, from where else Chicago, that festering swamp of machine politics. Again, this is strictly coincidence I'm sure, the long list of earmarks that the Messiah sent in this person's direction.
Yes, yes, Megan, do change the subject and tell us again how stupid Governor Palin is.
Is the tea that weak or are you invested in a specific conclusion? I often find myself making decisions and then massaging the facts, when I should do it the other way. I am not saying you are, but introspect and consider.
There is also the issue of the significant campaign contributions he received.
No one's saying it's damning evidence, but it's dishonesty by omission to claim that the email was wrong, period, because he actually had one major Fannie slimebag in the role of serious campaign advisor instead of three.
Let me understand - a person who was employed by Fannie Mae as a lobbyist is no different, or worse, than the Fannie Mae CEO under whom there was accounting irregularities enabling he, and other Fannie Mae execs, to receive bonuses they didn't earn?
Megan is so deeply in the tank for Obama that she doesn't even know the tank exists.
"When mortgage giant Freddie Mac feared several years ago that Sen. John McCain was too outspoken on the issue of executive pay, it pinpointed a lobbyist known for his closeness to McCain and hired him to work with the senator.
"Mark Buse, a longtime McCain adviser who had been staff director of the Senate commerce committee, signed on as a Freddie Mac lobbyist, and his firm, ML Strategies, earned $460,000 in lobbying fees in late 2003 and 2004, according to lobbying disclosures. Buse is now chief of staff at McCain's Senate office. [...]
"McCain's own entanglements include his campaign manager, Rick Davis, who earned more than $2 million as president of an advocacy group that defended Fannie and Freddie against stricter regulation. Davis's lobbying firm, Davis Manafort, also received monthly payments of $15,000 from Freddie Mac as recently as August."
Give it up, guys. These are just the most prominent two of the 15 on McCain's staff, IIRC.
brooksfoe, I think there are two essential differences: 1) There's a difference between being a lobbyist for a crooked organization and being a principal. It's like the difference between a defense lawyer and his guilty client. 2) John McCain never adopted the positions the GSEs wanted him to adopt, but Barry Obama did. McCain favored regulation, Obama opposed. Because of Obama's success, we're out a couple hundred billion just on the bailout of the GSEs, without considering the broader effects, including their role in today's $700+ bailout.
you have allowed yourself to be convinced of a long string of falsehoods because of your sentimental attachment to your political party. We are not here to judge the moral character of CEOs or lobbyists; we are here to judge the character and wisdom of someone who has paid agents of corporations, people who are paid to influence politicians in specific corporations' benefit, acting as his chief campaign staff -- all while decrying the influence of lobbyists in Washington's corrupt culture.
The other thing is, it's a sign of immaturity to call Barack Obama "Barry". Sort of like if we started saying "Sidney McCain" or something.
brooksfoe, where's the long string of falsehoods? Look, Johnson would be in jail if he had been at Enron instead of Fannie Mae doing the same thing. And that's the sort of person that Obama turns to for advice.
We can play the game of "what kind of person hires lobbyists, is friendly with lobbyists, and then criticizes lobbyists", but what's the point? I think the word you're looking for is "politician" and it describes Obama as well as McCain.
The more relevant question is, who sells out the public for the special interests, for the lobbyists, for their friends? And that's Obama, not McCain.
One other thing: there's nothing wrong with calling Obama by the name he used for much of his life. Please, feel free to call McCain by his middle name, just as Democrats called George Allen by his.
This is why Andrew Sullivan doesn't allow comments to his columns; doesn't want anyone disputing his mistruths. Has anyone mentioned ACORN, ACORN Housing and Obama's connections to both?
We are not here to judge the moral character of CEOs or lobbyists; we are here to judge the character and wisdom of someone who has paid agents of corporations, people who are paid to influence politicians in specific corporations' benefit, acting as his chief campaign staff -- all while decrying the influence of lobbyists in Washington's corrupt culture.
Are you under the impression that there are no lobbyists on Obama's campaign staff?!? Or is this a semantic game where everyone who is an embarassment is, by definition, not allowed to be counted as a "real" Obama staff member.
Obama did receive the second highest amount of campaign contributions from Fannie Mae and Freddie Mac, right after Chris Dodd.
That's only if you consider employees personal donations, I bet a lot of companies have donated more money in employee personal donations to Obama than McCain. This is mainly due to Obama's ability to raise far more money than McCain. IIRC if you look at corporate donations from Fannie/Freddie, Obama's not even in the top 100.
you have allowed yourself to be convinced of a long string of falsehoods because of your sentimental attachment to your political party.
Handwaving has its place, and in my opinion, it should be restricted to that of the friendly greeting. Which of his statements represent this "long string of falsehoods" that he has apparently been convinced of?
"We can play the game of "what kind of person hires lobbyists, is friendly with lobbyists, and then criticizes lobbyists", but what's the point? I think the word you're looking for is "politician" and it describes Obama as well as McCain."
Ding Ding Ding we have a winner.
Some folks "sentimental attachment to their party" does not allow them to realize this fact?
More relevant questions are who favored more regulation of Fannie and Freddie, who took the most money from Fannie and Freddie, and who worked to force banks to make more subprime loans?
We need to learn more about Obama's connections to ACORN and to pressuring banks to make subprime loans (for instance, his role in the 1994 Citibank lawsuit). We need to learn more about his training of ACORN activists. Here's the most detailed article I've found so far -
The media should be asking more questions about this. It's ridiculous that the Democrats tried to include huge amounts of money for ACORN in early versions of the rescue package, when ACORN did so much to help create this mess.
Hey, guys, you have to parse the words better than this.
Advisors, yes, in some sort of unofficial capacity. Raines was called by Obama who asked him a few questions.
That doesn't make Raines a "key" advisor, nor a member of Obama's campaign.
Note that the Obama camp is not denying that these three guys have given advice, but that's because no one is asking that question. Everyone asks the question in terms of "on the campaign staff" or "key advisor" or "member of the campaign staff" to which the Obama camp can respond NO with a straight face.
But there is no doubt that these three have given Obama economic advice.
Conn Carroll: Politico is not a legitimate news source. It's the same as using the Washington (aka Moonie) Times. They are both right wing outlets. If you don't believe me, check out the money behind Politico.
Rex:
The "Oracle of Omaha" has given Obama economic advice as well. Is he a member of Obama's campaign? Or just Obama asking various people their opinions? It's funny you people whine about shady people Obama might have come across or had contact with for some reason yet you don't apply that same standard to McCain. I wonder why.
That's only if you consider employees personal donations, I bet a lot of companies have donated more money in employee personal donations to Obama than McCain. This is mainly due to Obama's ability to raise far more money than McCain. IIRC if you look at corporate donations from Fannie/Freddie, Obama's not even in the top 100.
JordanT:
Huh? Actual flat-out corporate donations are illegal. They've been illegal for nearly forever. That's why most corporate donations are employee personal donations. But in most case, these "individual" contributions really are corporate. It just "so happens" that the majority of the individual contributions are made by all the top execs and all their family members to the same candidates. The other main form of contributions is, of course, PACs that employees are "asked" to contribute to.
You do have a point that if you count PAC contributions alone, Sen. Obama does not rank nearly as highly. However, he remains #2 if you total both individual and PAC contributions. Part of that certainly is from running for President, which boosts fundraising.
Of course, if you're going that route, you have to note that Sen. McCain has received $0 all-time from FM/FM PACs, unlike Sen. Obama, and his level of individual contributions is extremely low for someone who has run for President.
"Politico is not a legitimate news source. It's the same as using the Washington (aka Moonie) Times. They are both right wing outlets. If you don't believe me, check out the money behind Politico."
So, does this statement validate any right wing talking points that the NYT, etc. are not legitimate news sources because they are backed by a bunch of pinkos?
JK's conscience--Hey, next time Obama is railing against the evils of deregulation, he should ask the Oracle what he thinks of it. In particular, he should ask the Oracle if the Fed's recent rule change--the adoption of what my banking law friends call the "Buffett rule", which allowed Buffett to buy into Goldman Sachs (which is now regulated as a bank holding company)--was a good deregulation or a bad one.
Wow Megan. Some of your commenters are real mouth breathers. They make sane, calm and smart conservatives like you, Sullivan and Douthat look bad.
Apparently a couple of phone calls between the Obama campaign and one Fannie Mae executive, who was never on the Obama campaign payroll and never played any role whatsoever in the Obama campaign now adds up to no less than THREE Fannie Mae executives being "Senior Obama Economic Advisors".
Damn the evidence that you provided otherwise! Damn the fact that you're a CONSERVATIVE saying that it isn't true!
As usual, reality continues to have a liberal bias. Hat tip to Steven Colbert.
I am so happy that the finally passed bailout, er... economic rescue bill, has passed and stopped the market meltdown.
I would really like to know the thoughts of the representatives who voted no on Monday, but changed their votes to yes today because Monday's 777 point fall.
And how is it spinned now? Is the market now telling up we need Bailout, uh, sorry, Economic Rescue 2?
1) There's a difference between being a lobbyist for a crooked organization and being a principal. It's like the difference between a defense lawyer and his guilty client.
The right to competent legal counsel is a Constitutional right. There is no right to have a highly paid, influential person try to use his personal connections to a politician to influence that politician's actions.
2) John McCain never adopted the positions the GSEs wanted him to adopt
Off the top of my head, after Buse took a contract from Fannie Mae to get McCain to stop attempting to limit CEO pay, McCain stopped trying to do anything concrete about reigning limiting CEO pay. Fannie Mae officials reported Buse had done a terrific job of achieving this. McCain continued to make occasional blah-blah speeches on the issue but never pushed to actually do anything. I'm sure one could find other examples of the GSEs getting their money's worth from the lobbyists they placed in McCain's circle.
McCain favored regulation
McCain sponsored a bill in 2005 that would have set up a non-governmental commission to regulate the GSEs, i.e. taking the regulation outside of government, in keeping with his typical anti-government philosophy. The bill passed in the House, but McCain never made it a priority. Mike Oxley just excoriated McCain last week for failing to devote any serious effort to getting the bill passed. When a bill to regulate the GSEs finally came back for a vote in March 2008, McCain didn't show up to vote.
Because of Obama's success, we're out a couple hundred billion just on the bailout of the GSEs,
Blaming Obama for the collapse of Fannie Mae and Freddie Mac is ridiculous hyperbole. The huge expansion in their loan portfolios lasted from 1980 to 2003, when it ended and sharply reversed. The FM/FM share of the mortgage market shrank from 50% in 2003 to about 43% in 2008. The trouble they got themselves into had very little to do with the positions held by a junior senator who came into office in 2005 and who was #127 on the list of congressional beneficiaries of FM/FM PAC money.
without considering the broader effects, including their role in today's $700+ bailout.
The number of subprime mortgages held by FM/FM? Zero. They were prohibited from issuing subprime mortgages. The subprime mess is the result of the expansion of private lenders into risky clients and risky mortgage formats which FM/FM wouldn't take. It's the result of repackaging those private mortgages and putting them in SIVs with high ratings. In March the NY Fed issued a report laying out the causes of the subprime mess. FM/FM figure nowhere in the report. It's probably an exaggeration to say the subprime mess had nothing to do with them, so I'll say almost nothing.
Huh? Actual flat-out corporate donations are illegal.
Are PAC and unregulated 527 donations all that different than a campaign corporate donation in all but the name we give them? Sure, there are some hoops to jump through but that's not really a problem for the most part. Obama has gotten far more individual donations than John McCain could hope to get. It's not a surprise that a companies individual donations for Obama would trump that of McCain. Especially since he's in a presidential election, I bet Obama is at or near the top of the list from the individuals of many different corporations.
John McCain is going to have to bear his humiliating connections to lobbyists alone.
I see. A little red meat, er, blackened tofu for the liberal readership today. As we all know, lobbyists are the ultimate monsters under the bed for dyed-in-the-wool liberals: The G-rated version of the mean old Jooz who run Wall Street and the media, etc.
Bam and the BamBoosters are scared witless each time someone finds a lobbyist in a rival campaign, which works out well for Bam. It draws attention from the fact that Bam's campaign is a full of lobbyists as any other in Washington, DC. 'Cuz that's how anyone involved in national politics outside elected office makes a living.
There is no right to have a highly paid, influential person try to use his personal connections to a politician to influence that politician's actions.
Amendment 1: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Despite the feverish defense of Nobama by his shameless, leftist cult followers (namely, Democrats), the reason why all the questionable lobbyist ties will not go away is because Nobama is a major component of the Chicago Machine, and all the corruption that entails.
The taint is clear for all to see and the facts are indisputable. Only the willfully blind and the traitorous left will keep trying to run interference for Nobama, however much in vain their actions will prove to be once John McCain and Sarah Palin win the election by a landslide on November 4th.
brooksfoe, I'm not sure there's much you said that anyone could reasonably agree with. Going in order:
1. SG has it right--the right to petition certainly includes the right to retain advocates for one's cause.
2. This is really weak. First, it's weak because--unfortunately, in my view--McCain has never abandoned his position on executive compensation. And it's weak, because the subject of executive comp covers a vast number of companies. Unlike the legislation which McCain favored and which Obama opposed, which would have regulated Fannie and Freddie.
3. The bill McCain favored would have created a new federal agency to regulate Fannie and Freddie. That agency would have been part of the federal government. McCain favored cracking down on the looting going on at Fannie, and Obama opposed it, each acting in accordance with their views on government--McCain believing government should work for the people, and Obama being a machine pol from Chicago. And this bit about Oxley is just sad. Oxley favored gutting the bill to meet the objections of Barney Frank. You still think that Barney "I want to roll the dice" Frank is a credible voice on this issue, don't you?
4 and 5. You cite the oft-repeated bit about Fannie and Freddie not buying subprime mortgages. That's true--they bought MBS, that is, they bought them after they'd been pooled by Wall Street investment banks. They were the biggest buyer, creating the demand that led to the supply. The fact that you are using these transparently misleading claims means you either don't know what you're talking about, or you're not interested in what the facts are. I'm leaning toward the former, given your citation of Obama's record of contributions from the GSEs' PACs, as if that's particularly meaningful.
The number of subprime mortgages held by FM/FM? Zero. They were prohibited from issuing subprime mortgages. The subprime mess is the result of the expansion of private lenders into risky clients and risky mortgage formats which FM/FM wouldn't take. It's the result of repackaging those private mortgages and putting them in SIVs with high ratings. In March the NY Fed issued a report laying out the causes of the subprime mess. FM/FM figure nowhere in the report. It's probably an exaggeration to say the subprime mess had nothing to do with them, so I'll say almost nothing.
And that's the series of falsehoods.
You came perilously close to a falsehood of your own. I believe you've been corrected on this point before:
Truncated to pass the soup-nazi spam filter, please add the standard prefix to the front in order to view the link. (And do note the article date.)
Practically speaking, it makes little difference whether the FM twins issued subprimes or merely bought them by the shovel-load, either way it encouraged more of the same. In fact, it may have been worse this way, because smaller lenders in regional markets could spread the mess far and wide with the full confidence that they could roll the dung uphill.
Truth is that Frannie-Mae's former CEO has been tied at the hip to the Democratic party for years. In 2004 he was used as a witness to testify to his former company's situation. he was good enough for Barney Franks and the black democratic committee, but now that we know what we do, Barack won't even admit to knowing the guy, let alone admit he has advised his campaign. Where do you think they got that crazy idea about renegotiating the principle of a loan? Well to be fair, ACORN could have suggested it.
For more Fannie goodness, see Jamie Gorelick. Not only did she help slaughter 3000 New Yorkers by inventing rules to hamper anti-terrorist investigations, she also was vice-chair of Fannie between 97 and 03. She was DeputyAG during the Clinton Admin and is touted as an AG candidate during an Obama disaster (er, administration).
If you want other scary connections, there's Obama and an interstate conspiracy to committ election fraud - ACORN. Unfortunately all attempts to prosecute them under RICO laws will be described as racist, no matter how many times they falsify registrations. Obama only trained their staff, praised their organization, and worked in an allied group.
Obama is corrupt, a friend of interstate conspiracies to subvert democracy, and relies on terrorists for critical political support. But yet he's the best candidate? Megan is showing hr NYC roots and wants to bring us back to the 70s. Maybe next time Bill can get a BIG bomb to the Pentagon. But then if you want to be a Dem Presidential candidate, you have to be friends with terrorists - John Kerry supporting the VC, SDS, VVAW, Clinton pardoning Puerto Rican terrorists, Hillary hugging Suha Arafat, Obama relying on Bill Ayers for a job and his first political fundraiser. But don't question their patriotism!
To say that James Johnson bears no responsibility for the GSE debacle, because he left the CEO position in the late 90s, is simply ignorant. It is also completely ignorant (or dishonest) to assert that the GSEs had no role in the subprime sewer, as was noted above.
Even without the subprime sewer, however, the GSEs played a huge role in the housing speculative bubble which has led us to our current unhappy condition. Having two financial giants dominate the industry by purchasing loans, and then reselling them with an inmplied taxpayer guarantee, with all the benefits that such a guarantee entails, was questionable enough. To do so, however, while also telling the giants that their charter was not to simply package and resell loans in a responsible manner, but also to expand rates of homeownership, while also making it possible for top level management to makes tens of millions of dollars in incentives by doing so, nearly guaranteed a slowly, and eventually rapidly, increasing rate of erosion in underwriting standards. Anyone who thinks that underwriting went in the crapper solely in the case of subprime dreck is ignorant of the industry. What typically constituted a prime grade Fannie Mae loan in 1988 was far different than was the case even in 1998, to say nothing of 2005.
This fecal storm was decades in the making, and there are dozens, if not hundreds of people, who should be eligible for a symbolic tar and feathering, if not a real one. Any person with an ounce of decency, which of course excludes nearly any Presediential candidate, would be ashamed to have picked James Johnson as a key advisor.
Blaming Obama and by extension the Democrats for this mess is the most cowardly thing I've ever seen. The Republicans have controlled all three branches of governement 6 of the last 8 years. If the Republicans saw this coming and didn't do something to stop it they should be strung up for treason. Blaming the party out of power is pure cowardice.
Never in my life did I think I would see the Republicans turn into whining, yellow bellied, identity politics peddling, victocrats. For some odd reason the Republicans decided to imitate the Democrats, and, as usual, the imitation is worse than the original.
Barney Frank probably wins the award for the best friend the GSE's ever had in DC. Thus even the most liberal of politicians up to this very moment, as he was head cheerleader of the bailout. don't have a clue.
Weirdly it was the administration which was intermittently skeptical of the GSE's. One of the few cases where they were right on a big economic picture issue. That said they were driven mostly by ideological concerns and free market fetishism but any opposition to the GSE's took some real political courage. Not that they ever went very far to stop the train wreck.
Obama doesn't seem to have a clue either. It's possible his getting aboard the bailout train was a political calculation and I can accept that as probably the right tactic, even if I don't have to like it. One can suppose on taking office he will go after the pigmen and start the revolution against the financial caste, but I'm not holding my breath.
Well, at least John McCain didn't obtain pork for the lobbyist-son of his running mate, isn't that right Hunter Biden, registered lobbyist?
Sorry, but just because someone else at Davis' firm was lobbying for the GSEs does not make him a lobbyist for the GSEs - sure it is a connection, but it is a lot weaker than the Raines / Johnson connection to Obama. And now we have learned that Barney Frank's boyfriend was an executive at Fannie. I'm not claiming that the Dems own this mess, but the links are clearer and stronger, with the likes of Johnson, Gorelick and Raines.
The Republicans efforts to rein in the GSEs was frankly kind of weak, and abandoned in the face of opposition, but let's not forget that it was the Dems who were that opposition. Last night I heard Joe Biden rail on and on about deregulation, yet his party are the ones who repeatedly blocked oversight of the GSEs - and no amount of repeating "Rick Davis" like a mantra can change that. I assume Biden was referring to the repeal of Glass-Seagalman under Clinton, which Clinton maintains was a good move and which may have allowed the large banks like Citi, BofA and JPM to weather the current storm.
brookesfoe babbled that this was damning of McCain:
"When mortgage giant Freddie Mac feared several years ago that Sen. John McCain was too outspoken on the issue of executive pay, it pinpointed a lobbyist known for his closeness to McCain and hired him to work with the senator.
"Mark Buse, a longtime McCain adviser who had been staff director of the Senate commerce committee, signed on as a Freddie Mac lobbyist, and his firm, ML Strategies, earned $460,000 in lobbying fees in late 2003 and 2004, according to lobbying disclosures. Buse is now chief of staff at McCain's Senate office. [...]
Gosh, let's see, what did McCain do in 2005 and 2007 (you know, after they tried to "bribe" McCain)?
Oh, oh, I know! He proposed laws cracking down on Fannie and Freddie.
And what did Obama do? Why, IIRC he fought those bills. He certainly didn't support them. And, as a regular Democrat Party line voter, I'm going to say it's quite fair to tar him with the Democrat's Party line votes against more regulation for F / F.
As an "in the task delusional elitist" Obama supporter':
1) yep. he's a politician
2) Thus, imperfect
3) I'm reading this blog because he has inspired me to think it's a good idea. Think about it. (no matter how you vote, it's clear that he is on the verge of "community organizing" himself into the White House. Compare - RNC Palin speech)
4) Thank you for actually debating the issue instead of spewing Barack HUSSEIN Obama nonsense
5) Last night was a really bad night for women internationally. Again, think about it - seriously
I'm a 44 year old AA woman who gave up on RP after the famous Pat Robertson "culture war" speech. Ironic that W is now the most effective civil rights activist in history...
Oh, oh, I know! He proposed laws cracking down on Fannie and Freddie.
No, he proposed that regulation of Fannie and Freddie be handed to a private company. I'm sure they would have done a great job as well. However, by 2005 it was too late the bubble had already reached its peak and the damage was done. The majority of the crap paper originates in the 2003, 2004 and 2005 era of home lending. It is also mostly held by private investors, and not by Fannie and Freddie. If we had taken decisive action in 2005 the damage may have been less, but we still would have had a major problem on our hands.
Second, Fannie and Freddie were nationalized in a misguided attempt to prop up home prices by lowering mortgage rates. The mortgage rates did fall with the nationalization, but even at 5.75% interest the homes were still unaffordable.
A stupid voter might think that all this talk about the FMs was enough to prove that the Republicans would save this economy from corruption. An equally stupid voter might imagine that John McCain, the last of the Keating Five, was somehow on the side of honesty in business and deeply opposed to the corruption that comes when Washington is married to Wall Street. Alas, there are fewer and fewer stupid voters as the economy under the stupidest Republican president ever becomes worse and worse.
I have heard a lot of venom, but little to challenge the Snopes.com assessment of the e-mail McArdle mentions.
I suppose it could be said that Snopes was 'in the tank' for Obama because it has a history of discrediting the other rumors surrounding the Democratic nominee: e.g. that he is a Muslim.
"The gays? I thought it was the blacks, and their damn desire to have homes just like white people."
Little Boots
It this some kind of race baiting that you picked up from the Rev's especially Wright?
Why don't you instead get that remnant of a brain stem around the fact that Barney had a conflict of interest. Come on now, it will set you free.
Noo lets not do that. Lets instead bring up the Keating five. Yes, that should do. Five Senators, only one was a Repub and he was cleared. Reprimanded for poor judgement he was. Keating was a personal friend and fellow resident of Arizona.
Sort of like the poor judgment Barney showed when one of his lovers was running a prostitution ring out of his basement. Of course Barney didn't know. Right Little Boots.....
FNM and FRE didn't buy subprime loans, on purpose. The issue was that total mortgage lending exploded and so then too did home prices as demand rose relentlessly. So that on paper their mortgage portfolio looked pretty good, as long as pries didn't fall. Then prices started to fall. The last sucker and speculator bought the last house at an inflated price and then demand dropped a bit. Then inventory built up. Then prices started falling. The subprime owners were the first to get foreclosed and they brought down the value of all homes. Even the ones the GSE's mortgaged.
They hold trillions of dollars in mortgages and have sold a couple of trillion of them as mortgage backed securities into the private market. Those they sold they guaranteed, insured against the loss of interest and principal.
The two kinds of losses are related but different. On those they hold they have to account for on financial statements. Of course like everyone they are trying to say these losses aren't so bad, but it's just numbers on a ledger sheet. On the ones they sold and guaranteed they have to send cash to the buyer. Oooops. They don't have enough cash. Now while accountants can argue if they are or are not bankrupt based upon their balance sheet, accounting, financial statement when someone knocks on the door and says "look, I've lost $100 million on this shit you sold me, pay up" they have a problem. Some $50 billion in cash, they say, and hundreds of billions in losses waiting to be have their 'insurance' paid off.
Now foreign central banks own $960 billion in GSE issued mortgage backed securities. Why they bought them is an enduring mystery but it's not a mystery that they wouldn't be happy if they don't get their insurance payment. Being that all central bankers are friends Uncle Sam decided to say that he would pay off what Freddie and Fannie couldn't.
1) Why the implicit bashing of lobbyists? Lobbying is a legitimate part of our political system, a way for various constituencies -- from corporations, to the armed services, to the victims of various diseases -- to advocate for their interests.
2) Why ignore Obama's receipt of donations directly from the GSEs? He and the rest of the Dems have been getting away with murder blaming the real estate and credit bust on "failed Republican policies". It was Republicans who tried to regulated the GSEs more tightly and it was Democrats who resisted.
3) Where's your omnibus post on different proposed solutions to the credit crisis?
Please explain to me why, if Fannie and Freddie had nothing to do with sub-prime paper, they both went into receivership? Just for giggles?
Posted by jl | October 3, 2008 9:27 PM
Well there's the dirty little secret. While Fannie and Freddie didn't actually write the mortgages they bought for investment purposes the little nuggets.
How many did they buy? In the end, piglets that they were spurred on by the likes of Barney and friends, they owned, I believe, 44% of the toxic waste. They bought so much that local loan offices couldn't write enough liar loans to keep up with the demand. Everyone on the street knew Fannie was buying. Such was their commitment to put everyone in a house by hook or crook.
Now because of their wonderful enterprise we own it all.
There's a recession coming, the Russians are back in the Caribbean, Asia is playing economic hare to our tortoise and America has suddenly decided we need a rerun of the 1970s with a President whose greatest achievement was dancing with Ellen on the Degeneres show.
Americans love easy credit and easy money. It's the grease that makes the system operate. They expect it and demand it from their institutions and they get it. They always have and they always will.
Chastised now, Americans will adopt caution as the order of the day as a new economic cycle begins. (that's some way off yet as the death of this cycle is going to drag on)
Then someday a new age of easy wealth creation will take flight.
Scent, that's clever. Given that we're talking about a failure to regulate a quasi-governmental agency, it isn't accurate, but it's still clever. But I take it that we can all agree that the sort of market intervention we saw from the GSEs is dead? Or am I right that you and Barney Frank want to draw some bullshit philosophical point and ignore the fact that these Democrat-dominated agencies were a horrendous idea, poorly executed?
It's simplistic and deliberately misleading to argue that free markets means no regulation. No regulation is anarchy, not capitalism.
Both liberals and conservatives believe in regulation - the difference is in the type that they support. If you think in terms of sports, free marketers believe that government should set reasonable rules for the game and then act only as a referee, to make sure that both sides play by those rules. As long as both sides play by the same rules, it's not the role of the referee to choose the winner.
Liberals, on the other hand, think that the government should be more than a referee, and should redistribute goals in the name of fairness. To make sure that both sides come out equal, liberals believe that the government should take goals from the side that's ahead to give to the side that's behind.
We got into this mess because liberals felt that it was unfair for loans to go only to those who could pay them back. They felt that people should have homes whether or not they could afford them. Who could possibly have predicted that making bad loans could lead to problems? Obviously, the real reason for this crisis is that we didn't give enough money to ACORN, an error that the Democrats tried to fix. And Obama has funneled money to ACORN every chance he got, so this can't be his fault.
No, SOV, we can begin with the fact that having the state dominate the housing industry, in the form of GSEs, is a bad idea. It bores the cockles of my heart to hear compulsive statists make snide remarks about those who advocate a limited state, after the statists put in place the mechanisms and incentives which led to a disastous speculative bubble. Is Saturday morning your scheduled silly spell?
Uh huh. The state 'dominates' the housing industry, but is simultaneously not regulated enough. Freddie and Fannie are now 'quasi-governmental', whatever that means (primarily, something that sounds good to the tin ear of the Right, I would imagine.) We also have the contradictory supposition that the 'statists put in place the mechanisms and incentives which led to a disastous speculative bubble.'
Why don't you all get together and come up with a consistent story?
The funny thing about this is, 'statists' in general don't have anything against free markets, they just don't attribute to them magical restorative powers, or certain ahistorical outcomes.
People like me are in fact (modulo the social conservatism) more aptly described as Eisenhower Republicans. The only time we agitate for government intervention is when the 'free market' conspicuously fails.
Nobody, for example, simply woke up one day and thought on the basis of a 'statist philosophy' that regulating the commerce of food and drugs was a dandy idea. No, it happened because of conspicuous failures of the free market to regulate itself. No one thought on the basis of a 'statist philosophy' that the government should intervene in the hiring practices of private business, or in the selling of housing to minorities, or in the . . . you get the picture.
No, there was government intervention because the markets explicitly failed. Here's another example of where the government stepped back from it's regulatory functions - on the basis of advice from those who projected 'gravitas':
On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.
They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.
The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.
A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.
One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.
“We’ve said these are the big guys,” Mr. Goldschmid said, provoking nervous laughter, “but that means if anything goes wrong, it’s going to be an awfully big mess.”
Mr. Goldschmid, an authority on securities law from Columbia, was a behind-the-scenes adviser in 2002 to Senator Paul S. Sarbanes when he rewrote the nation’s corporate laws after a wave of accounting scandals. “Do we feel secure if there are these drops in capital we really will have investor protection?” Mr. Goldschmid asked. A senior staff member said the commission would hire the best minds, including people with strong quantitative skills to parse the banks’ balance sheets.
Annette L. Nazareth, the head of market regulation, reassured the commission that under the new rules, the companies for the first time could be restricted by the commission from excessively risky activity. She was later appointed a commissioner and served until January 2008.
“I’m very happy to support it,” said Commissioner Roel C. Campos, a former federal prosecutor and owner of a small radio broadcasting company from Houston, who then deadpanned: “And I keep my fingers crossed for the future.”
The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.
After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.
With that, the five big independent investment firms were unleashed.
And of course, despite the pseudo-justification:
But the agency never took true advantage of that part of the bargain. The supervisory program under Mr. Cox, who arrived at the agency a year later, was a low priority.
The commission assigned seven people to examine the parent companies — which last year controlled financial empires with combined assets of more than $4 trillion. Since March 2007, the office has not had a director. And as of last month, the office had not completed a single inspection since it was reshuffled by Mr. Cox more than a year and a half ago.
The few problems the examiners preliminarily uncovered about the riskiness of the firms’ investments and their increased reliance on debt — clear signs of trouble — were all but ignored.
The commission’s division of trading and markets “became aware of numerous potential red flags prior to Bear Stearns’s collapse, regarding its concentration of mortgage securities, high leverage, shortcomings of risk management in mortgage-backed securities and lack of compliance with the spirit of certain” capital standards, said an inspector general’s report issued last Friday. But the division “did not take actions to limit these risk factors.”
Drive to Deregulate
The commission’s decision effectively to outsource its oversight to the firms themselves fit squarely in the broader Washington culture of the last eight years under President Bush.
A similar closeness to industry and laissez-faire philosophy has driven a push for deregulation throughout the government, from the Consumer Product Safety Commission and the Environmental Protection Agency to worker safety and transportation agencies.
“It’s a fair criticism of the Bush administration that regulators have relied on many voluntary regulatory programs,” said Roderick M. Hills, a Republican who was chairman of the S.E.C. under President Gerald R. Ford. “The problem with such voluntary programs is that, as we’ve seen throughout history, they often don’t work.”
As was the case with other agencies, the commission’s decision was motivated by industry complaints of excessive regulation at a time of growing competition from overseas. The 2004 decision was aimed at easing regulatory burdens that the European Union was about to impose on the foreign operations of United States investment banks.
The Europeans said they would agree not to regulate the foreign subsidiaries of the investment banks on one condition — that the commission regulate the parent companies, along with the brokerage units that the S.E.C. already oversaw.
A 1999 law, however, had left a gap that did not give the commission explicit oversight of the parent companies. To get around that problem, and in exchange for the relaxed capital rules, the banks volunteered to let the commission examine the books of their parent companies and subsidiaries.
The 2004 decision also reflected a faith that Wall Street’s financial interests coincided with Washington’s regulatory interests.
“We foolishly believed that the firms had a strong culture of self-preservation and responsibility and would have the discipline not to be excessively borrowing,” said Professor James D. Cox, an expert on securities law and accounting at Duke School of Law (and no relationship to Christopher Cox).
“Letting the firms police themselves made sense to me because I didn’t think the S.E.C. had the staff and wherewithal to impose its own standards and I foolishly thought the market would impose its own self-discipline. We’ve all learned a terrible lesson,” he added.
Watching rightwingers/libertarians/'conservatives'/Republicans squirm and reveal themselves as not serious, not reputable, not men of their word, not people who practice what they preach, namely personal responsibility affords me a certain satisfaction, I admit, especially after accusations (even now!) that I am somehow a 'statist'. But I'd much rather these types had never had the influence to bring about such mischief in the first place.
Sigh. The curse of Cassandra, and all that, I suppose.
I'll buy into Libertarianism as soon as Libertarians agree that corporations should be banned. Unless and until all economic actors are not given a waiver on personal liability the Libertarian model makes no sense.
It is not a coincidence that the great Wall Street investment banks, all with roots a century long or more were completely destroyed in a period of less than 10 years as they went from privately held corporations and partnerships to public corporations. As their behavior became divorced from the names of the owners all restraint was lost. Go up and down a list of all the great corporations, even the ones now dead or dying, and find one single person at the top who has suffered one slight bit of discomfort save perhaps some hit to their gigantic net worth if they were dumb enough to have much of their assets in their own company.
Goldman Sachs paid out $40 billion in bonuses over the last 5 years. If they would have retained a good portion of that as capital they would not be in trouble. Ah, but therein lies the key. Paulson is worth at least $500 million, he got his. The triumph of individualism. The rewards to the innovators, the creative. As to the parasites, well they lose their jobs and get forclosed on.
Wow, this is one of the more intentionally inaccurate political "fact checks" I have ever seen. At least the link is provided so that is quickly apparent.
We got into this mess because liberals felt that it was unfair for loans to go only to those who could pay them back. They felt that people should have homes whether or not they could afford them. Who could possibly have predicted that making bad loans could lead to problems? Obviously, the real reason for this crisis is that we didn't give enough money to ACORN, an error that the Democrats tried to fix. And Obama has funneled money to ACORN every chance he got, so this can't be his fault.
While the rest of your post is nonsense, this is the most offensive part of it. Why? Because it is totally not true. Not to mention you are being cyrpto-racist. What you are really trying to get at here is the CRA. And even the Federal Reserve says to stop being so stupid. In fact, CRA loans get paid back at a higher rate then the general public.
SOV, what has occurred in your brain to prevent from realizing that a market or industry in which 6 trillion in notes receive an implied taxpayer guarantee, thus allowing the two entities which sell the notes to borrow money at rates lower than any potential competitors, and as the OMB used to note, have the effect of lowering interest rates for all consumers in the industry, is, yes, an industry or market which is dominated by the state? Is this sort of cognitive problem common for you? There is nothing contradictory in noting that GSE's who sell loan portfolios with an implied taxpayer guarantee, while being told by Congress that they should expand rates of homeownership, while the top executives of the GSEs can pay themselves tens of millions of dollars by doing so, will over time experience an increasing rate of erosion in underwriting standards, and have an effect on the entire industry.
Yes, William H. Donaldson, notable Obama supporter, really screwed up when he approved of changing the alowable ratios for those five companies form 5:1 to 30:1 or higher. What of it?
I'll buy into Libertarianism as soon as Libertarians agree that corporations should be banned. Unless and until all economic actors are not given a waiver on personal liability the Libertarian model makes no sense.
I'm right there with you, though I do call myself a libertarian. But I find it a more practical problem...I believe that the corporate model is doomed to failure just as the concept of a benevolent dictator is fundamentally flawed. I believe many corporations and their practices are detrimental to economic well-being and freedom.
Will, you and yours have screwed up, and screwed up bad. We've gone from a privatized Fannie and Freddie to an F & F with an 'implicit guarantee' to 'dominated by the state'. More and more soaring rhetoric, anything to admit that - gasp! - You Were Wrong.
You are, in my opinion, treasonous scum. You _don't_ care about the good of the country; you care only about absolving yourself and your philosophy from any of the blame. I have yet to see any of you low-life traitors accept a scintilla of responsibility for this fiasco, let alone fifty percent, half, let alone (and properly) the vast majority of the blame.
Oh, and for the record - actually, for the record again - I don't absolve anyone who happens to have a D in front of their name of any blame. In fact, I'll post yet another few links:
How about this bar graph showing which party slurped up what percentage of the total contributions from the big players?
Or how about the article this graph accompanies, showing at least some of the blame slops over onto the Democrats?
Both political parties have become beholden to Wall Street.
Legislators failed in several instances to conduct oversight hearings or to raise concerns as the Bush administration adopted rules that fed the mortgage frenzy and set Wall Street on a path to disaster.
For instance, in 2004 when the Securities and Exchange Commission adopted a major rule change that freed investment banks to plunge tens of billions of dollars in borrowed money into subprime mortgages and other risky plays, congressional banking committees held no oversight hearings.
The difference is, with Democrats, it is easy to see that this is a quid pro quo, cash for influence (such as they may have had in 2004.) There really isn't a pretense that this is just good economic policy.
In contrast, the right wing has made it part of their philosophy that deregulation, a diminution of government oversight, privatization, etc. is a good thing, as scientifically (ha!) determined by their cockeyed brand of economic theory. They have suggested for literally decades that disagreeing with them these points is 'not being scientific' or 'not understanding elementary economics', etc. Or that 'statists' know that what the Chicago school peddles is true, but that they are selfishly denying this in order to further their own grubby little careers.
Very obviously now, that particular philosophy simply isn't true, and equally obviously, that's become apparent to the vast, vast majority of the public who aren't locked in to some sort of tribal identification holding pattern.
But what despicable people like Will Allen want is to have their cake and eat it too. After things are set right again, does anyone doubt that he'll keep on parroting right-wing talking points? Or that, somehow, he will find a way to blame this all on 'big government', the Democrats, etc.
Jesus Will, at long last, don't you at long last have any sense of shame?
Well now we've really gone off the rails but I disagree totally that corporations are doomed. Instead they have just begun to hit their stride as the dominant human organizational model, replacing states. Somewhat modified in form if not concept they now might be said to dominate China and Russia. Certainly the majority stake holders in the great corporations in those places are so entwined with the political leadership that they are essentially as one.
While corporations are created by the state they have now co opted much of the political decision making process. Has the failure of the huge financial corporations now caused some some rethinking of how this outcome took place. Hardly. A giant of the financial world was made Treasury Secretary and has just cowed the state into providing him with the capital for his own hedge fund which will help financial corporations.
Megan McArdle:
Can we please have a blog post telliing us why you did this? It doesn't stop you from voting in November so I don't see the reason for it. Secondly, you don't live in Steny Hoyer's district(as I believe you live in DC), so you can't help us DFH's get rid of his corrupt butt.
after the statists put in place the mechanisms and incentives which led to a disastous speculative bubble
You should keep repeating this falsehood to yourself. It'll help you sustain the illusion that you're a Rugged Individualist and not a "compulsive statist."
Thanks for the unintentional comedy; "compulsive statist" brings the unmeant funny.
Oh, and thanks for the Bush Boom. As with the Iraq Invasion, it's so awesome.
Here's the thing Megan: I would agree with you if by electing Obama we were electing a "unitary executive" who didn't have to answer to Congress. But, of course, we're not. So while Obama's connections to FM/FM might be less than the GOP is making them out to be, the Democratic leaders of Congress who will bring him to heel are up to their necks in it.
It's very reminiscent of 1977 and 1993. Carter and Clinton got elected by voters who were firmly rejecting Republican rulers, but were looking for something different than an old-line Democrat. They didn't want a liberal, they wanted someone more in the middle who they could trust to do the right thing, regardless of partisanship. And I believe Carter and Clinton had the best of intentions to govern just that way. But Congress simply wouldn't let them. They dismissed the new presidents' reform ideas as if they'd been written by children. They were determined to get their pent-up agendas addressed first, second, third and fifth.
So whatever Obama says he's going to do, the first act of legislation he's going to sign will be the Employee Free Choice Act, which will hugely expand union membership by allowing organizers to intimidate workers into signing cards rather than voting in a secret ballot. Fannie/Freddie will not be reined in, because Barney Frank and Nancy Pelosi will make it very clear to Obama that his legislative agenda is DOA if he doesn't handle it their way. There will never be a middle-class tax cut, although there will be a Patriotic Contribution Act raising taxes on rich people making $110,000 and up.
Hillary could have stood up to this, because she'd seen it before. If McCain wins, we'd at least have a fight between equals. Obama is not strong enough to be anything but Congress' toy.
Vail Beach:
Old-line Democrat? If you mean Clinton/DLC crap, I agree. If you mean FDR Democrat, then I disagree. The problem is all the corporate donations to both parties. The thing is, there are those of us that are trying to clean up the Democratic Party. Intimidate workers? You mean like the bosses do? I hope you realize that real wages have been declining and if you did, you'd know why the EFCA is important. Fannie/Freddie will be changed because they don't have lobbyists anymore.
Joe, here's the thing: we spent thirty years marching into the wilderness. Better figure on another thirty to march back out of it.
Once the Democrats have a filibuster-proof majority, the next thing to do is to initiate a few modest reforms, such as reforming the bankruptcy laws, giving the courts the ability to reset mortgages, beefing up the various federal oversight agencies, getting capital gains taxes in alignment with taxes from income, etc. And then eject the blue dogs. They aren't needed any more, and will simply use their power ala Lieberman to pursue their own agendas. Then we can start working on the real reforms: lobbying, political contributions, a new Fairness Doctrine, etc. We could also kill off the various propaganda 'think tank' organizations, perhaps with the threat of heavily taxing them or their donors. Raze the Chicago school to the ground.
Finally, we could do something about paring back the military and cracking down on abuses like the whole big pharma sector and insurance industries. Oh, and easing the hacks off the highest court in the land and appointing people who will actually do their jobs in that position. No more Scalia's, Thomas's, Robert's, etc. Those people make the Supreme court a laughing stock.
None of this is going to be easy, and all of it will take a lot of time. But by '40s, America might finally enter the 21st Century.
SOV, you are quite possibly the most ignorant, drooling, lackwit to ever post in this forum. Congratulations. How much bad acid have you dropped, in order to give you the notion that there was ever a moment when Fannie and Freddie were privatised? Why the hell do you think that these entities were able to borrow at below-market rates for decades? Because they were nice people? SOV, if you can't grasp that these entities had an implied taxpayer guarantee from the moment that they were formed, which is why they could borrow money so cheaply from the moment they were formed, well, why don't you just go down to your local zoo, and offer to trade places with a chimp; I sure your simian cousin could use the day off, and you certainly fling crap as well as him already.
Look, you yammering dolt, people like me have been saying FOR DECADES that Fannie and Freddie were inevitable trainwrecks, because, yes, all the incentives were in place to make them so. People like me have been saying FOR DECADES that it was lunacy to have Congress give these entities the goal of expanding the rate of homeownership, while also allowing them to bundle and resell paper with an implied taxpayer guarantee, while also letting their management pay themselves huge sums of money while they carried out these tasks.
Truly, you titanic cretin, the fact that you haven't yet grasped that there was never a day when Fannie and Freddie were private entities (for cripes sakes, you moron, just what the hell do you think the "government sponsored" part of "government sponsored entities" means?) indicates that you could press your neck across the externally moving part of a running chainsaw, and not lose any cognitive capacity. If I wanted to be mean, I'd suggest that you give it a try, if it weren't for the fact that it is apparent that you might just take the suggestion, such is your brain.
By old-line Democrats, I mean the "lions" of Congress who are more concerned with pork and the perks of chairmanship. They rolled Carter and rendered his presidency a joke. They rolled Clinton for the first two years. His presidency was saved, ironically, by Newt Gingrich booting out the old Demo establishment and then overreaching to render himself less powerful than he could have been. But whenever the Democrats get back in control of Congress, they revert to form -- promising fiscal responsibility and an end to backroom deals, while carrying on as always.
You're obviously pretty young or history-challenged if you think the DLC was "old-line." Dude, without the DLC, Republicans would be about to enjoy their eighth straight presidential victory. The DLC reformed a Democratic brand that was in the toilet and made viable again. You think Obama isn't a DLC type candidate because he panders to you by seeming to ignore the DLC. But he is campaigning using the DLC's song, which is the only song that gets a Democrat elected in this still-conservative country.
EFCA will not raise real wages. You've got to be kidding. It will increase domestic unemployment because -- talk about old-line -- it is a nostalgic fantasy that empowering organized labor will bring back a 50s-style economy. You want to see how global the economy can become? Pass the EFCA. Real wages will not increase by any government action because government cannot increase the nation's wealth.
If you're on a union payroll, I forgive you for supporting for EFCA. Like the guy in "Thank You for Smoking" said, everyone's got to pay their mortgage. But if you actually said those words without someone first slipping you a fifty dollar bill, then someone should be tasting your Kool-Aid.
I would say this too: right wingers have been claiming for a long time that inequality doesn't matter, as long as everyone's lot in life is improving, and that Laissez Faire is the best way to increase productivity, wealth, etc.
Now, there are certain normative arguments that can be made that given two societies A and B, with B having twice the wealth but forty times the inequality of A is somehow the 'better' society. That is, even if most people are better off living in society A, B is still to be preferred.
But now it appears - surprise - that policies that flatten the inequality in fact make society A the better engine of growth and productivity. So that even though the wealthiest in A are not as rich as the Wealthiest in B, A is, by the old argument, now the better place to live.
Is anyone surprised that the arguments have switched, the goalposts moved yet again? Now the argument by these types is that society B is _still_ better because it is possible to attain greater wealth than in society A. It's not an argument that right-wingers want to make, but it's all they've got at this point.
And at least it's to be preferred to the real reason why they prefer the setup in society B.
Hey, SOV, is Joe Biden one of the Democrats who needs to be ejected, given he was one of the prime movers (I wonder how much Biden's son was getting paid by MBNA, while Biden was carrying that swell corporation's water!) behind the hideous bankruptcy bill? How does one eject a sitting Vice President from his party? Or do you intend to call for impeachment proceedings immediately after he is inaugurated? Do tell!
Megan, how does it feel to belong to a tribe which has a lot of members who want to bring back the Fairness Doctrine? Mind you, the Republican candidate is clearly despicable as well on these matters, but I am curious as to what prompted the decision.
Chuckle. Will, I think it's pretty obvious to all who's got the smarts and who don't, and who is well informed, and who ain't. And who has been right all along and who hasn't.
No, it's quite, quite clear that you are my intellectual inferior. Nothing wrong with that. What _is_ wrong is that you are also my moral inferior as well.
Oh, and of course, a few links, just to show you how it's done. Like how Fannie Mae was for example:
First established in 1938 as a government agency, Fannie Mae in 1968 became a private, shareholder-owned company with a charter from Congress requiring the company to support the housing finance system.
In 1968, to remove the activity of Fannie Mae from the annual balance sheet of the federal budget, it was converted into a private corporation.[6] Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae).
It looks like you put a lot more energy into throwing poo when you've been overmatched than you do in making sure it's not pathetically easy to prove you're wrong. Hmmmm . . . consistent with the way you've been behaving, maybe your whole schtick is to encourage poo-flinging because that's all you're really here for.
I'm not questioning the proposition that a more equal society is likely to be a more prosperous one. I'm questioning the proposition that the EFCA will do anything to increase prosperity or equality. It is a law for union bosses, period. Which is why the campaign to get it passed is entirely a stealth one. Did you hear Obama mention it in the debate? Did Biden? Did either of them even mention organized labor? But like I said, Obama's First Hundred Days will be all about organized labor. America will be very surprised, but it will be over quickly. Debate doesn't help this particular cause, so there won't be much of it.
SOV, you moron, the fact that Fannie and Freddie were still able to borrow at well below market rates after 1968 means that there continued to be an implied guarantee on the paper they sold. Do you know anything at all? Do you think private entities typically are told by Congress what they are required to support? How unspeakably stupid are you?
"Once the Democrats have a filibuster-proof majority.... And then eject the blue dogs."
Uh...how about some math help here for poor SOV?
You can't get to a filibuster-proof Democratic majority without the blue dogs. Ever. You can't even get to a majority.
Posted by Vail Beach
Sigh. If you're going to try some sort of takedown, would you please put some effort into it? You might start by asking how it is possible for a party to eject one of it's own at all. The answer is - playing favorites, both with comittee assignments and election help.
This being the obvious and well-known route, one thinks immediately of the 2010 elections. If there is a blue dog who won't get with the program, who is being obstructionist in a way that hurts the party or certain objectives of the party, one strips that representative of any sort of power above and beyond the simple vote. One pointedly does not endorse Huckleberry Hound, but his much more progressive Democratic challenger, Mabel Mae Jones. One does not direct any effort or funds towards Huckleberry's campaign, one flies in the top brass, complete with brass band for Mabel. It's not a sure thing by any means, but odds favor Huckleberry being cut off at the knees during the primaries. Statistically, the House loses Blue Dogs and brings in more progressives. And of course, this causes the remaining Blue Dogs to think very carefully about any obstructive maneuvers they wish to undertake.
None of this is hard to find out, if indeed you didn't know it already.
Again, we see who is offering intelligent commentary, and who couldn't outsmart a jar of pickles.
Please, Vail, if you're to do this thing right, would you at least _try_ not to make your responses not quite so dimwitted?
SOV, you moron, the fact that Fannie and Freddie were still able to borrow at well below market rates after 1968 means that there continued to be an implied guarantee on the paper they sold. Do you know anything at all? Do you think private entities typically are told by Congress what they are required to support? How unspeakably stupid are you?
Posted by Will Allen
I think at this point, I'll just walk away from the rabid dog. Clearly he has nothing to offer except an invitation to roll around in the mud with him.
No thanks, guy; I pass. But otoh, thanks for demonstrating just how bankrupt, both intellectually and morally, you and all you stand in for are. Like Communism, your lot is destined to wind up in the ash bin of history (intended.)
I would like to also point it is another fraudulent impersonation, claiming I was sexually active in the 'meatpacking' area.
I'm too young for that, but did experiment sexually when I was younger (who doesn't), and regard sucking off a brass band which did one Saturday evening with embarrassment, but not the shame I have of having once been a Marxist.
The latter left a far worse taste in my mouth than the former.
ScentOfViolets:
You could have cut down on the typing by just referencing Donna Edwards. We(meaning progressive Democrats) took down Al Wynn and have one less Blue Dog in the House as a result. While Lieberman is still in the Senate, we can, without a doubt, say we caused his meltdown and soon to be slide in to irrelevancy. There is more to come.
I'm not questioning the proposition that a more equal society is likely to be a more prosperous one. I'm questioning the proposition that the EFCA will do anything to increase prosperity or equality. It is a law for union bosses, period. Which is why the campaign to get it passed is entirely a stealth one. Did you hear Obama mention it in the debate? Did Biden? Did either of them even mention organized labor? But like I said, Obama's First Hundred Days will be all about organized labor. America will be very surprised, but it will be over quickly. Debate doesn't help this particular cause, so there won't be much of it.
Old union bosses? In what industry? You obviously don't know much about unions or how they work, except for your right-wing nonsense. There is a lot of stuff that hasn't been brought up in any of the debates. Obama's First One Hundred Days will not be "all about organized labor". That is just one of many policies to be enacted.
I could have cut it down even further by just linking to Firedoglake.
I've got to wonder if these people are really as ignorant as they make themselves out to be, or if this is some sort of deliberate strategy. If so, it's not working.
You're obviously pretty young or history-challenged if you think the DLC was "old-line." Dude, without the DLC, Republicans would be about to enjoy their eighth straight presidential victory. The DLC reformed a Democratic brand that was in the toilet and made viable again. You think Obama isn't a DLC type candidate because he panders to you by seeming to ignore the DLC. But he is campaigning using the DLC's song, which is the only song that gets a Democrat elected in this still-conservative country.
You are the one who don't seem to understand what the DLC is. Two things make them up. One, they are neo-cons who chose to remain in the Democratic Party(see "Holy" Joe Lieberman) and 2.) They are what I call Corporate Democrats. Those are the kind like Ben Nelson, who calls himself a Democrat, but votes more often with Republicans(while selling himself out to corporate interests). What way is this county conservative? Enlighten me. The DLC is old news. Harold Ford, Jr. couldn't even help his protege win back his old Congressional seat. How did the DLC make the Democratic brand more viable? Gore and Kerry both lost(when each should have won .. and the same goes for Hillary). And pork? You mean pork like Don Young and Senator Ted "Toobez!!" Stevens put pork into bills?
I've got to wonder if these people are really as ignorant as they make themselves out to be, or if this is some sort of deliberate strategy. If so, it's not working.
They put an incurious twit in office and are thrilled with another as McCain's VP. They revel in their intellectual dishonesty. Do you know how Palin found out about "The Surge"?
"But now it appears - surprise - that policies that flatten the inequality in fact make society A the better engine of growth and productivity."
Where the heck did you get this? Have you been reading brochures from Cuba and North Korea on the 'worker's paradise'?
Also, SOV, can you find even one money and banking textbook that doesn't describe Freddie and Fannie as quasi-government agencies, explaining that they can borrow at below-market rates because everyone assumes that they're still backed by the government, even though they're supposedly private? It's been a few years since I taught a class that used one of these textbooks, but most publishers still send me review copies in case I ever assign one again, and all the money and banking textbooks I have contain a special section on GSEs, explaining that they're semi-government agencies. After all, why else wouldn't they be subject to anti-trust regulations and prevented from having such a ridiculously large market share?
"In fact, CRA loans get paid back at a higher rate then the general public."
JK's conscience -
Could you give your evidence for this? In the Federal Reserve link you gave, it claimed only that the rates weren’t all that different either way, and offered as evidence a study that said that CRA loan performance was worse (in terms of both default and delinquency rates). Here's the link to that study:
This study is apparently the best evidence we have, but it’s pretty limited. Out of 10,000 financial institutions, they sent the survey to the 500 largest and got back 143 responses, of which less than half were able to offer data on CRA loans specifically, so I guess one could argue that there’s not enough evidence to conclude anything.
But on the findings of the survey cited by the Federal Reserve report, here are the conclusions I found:
“On average, although experience varies, survey responses indicate that CRA-related home purchase and refinance loans do not perform as well as home purchase and refinance loans in the aggregate”
“about half of the survey respondents have higher rates for both measures of delinquency for CRA-related home purchase and refinance loans than for overall home purchase and refinance loans.”
“CRA-related home purchase and refinance loans do not appear to perform as well as other home purchase and refinance loans when the analysis is conducted on a per CRA-dollar basis (tables 3e and 3f).”
The study also surveys other research, which was mostly on affordable mortgage programs for low-income borrowers, many (but far from all) of which were CRA-related loans. It concluded that “Evidence on the delinquency, default, and prepayment experiences that mortgage market participants have had with affordable home loans has been fairly consistent. Affordable home loans tend to have higher delinquency and default rates than loans extended using traditional underwriting criteria.”
You were the one that brought up the CRA specifically. I was speaking about "affordable home loan" programs in general, of which CRA loans are certainly a significant part but not the only part. I'd be interested to see what evidence you have that they actually get paid back at a higher rate, since the links you provided before indicate the opposite.
One more point regarding the survey I already linked to that (counter-intuitively) appears to be the evidence for the claims that CRA loan performance is as good as non-CRA loans:
The survey looked at delinquency rates as of Dec. 31, 1999. For default rates, it measured net charge-offs during the calendar year 1999. Although the CRA had been around since the Carter Administration, it was only in 1995 under Clinton that the CRA was expanded to include subprime loans, and Fannie and Freddie were given affordable-housing credit for buying securities containing subprime loans. Thus this study could have the same problem that Michael Milken’s junk bond studies had – that the newer, riskier debt was still too young to show high default rates, while the overall sample was dominated by debt from an earlier era with higher standards.
Clinton only allowed subprime loans to be counted as CRA loans and purchased by Fannie and Freddie beginning around mid-1995, and it would naturally take time for the market to shift towards those loans. It takes time for a mortgage loan to become delinquent, then declared to be in default, and then charged off, so charge-offs for the 1999 calendar year would probably include very few of the newer subprime loans.
And note that it’s fair to blame the Clinton Administration for these changes, since the changes were through the Treasury Department and HUD (not through the Republican controlled Congress), and were part of Clinton’s National Homeownership Strategy. Here’s a link to an Investor’s Business Daily article on Clinton’s role: http://news.yahoo.com/s/ibd/20080924/bs_ibd_ibd/20080924general01
Ben Smith at The Politico reported September 24, 2008:
Former Fannie Mae chairman Jim Johnson was dumped from Obama’s vice presidential search team, but he’s still playing a behind-the-scenes role on the campaign.
Former Senator Tom Daschle, a top Obama backer, emailed a select list this afternoon that he and Johnson would be leading a briefing intended largely for Clinton’s campaign brain trust next month.
“Jim Johnson and I have scheduled another informal breakfast discussion and update on the campaign early next month,” he wrote to a list including Senator John Kerry, James Carville, and Richard Holbrooke, as well as Clinton’s former top campaign aides, including Howard Wolfson, Geoff Garin, and Harold Ickes.
Johnson’s involvement comes at a moment when political association with the failed mortgage giants is particularly toxic. He was already the subject of a McCain ad attacking Obama.
"But now it appears - surprise - that policies that flatten the inequality in fact make society A the better engine of growth and productivity."
Where the heck did you get this? Have you been reading brochures from Cuba and North Korea on the 'worker's paradise'?
Uh huh. You probably haven't heard me describe myself as an Eisenhower Republican maybe thirty or forty times, once at 12:58 in this very thread. But you think Eisenhower Republicans are somehow Communist. Rather telling, that is. Policies that have capital gains taxed at the same rate as income are clear evidence of Communism. Policies that are against the tomfoolery of awarding government contracts to Kellog, Brown and Root, or Blackwater in the way they were awarded is a symptom of solidarity with Che Guevera. Right. And so I find myself rather slack-jawed at this declaration:
It's been a few years since I taught a class that used one of these textbooks, but most publishers still send me review copies in case I ever assign one again, and all the money and banking textbooks I have contain a special section on GSEs, explaining that they're semi-government agencies.
You taught some sort of class with any sort of numbers in it? I find that extremely hard to believe. Y'know, you could actually post some cites if you think this point is actually worth pursuing. Instead we get this twaddle:
Also, SOV, can you find even one money and banking textbook that doesn't describe Freddie and Fannie as quasi-government agencies, explaining that they can borrow at below-market rates because everyone assumes that they're still backed by the government, even though they're supposedly private?
Notice the construction here, folks. _Ann_ makes an assertion, and _I'm_ the one that's expected to do the heavy work.
And also despite the fact that as far as CRA's are concerned, Frannie and Freddie weren't the problem:
In a Bank for International Settlements ("BIS") working paper, economist Luci Ellis concluded that "there is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust."[39]
According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made "high-priced loans" at more than twice the rate of the banks and thrifts. She states that most CRA loans have been responsibly made, and are not the higher-priced loans that have contributed to the current crisis.[40]
And to the extent that they acquired toxic paper, well, there were worse offenders, offenders that I'm not entirely sure Ann won't claim were also not 'private'.
From the Washington Post 8/18/08 : " Fannie's Perilous Pursiu of Subprime Loans:
At the end of June, Fannie Mae owned or guaranteed $388.3 billion of Alt-A and subprime mortgage investments. In comparison, it said its capital -- the financial cushion that enables it to absorb losses -- totaled $47 billion, which exceeded the government's minimum requirement by $9.4 billion.
In his statement to The Post, Mudd said Fannie Mae's Alt-A investments have been hurt "by the most severe decline in home prices since the Great Depression." Making matters worse, the investments are concentrated in states "where home prices have fallen further and faster than in the rest of the nation," he said.
This month, Fannie Mae said it would stop taking on new Alt-A loans by the end of this year.
From the Washigton Post : " How HUD Mortgage Policy Fed the Mortgage Crisis":
HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.
Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.
The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.
Note, btw, that almost by definition, FM cannot originate a notionally subprime loan:
Subprime could also refer to a security for which a return above the "prime" rate is received, also known as C-paper. In the United States, mortgage lending specifically, the term "subprime" can be applied to "non conforming" loans, those that do not meet Fannie Mae or Freddie Mac guidelines, generally due to one of a array of factors including the size of the loan, income to mortgage payment ratio or the quality of the documentation provided with the loan.
So these stories are just a wee bit . . . disingenuous. Yes, they bought securities. Just like everyone else did. But they most definitely did not do the lending that those securities were based upon.
late Friday and still with some misgivings, I registered as a Democrat.
I'm like a little nervous that they're going to start serving Republican at the Democrat parties too. Obama's speech on how he was going to liberate property from the insurance and pharmaceutical companies and give the mob what they want in the medical arena today was a disturbing start.
Ann - Thanks for your effort to keep the record straight. Before you bother to trace back through SOV's latest links note that the reference is to wikipedia. And as if that weren't bad enough, the article has been flagged as one whose neutrality has been challenged.
I might also take the small responsibility of explaining to the uninitiated that independent mortgage companies typcially originate loans and then sell them to the likes of Fannie and Freddie. It is not unreasonable to describe them as acting, in these instances, as the contracted retail lending arms of those Government Sponsored Entities (SOV - please note the word 'Government' in the title. It actually means, you know, the government.)
"Notice the construction here, folks. _Ann_ makes an assertion, and _I'm_ the one that's expected to do the heavy work."
I assumed that you would quibble with anything that I chose, or else simply refuse to believe it. But here's something from “The handbook of mortgage-backed securities” by Frank Fabozzi (the established expert on debt markets):
"Their charters allow Fannie Mae and Freddie Mac to hold $2.50 of risk capital for every $100 of assets – a leverage ratio of 40:1. The actual ratio of core capital to total assets for both agencies in the last few years going into 2005 has run at a slightly lower 32:1.... roughly three to four times the leverage of the typical bank. This means that if a GSE and a bank are both bidding for an asset, for example, the GSE can buy it profitably at a fraction of the spread to funding that the bank might require. If the GSE also brings a lower cost of funding to the bid, the combination of good funding and high leverage is powerful. .... The GSE’s origins in acts of Congress and their ongoing $2.25 Million lines of credit with the U.S. Treasury create political leverage for these constituencies. The GSEs also view their government ties as one reason why their debt has traded at lower yields that most other financial institutions"
So they've been allowed higher leverage ratios than any of their competitors, have lines of credit with the U.S. Treasury that are not given to their competitors, and have been able to borrow more cheaply. They themselves attribute their lower borrowing cost to their government ties.
Many people here have pointed out how these quasi-government agencies were different from their competitors. Every textbook puts these 'private' entities in a separate category. Rather than resort to cheap personal attacks, perhaps you could explain why you refuse to acknowledge a difference, in spite of the many specific differences that have been presented to you. Are you claiming that, from a regulatory standpoint, they were treated exactly the same as any other lender?
In the BIS working paper that you cited, Ellis claimed that the GSEs were supposed to be a key part of the enforcement of regulatory standards, which would be odd if they were just private companies. Here's a quote:
"The mortgage market in the United States has several unusual features that are seen in few other countries. As described in Green and Wachter (2005) and elsewhere, the US mortgage system evolved to receive indirect government support via the GSEs. The GSEs were long able to fund themselves in capital markets at advantageous rates."
He later talks about how the GSEs were supposed to enforce high lending standards.
As for Janet Yellen, again I went to the actual source and was unable to find even an unsubstantiated assertion from her that "most CRA loans have been responsibly made". She certainly didn't offer any evidence of this. She argued that CRA loans have helped communities, which is a different claim.
jl - You're right, I should have stopped sooner. Although at least Wikipedia often gives sources, and it's interesting what one finds by pursuing the original sources. But I'm done for the night. Thanks for explaining that GSEs don't just originate loans.
When you looked at the BIS working paper itself, surely you noticed that Ellis's source for the role of the CRA was the speech by Yellen, didn't you? So you didn't give two sources, you gave the same source twice. And when you read that source, a speech and not a research paper, it offers no direct evidence and actually claims only that others were also making "high priced loans" (the question is over loan standards, not pricing) and that CRA loans are good for communities.
OK, I've said twice that I'm done, but I hadn't seen Megan's contribution before this.
Thank you, Megan, for approaching me with an offensive and disturbing sexual reference when I've worked hard to avoid personal comments, despite numerous provocations. I understand that hard data indicating a leading role for Democrats in the subprime lending mess doesn't sit well with your newly-announced blind allegiance.
I am disappointed by your recent writings and I am disappointed by your decision to register as a Democrat. I was a regular reader and occasional poster to Asymmetrical Information and followed you to The Atlantic. As a conservative by philosophical inclination and an economist by training I sometimes had reason to disagree with your positions, but I found your thoughtful libertarianism interesting, particularly when you struggled to make that philosophy work practically as well as morally.
Your more recent writings have lost their intellectual center and are no longer the least bit compelling. You are just not terribly thoughtful anymore. Instead you are lashing out without justification. Do you expect anyone thoughtful to believe that someone with a mature intellect and a fondness for a libertarian ideal would register as a Democrat just as that party lurches toward the authoritarian left? And how can you seriously suggest that John McCain’s - not my favorite politician, by the way - associations with people who may have worked as lobbyists for Fannie Mae and Freddie Mac are more disturbing than the close connections the Democratic Party had with the people who hired those lobbyists, told them what to say, and who ultimately drove Fannie, Freddie and a good chunk of the American economy into a ditch? Or is it a plank in the new libertarian platform that we should release Andy Fastow and Jeff Skilling and lock up Enron's lobbyists?
I never had you pegged as political partisan, but things change. Good luck with the Democrats. I doubt that you'll care much, but I don't think I'll be reading anymore. Intellectual flailing is just not that interesting. Perhaps you will bid me farewell with a rude sexual innuendo?
Anyone can sign their comments as Megan McArdle. It doesn't mean that person is actually her. (I, for example, am neither her nor the vibrator comment person).
1. CRA has been around since 1977. It's rather unreasonable to blaim a 30-year-old banking regulation for today's crisis, even more so than blaming somebody's gay lover.
2. FNMA/FHLC acquired Alt-A loans, not sub-prime loans. Whereas all of them have gone bad, there's a big difference in terms of standards applied to borrowers. For that matter, the default rate on conforming mortgages has increased 30 times in the last two years. FNMA/FHLC aren't the ones to blame. http://economistsview.typepad.com/economistsview/2008/09/it-wasnt-fannie.html
3. What other investment opportunitites were available after 2002 aside from real estate? Would the markets (and investment opportunities)be more diversified, if the investment in infrustructure weren't declining from 1985? If $100.000.000.000 weren't sunk into sand every year? If the first Treasury Secretary in the W administration weren't sacked for ideological reasons?
P.S. I thought that the kind of folk who think that all Democrats are terrorists couldn't read. Apparently, some can even write and, amasingly, can find theAtlantic.com
I do hope the comment from October 4, 2008 10:48 PM wasn't from our kind hostess. She's always shown a great deal more intelligence and decency than that. Then again, she did register as a Democrat....
Ann - Thanks for your effort to keep the record straight. Before you bother to trace back through SOV's latest links note that the reference is to wikipedia. And as if that weren't bad enough, the article has been flagged as one whose neutrality has been challenged.
Uh, jl, notice that I quoted the parts with footnotes? Why do you think that was? As you should know, there seems to be a limit to how many links one can post in a certain time. You _are_ capable of going to the article and clicking on the link, aren't you?
"Notice the construction here, folks. _Ann_ makes an assertion, and _I'm_ the one that's expected to do the heavy work."
I assumed that you would quibble with anything that I chose, or else simply refuse to believe it. But here's something from “The handbook of mortgage-backed securities” by Frank Fabozzi (the established expert on debt markets):
No, you just don't want to do the work. You claim to be a teacher, though you don't say of what. I'll assume some sort of finance.
Then you should know that the burden of proof always falls on the party making the assertion. Period. End of story.
You tried to weasel out. You also tried to imply that I'm some sort of Communist or Communist sympathizer. Stop it.
I've worked hard to avoid personal comments, despite numerous provocations.
Ann
Ann, get this straight - you're the one who has been provocative. Didn't you write this?
Where the heck did you get this? Have you been reading brochures from Cuba and North Korea on the 'worker's paradise'?
Stop playing the victim. We all know the dynamic here, right? It's called "Somehow, It's the Governments Fault. We Don't Know How, But We'll Find it."
Starting sometime last week, it was the conservative rage (pun intended) to blame it on CRA's. It quickly became apparent that no one was buying that particular talking point. Then it was the FF's taking on subprime loans. _That's_ barely worth the two lines it takes to refute it. Now it's the fact that these entities are somehow responsible coupled with trying to show that they are somehow government agencies.
Somehow, some way, these tossers are going to try to find a government connection. Can you say 'theory in search of the facts'? Sure. I knew you could. In a nice little whirl of synchronicity, Mark Thoma has a piece up today on the very subject.
Fundamentally, then, it was the agency problems and the failure of risk prediction and distribution models that allowed the bubble to inflate and then cause big problems after it popped. But back to Fannie and Freddie. The willingness of the non-traditional banking sector - the shadow banking system - to take on these risky assets and still pay investors a relatively high return put tremendous pressure on Fannie and Freddie to follow suit. And their response was unwise - Fannie and Freddie followed the shadow banking sector downward. There is lots to fault in the behavior of Fannie and Freddie and in government oversight of them - the decisions of management, the lobbying efforts that were funded by their ability to extract a premium from the implicit government guarantee - all of this was a big problem. The bubble, and later the financial crisis expressed itself in these institutions, and they may have also contributed to it to some extent as they took on more risky securities when their business began to go elsewhere. But the agency issues and the failures of risk models and securitization would have created problems in the largely unregulated shadow banking sector even if these two institutions had taken on nothing but the safest of mortgages. The bubble still would have inflated in the shadow banking system - maybe it's a little smaller, I don't know - but it still would have been large enough to cause big problems when it burst. The best behavior of Fannie and Freddie would not have been enough to stop the bubble from inflating in other parts of the financial sector, and then turning into a full fledged financial crisis as housing prices plunged.
Check out the comments. They are a lot more thoughtful and informed than what is usually found here. A sample:
All the proposals (Mark Thoma's included) aim at restoring some role for government, they only differ in the details. Even the classic free marketeers now see things have gotten out of hand. They, of course, prefer to blame it on bad actors rather than on their ideology.
Note also, that as Thoma says, that observing that the FF's were not the cause (or at the most, a very small part of it) of the current crises is in no way defending their behaviour. It's just keeping the heat on the free market maniacs.
I think the sports analogy above is a great illustration of modern day American business. Sports team owners ask the public (or rather, the public's elected representatives) to build them stadiums and the public agrees.
There is no problem with income redistribution, as long as it is redistributed to the right people.
This is getting to the point of ridiculous. SOV, the GSEs were in up to their necks in the mortgage mess. They made a market for these mortgages. They ran a de facto hedge fund with the taxpayers' guarantee. Overseeing them is not a question of regulation. It's a matter of simple credit management. Some Republicans tried to do this. They were cut off at the knees. Seriously, do you believe that the heros of all of this are Chris Dodd and Barney Frank? Do you think there's no problem with a member of the legislature carrying on an affair with a person who they're charged with overseeing? Do you think that the government had no role in creating this mess by encouraging bad behavior?
Many people here have pointed out how these quasi-government agencies were different from their competitors. Every textbook puts these 'private' entities in a separate category. Rather than resort to cheap personal attacks, perhaps you could explain why you refuse to acknowledge a difference, in spite of the many specific differences that have been presented to you. Are you claiming that, from a regulatory standpoint, they were treated exactly the same as any other lender?
Easy. The GSEs are leading the cavalry charge at the front of the subprime avalanche perilously close to the elections, and it is painfully clear that the GSEs were administratively corrupted and holding a lot of subprime-backed debt while being encouraged to move forward in same by prominent Democrats and an activist group affiliated with the Democrat's current presidential candidate.
This incovenient truth can't be swept away at this point, since the financial meltdown and subsequent bailout have put the facts into the hands of too many adversaries. Hence, Plan B: "recharacterize" the GSEs as functionally private entities who made stupid investment decisions. With any luck, that will get them tarred as Republicans, or at the very least, more failures of the "unregulated free market" (whatever that is).
SoV knows quite well what a GSE is, and normally would have no hindrance explaining it back to you in the same terms you have outlined. But, there is an election at hand. Logical reasoning is out the door; this is all about power, baby.
Sigh. What is it with the 'wingers and their reading skills?
This is getting to the point of ridiculous. SOV, the GSEs were in up to their necks in the mortgage mess.
Why don't you go back through and find something I wrote that said that they weren't? Here's the deal - you find that, and I will immediately say I was wrong to do so, and apologizing for ever implying that this was not the case. If you can't find any such claim, then _you_ admit that _you_ are wrong in you characterization of what I wrote, and you apologize to me for putting those words in my mouth.
Deal?
Or is this where you weasel your way out of backing up your words while still trying to imply that what you wrote above is true?
They made a market for these mortgages. They ran a de facto hedge fund with the taxpayers' guarantee. Overseeing them is not a question of regulation. It's a matter of simple credit management. Some Republicans tried to do this. They were cut off at the knees. Seriously, do you believe that the heros of all of this are Chris Dodd and Barney Frank? Do you think there's no problem with a member of the legislature carrying on an affair with a person who they're charged with overseeing? Do you think that the government had no role in creating this mess by encouraging bad behavior?
Posted by Bill Dalasio
_Nowhere_ have I written about the sterling performance of any members of the Democratic party (again, go back and look.) In fact, _you_ are agreeing with _me_. And further, the problem in this instance was a lack of oversight. A lack of regulation.
You know, what I've been saying all along? And deregulation is the sin qua non of the conservative brand. It's what they're known for. I repeat, to the extent that any Democrat can be blamed for this mess, it's to the extent that they adhered the Republicans philosophy of deregulation.
And yet Fannie and Freddie didn't undergo deregulation. They were overseen by OFHEO, which was established in 1992 to watch and regulate Fannie and Freddie. OFHEO had hundreds of employees, its mission statement was never watered down by the deregulation movement of which SOV speaks - and yet OFHEO completely missed (a) the accounting scandals circa 2004 and (b) the impending collapse of those institutions.
Think about that: hundreds of federal employees had nothing to do all day but look for discrepancies and poor practices at Fannie and Freddie, and they were unable to predict or prevent any of the major problems. That looks an awful lot like a failure of regulation rather than a failure of deregulation. And since we can plainly see that regulation is far from foolproof, doesn't it make much more sense to remove the moral hazard of implicit government backing, rather than simply double down on a regulation scheme that has a miserable track record?
"CRA has been around since 1977. It's rather unreasonable to blaim a 30-year-old banking regulation for today's crisis, even more so than blaming somebody's gay lover."
Man I'm late to the party, but what a fun party it is.
CRA extant since 1977 implies it is irrelevant. Let me explain compounding to you. I know lefties don't do simple arithmetic, much less mathematics, but work with me, you'll find it worthwhile. (1+i)^n is the basic formula. As lefties all you need to know (or are able to understand) is that for larger values of n, say 31 (years) the formula results in a BFN (Big Effing Number)for almost any normal 'i'. The BFN I have in mind is the amount the taxpayer will pay to fix up this mess.
As for the gay lover, he's but a bit player. We blame Barney Frank who pretty clearly did what he did partly so he could keep on buggering the gay lover; or getting buggered, who knows, who cares.
Samantha Powers views on Israel. His closest advisor who said she would be back for an Obama administration. Look how she talks about the financial import of jews. She is his soulmate on foreign affairs
General Mcpeak blamed the jews in miami and new york for the mess in the middle east.
Father Pfleger is an anti semite who Obama called his moral compass and had him on a committee for his campaign.
Wright: Zionism is racism, posting articles praising Hamas at the church. How about even after the 9/11 attack still praising Wright in July 2007 in a speech Obama gave.
Obama's discussions with Ali Abunimah
"[Obama]came with his wife. That's where I had a chance to really talk to him," Abunimah recalled. "It was an intimate setting. He convinced me he was very aware of the issues [and] critical of U.S. bias toward Israel and lack of sensitivity to Arabs. ... He was very supportive of U.S. pressure on Israel.
According to quotes obtained by Gulf News, Abunimah recalled a 2004 meeting in a Chicago neighborhood while Obama was running for his Senate seat. Abunimah quoted Obama telling him "warmly" he was sorry that "I haven't said more about Palestine right now, but we are in a tough primary race."
"I'm hoping when things calm down, I can be more up front," Abunimah reportedly quoted the senator as saying.
Abunimah said Obama urged him to "keep up the good work" at the Chicago Tribune, where Abunimah contributed guest columns that were highly critical of Israel.
Obama in 2004 was critical of the fence in Israel and only changed positions because of poltiics.
HotAir as a legitimate source? Get real!! We know about Palin's AIP connections. And her support for Pat Buchanan in 2000(the Israeli flag in her office is a cheap political stunt). We also know about John McCain's dealings with unsavory people(John Hagee, anyone?). What is your point? The point is that you don't have one.
I see. Obama does not have three former Fannie execs as key advisors. He had one former Fannie exec on his VP selection committee, and has consulted with another on "general housing and economy issues." Therefore, "McCain is going to have to bear his humiliating connections to lobbyists alone."
To scared to blog on the 500 point drop in the Dow? Thank God we listened to you and the other gasbags and passed that welfare plan for Paulson and John Mack so they won't lose their retirements (the non-Argentinian cattle ranch portion) like the rest of us. The extra 4 or 5 trillion for my two month old niece and nephew to pay off is a small price to pay so that you can keep the effluvium emanating on Mort Zuckerman's dime or whoever you and
Sully are suckling off these days.
While you're at it, why don't you get that noted baseball authority Gentle Ben Bernanke-where's he scurried off to BTW- to tell us why MLB can't effect a similar do-over for the Cubs with the Dodgers and the Phillies and the eventual AL Champs in the role of the average American taxpayer with savings and no mortgage debt?
Anybody here in teetering cubicleland who actually is interested in hearing the views of people who understand markets ought to spend their clicks on Roubini and Shedlock, or Jimmy Rogers if he has a blog.
People who can't do and make money at the MERC or Bd. of Options with their, (insert harrumph) U. Chicago GSB MBA pay off Sallie Mae with hackery that insults the intelligence of stiffs who actually work for a living.
John McCain is going to have to bear his humiliating connections to lobbyists alone.
That's a bit strong of a statement considering that Jim Johnson was the head of the VP search for Sen. Obama. It's no longer a "humiliating connection" once the adviser resigns from the position?
It does seem in general that Sen. Obama has claimed to have lots and lots of advisers in various articles. Then opponents seize on one of these people, mentioned in one article as an adviser. The campaign then claims that the person was never an adviser, that the person is no longer an adviser, or that the person is somewhat of an adviser but not a "key" adviser.
It happened with Jim Johnson, with Franklin Raines (there was a WaPo article claiming that he was an adviser), with Samantha Power back during the primaries, etc.
Alone? Obama doesn't have three, but he certainly has one humiliating connection to Fannie.
Yes, it's only two out of three that his campaign has turned to for advice. Obama's connections aren't with the lobbyists, but with the principals. Not the guys making hundreds of thousands of dollars to persuade us that the GSEs are a good idea, but the guys mismanaging and looting them for millions.
Franklin Raines is the one who claimed he was advising Obama, not the other way around. And Jim Johnson left Fannie in 1998. This is rather weak tea.
Yes, and Franklin is the one who, with the help of the Obama campaign, denied that he advised the campaign. Yes, Jim Johnson left in 1998. So what? Enron blew up in 2001, but people still talk about. Jim Johnson manipulated disclosures to hide his pay. He was in charge when senior executives manipulated earnings to maximize bonuses. He made $21 million in his last year there--and that's in 1998 dollars.
Are you that far in the tank that you have to come up with stupidity like this because some person sent you an email? Advisors? I guess it depends on what the definition of is, is.
Obama, god love him, has all your typical stank that dirty politicians all have when they come from a machine such as Chicago's.
Yes, you are right, that his basically being the largest groveller of funds from the long list of bankrupt companies behind this crisis is all just a coincidence. The most amazing part is he did it in less than four years. Now that's what I call legislative accomplishment, hey he has one! Oh and who can forget today's FBI raid on his poker buddy, from where else Chicago, that festering swamp of machine politics. Again, this is strictly coincidence I'm sure, the long list of earmarks that the Messiah sent in this person's direction.
Yes, yes, Megan, do change the subject and tell us again how stupid Governor Palin is.
Is the tea that weak or are you invested in a specific conclusion? I often find myself making decisions and then massaging the facts, when I should do it the other way. I am not saying you are, but introspect and consider.
There is also the issue of the significant campaign contributions he received.
No one's saying it's damning evidence, but it's dishonesty by omission to claim that the email was wrong, period, because he actually had one major Fannie slimebag in the role of serious campaign advisor instead of three.
Let me understand - a person who was employed by Fannie Mae as a lobbyist is no different, or worse, than the Fannie Mae CEO under whom there was accounting irregularities enabling he, and other Fannie Mae execs, to receive bonuses they didn't earn?
Megan is so deeply in the tank for Obama that she doesn't even know the tank exists.
McCain's ties to FM/FM:
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100203812.html
"When mortgage giant Freddie Mac feared several years ago that Sen. John McCain was too outspoken on the issue of executive pay, it pinpointed a lobbyist known for his closeness to McCain and hired him to work with the senator.
"Mark Buse, a longtime McCain adviser who had been staff director of the Senate commerce committee, signed on as a Freddie Mac lobbyist, and his firm, ML Strategies, earned $460,000 in lobbying fees in late 2003 and 2004, according to lobbying disclosures. Buse is now chief of staff at McCain's Senate office. [...]
"McCain's own entanglements include his campaign manager, Rick Davis, who earned more than $2 million as president of an advocacy group that defended Fannie and Freddie against stricter regulation. Davis's lobbying firm, Davis Manafort, also received monthly payments of $15,000 from Freddie Mac as recently as August."
Give it up, guys. These are just the most prominent two of the 15 on McCain's staff, IIRC.
brooksfoe, I think there are two essential differences: 1) There's a difference between being a lobbyist for a crooked organization and being a principal. It's like the difference between a defense lawyer and his guilty client. 2) John McCain never adopted the positions the GSEs wanted him to adopt, but Barry Obama did. McCain favored regulation, Obama opposed. Because of Obama's success, we're out a couple hundred billion just on the bailout of the GSEs, without considering the broader effects, including their role in today's $700+ bailout.
Obama does not need lobbyists for humiliating connections. He has Bill Ayers, terrorist, and Jerimiah Wright, racist.
Obama did receive the second highest amount of campaign contributions from Fannie Mae and Freddie Mac, right after Chris Dodd.
Thomas:
you have allowed yourself to be convinced of a long string of falsehoods because of your sentimental attachment to your political party. We are not here to judge the moral character of CEOs or lobbyists; we are here to judge the character and wisdom of someone who has paid agents of corporations, people who are paid to influence politicians in specific corporations' benefit, acting as his chief campaign staff -- all while decrying the influence of lobbyists in Washington's corrupt culture.
The other thing is, it's a sign of immaturity to call Barack Obama "Barry". Sort of like if we started saying "Sidney McCain" or something.
Wow, the crazies are out in force today!
brooksfoe, where's the long string of falsehoods? Look, Johnson would be in jail if he had been at Enron instead of Fannie Mae doing the same thing. And that's the sort of person that Obama turns to for advice.
We can play the game of "what kind of person hires lobbyists, is friendly with lobbyists, and then criticizes lobbyists", but what's the point? I think the word you're looking for is "politician" and it describes Obama as well as McCain.
The more relevant question is, who sells out the public for the special interests, for the lobbyists, for their friends? And that's Obama, not McCain.
One other thing: there's nothing wrong with calling Obama by the name he used for much of his life. Please, feel free to call McCain by his middle name, just as Democrats called George Allen by his.
This is why Andrew Sullivan doesn't allow comments to his columns; doesn't want anyone disputing his mistruths. Has anyone mentioned ACORN, ACORN Housing and Obama's connections to both?
We are not here to judge the moral character of CEOs or lobbyists; we are here to judge the character and wisdom of someone who has paid agents of corporations, people who are paid to influence politicians in specific corporations' benefit, acting as his chief campaign staff -- all while decrying the influence of lobbyists in Washington's corrupt culture.
Are you under the impression that there are no lobbyists on Obama's campaign staff?!? Or is this a semantic game where everyone who is an embarassment is, by definition, not allowed to be counted as a "real" Obama staff member.
Obama did receive the second highest amount of campaign contributions from Fannie Mae and Freddie Mac, right after Chris Dodd.
That's only if you consider employees personal donations, I bet a lot of companies have donated more money in employee personal donations to Obama than McCain. This is mainly due to Obama's ability to raise far more money than McCain. IIRC if you look at corporate donations from Fannie/Freddie, Obama's not even in the top 100.
you have allowed yourself to be convinced of a long string of falsehoods because of your sentimental attachment to your political party.
Handwaving has its place, and in my opinion, it should be restricted to that of the friendly greeting. Which of his statements represent this "long string of falsehoods" that he has apparently been convinced of?
"We can play the game of "what kind of person hires lobbyists, is friendly with lobbyists, and then criticizes lobbyists", but what's the point? I think the word you're looking for is "politician" and it describes Obama as well as McCain."
Ding Ding Ding we have a winner.
Some folks "sentimental attachment to their party" does not allow them to realize this fact?
Megan needs to read Politico more often:
September 24, 2008
Categories: Barack Obama
Johnson to lead Obama briefing
http://www.politico.com/blogs/bensmith/0908/Johnson_to_lead_Obama_briefing.html
More relevant questions are who favored more regulation of Fannie and Freddie, who took the most money from Fannie and Freddie, and who worked to force banks to make more subprime loans?
We need to learn more about Obama's connections to ACORN and to pressuring banks to make subprime loans (for instance, his role in the 1994 Citibank lawsuit). We need to learn more about his training of ACORN activists. Here's the most detailed article I've found so far -
http://article.nationalreview.com/print/?q=NDZiMjkwMDczZWI5ODdjOWYxZTIzZGIyNzEyMjE0ODI=
The media should be asking more questions about this. It's ridiculous that the Democrats tried to include huge amounts of money for ACORN in early versions of the rescue package, when ACORN did so much to help create this mess.
The fringe is angry today.
Hey, guys, you have to parse the words better than this.
Advisors, yes, in some sort of unofficial capacity. Raines was called by Obama who asked him a few questions.
That doesn't make Raines a "key" advisor, nor a member of Obama's campaign.
Note that the Obama camp is not denying that these three guys have given advice, but that's because no one is asking that question. Everyone asks the question in terms of "on the campaign staff" or "key advisor" or "member of the campaign staff" to which the Obama camp can respond NO with a straight face.
But there is no doubt that these three have given Obama economic advice.
Conn Carroll:
Politico is not a legitimate news source. It's the same as using the Washington (aka Moonie) Times. They are both right wing outlets. If you don't believe me, check out the money behind Politico.
Rex:
The "Oracle of Omaha" has given Obama economic advice as well. Is he a member of Obama's campaign? Or just Obama asking various people their opinions? It's funny you people whine about shady people Obama might have come across or had contact with for some reason yet you don't apply that same standard to McCain. I wonder why.
You can argue what the definition of "advisor" is, or you can just look at the two senators' records on the GSE's.
One Senator proposed reining them in.
The other opposed restraining their activities.
The former is McCain.
The latter is Obama.
Just as with the "surge," one was right, one was wrong. I guess that's "change" you can believe in, if you believing in changing things for the worse.
Megan - I might start reading your blog again once you get over your hatred of Bush and McCain. It's blinded you to the reality of the Obama campaign.
JordanT:
Huh? Actual flat-out corporate donations are illegal. They've been illegal for nearly forever. That's why most corporate donations are employee personal donations. But in most case, these "individual" contributions really are corporate. It just "so happens" that the majority of the individual contributions are made by all the top execs and all their family members to the same candidates. The other main form of contributions is, of course, PACs that employees are "asked" to contribute to.
You do have a point that if you count PAC contributions alone, Sen. Obama does not rank nearly as highly. However, he remains #2 if you total both individual and PAC contributions. Part of that certainly is from running for President, which boosts fundraising.
Of course, if you're going that route, you have to note that Sen. McCain has received $0 all-time from FM/FM PACs, unlike Sen. Obama, and his level of individual contributions is extremely low for someone who has run for President.
Well, at least this crisis helped me decide what to do this election. I'll stay home or be voting against anyone who voted for the bailout.
"Politico is not a legitimate news source. It's the same as using the Washington (aka Moonie) Times. They are both right wing outlets. If you don't believe me, check out the money behind Politico."
So, does this statement validate any right wing talking points that the NYT, etc. are not legitimate news sources because they are backed by a bunch of pinkos?
JK's conscience--Hey, next time Obama is railing against the evils of deregulation, he should ask the Oracle what he thinks of it. In particular, he should ask the Oracle if the Fed's recent rule change--the adoption of what my banking law friends call the "Buffett rule", which allowed Buffett to buy into Goldman Sachs (which is now regulated as a bank holding company)--was a good deregulation or a bad one.
Wow Megan. Some of your commenters are real mouth breathers. They make sane, calm and smart conservatives like you, Sullivan and Douthat look bad.
Apparently a couple of phone calls between the Obama campaign and one Fannie Mae executive, who was never on the Obama campaign payroll and never played any role whatsoever in the Obama campaign now adds up to no less than THREE Fannie Mae executives being "Senior Obama Economic Advisors".
Damn the evidence that you provided otherwise! Damn the fact that you're a CONSERVATIVE saying that it isn't true!
As usual, reality continues to have a liberal bias. Hat tip to Steven Colbert.
I am so happy that the finally passed bailout, er... economic rescue bill, has passed and stopped the market meltdown.
I would really like to know the thoughts of the representatives who voted no on Monday, but changed their votes to yes today because Monday's 777 point fall.
And how is it spinned now? Is the market now telling up we need Bailout, uh, sorry, Economic Rescue 2?
1) There's a difference between being a lobbyist for a crooked organization and being a principal. It's like the difference between a defense lawyer and his guilty client.
The right to competent legal counsel is a Constitutional right. There is no right to have a highly paid, influential person try to use his personal connections to a politician to influence that politician's actions.
2) John McCain never adopted the positions the GSEs wanted him to adopt
Off the top of my head, after Buse took a contract from Fannie Mae to get McCain to stop attempting to limit CEO pay, McCain stopped trying to do anything concrete about reigning limiting CEO pay. Fannie Mae officials reported Buse had done a terrific job of achieving this. McCain continued to make occasional blah-blah speeches on the issue but never pushed to actually do anything. I'm sure one could find other examples of the GSEs getting their money's worth from the lobbyists they placed in McCain's circle.
McCain favored regulation
McCain sponsored a bill in 2005 that would have set up a non-governmental commission to regulate the GSEs, i.e. taking the regulation outside of government, in keeping with his typical anti-government philosophy. The bill passed in the House, but McCain never made it a priority. Mike Oxley just excoriated McCain last week for failing to devote any serious effort to getting the bill passed. When a bill to regulate the GSEs finally came back for a vote in March 2008, McCain didn't show up to vote.
Because of Obama's success, we're out a couple hundred billion just on the bailout of the GSEs,
Blaming Obama for the collapse of Fannie Mae and Freddie Mac is ridiculous hyperbole. The huge expansion in their loan portfolios lasted from 1980 to 2003, when it ended and sharply reversed. The FM/FM share of the mortgage market shrank from 50% in 2003 to about 43% in 2008. The trouble they got themselves into had very little to do with the positions held by a junior senator who came into office in 2005 and who was #127 on the list of congressional beneficiaries of FM/FM PAC money.
without considering the broader effects, including their role in today's $700+ bailout.
The number of subprime mortgages held by FM/FM? Zero. They were prohibited from issuing subprime mortgages. The subprime mess is the result of the expansion of private lenders into risky clients and risky mortgage formats which FM/FM wouldn't take. It's the result of repackaging those private mortgages and putting them in SIVs with high ratings. In March the NY Fed issued a report laying out the causes of the subprime mess. FM/FM figure nowhere in the report. It's probably an exaggeration to say the subprime mess had nothing to do with them, so I'll say almost nothing.
And that's the series of falsehoods.
Huh? Actual flat-out corporate donations are illegal.
Are PAC and unregulated 527 donations all that different than a campaign corporate donation in all but the name we give them? Sure, there are some hoops to jump through but that's not really a problem for the most part. Obama has gotten far more individual donations than John McCain could hope to get. It's not a surprise that a companies individual donations for Obama would trump that of McCain. Especially since he's in a presidential election, I bet Obama is at or near the top of the list from the individuals of many different corporations.
I see. A little red meat, er, blackened tofu for the liberal readership today. As we all know, lobbyists are the ultimate monsters under the bed for dyed-in-the-wool liberals: The G-rated version of the mean old Jooz who run Wall Street and the media, etc.
Bam and the BamBoosters are scared witless each time someone finds a lobbyist in a rival campaign, which works out well for Bam. It draws attention from the fact that Bam's campaign is a full of lobbyists as any other in Washington, DC. 'Cuz that's how anyone involved in national politics outside elected office makes a living.
There is no right to have a highly paid, influential person try to use his personal connections to a politician to influence that politician's actions.
You are wrong.
Emphasis added.
Despite the feverish defense of Nobama by his shameless, leftist cult followers (namely, Democrats), the reason why all the questionable lobbyist ties will not go away is because Nobama is a major component of the Chicago Machine, and all the corruption that entails.
The taint is clear for all to see and the facts are indisputable. Only the willfully blind and the traitorous left will keep trying to run interference for Nobama, however much in vain their actions will prove to be once John McCain and Sarah Palin win the election by a landslide on November 4th.
brooksfoe, I'm not sure there's much you said that anyone could reasonably agree with. Going in order:
1. SG has it right--the right to petition certainly includes the right to retain advocates for one's cause.
2. This is really weak. First, it's weak because--unfortunately, in my view--McCain has never abandoned his position on executive compensation. And it's weak, because the subject of executive comp covers a vast number of companies. Unlike the legislation which McCain favored and which Obama opposed, which would have regulated Fannie and Freddie.
3. The bill McCain favored would have created a new federal agency to regulate Fannie and Freddie. That agency would have been part of the federal government. McCain favored cracking down on the looting going on at Fannie, and Obama opposed it, each acting in accordance with their views on government--McCain believing government should work for the people, and Obama being a machine pol from Chicago. And this bit about Oxley is just sad. Oxley favored gutting the bill to meet the objections of Barney Frank. You still think that Barney "I want to roll the dice" Frank is a credible voice on this issue, don't you?
4 and 5. You cite the oft-repeated bit about Fannie and Freddie not buying subprime mortgages. That's true--they bought MBS, that is, they bought them after they'd been pooled by Wall Street investment banks. They were the biggest buyer, creating the demand that led to the supply. The fact that you are using these transparently misleading claims means you either don't know what you're talking about, or you're not interested in what the facts are. I'm leaning toward the former, given your citation of Obama's record of contributions from the GSEs' PACs, as if that's particularly meaningful.
The number of subprime mortgages held by FM/FM? Zero. They were prohibited from issuing subprime mortgages. The subprime mess is the result of the expansion of private lenders into risky clients and risky mortgage formats which FM/FM wouldn't take. It's the result of repackaging those private mortgages and putting them in SIVs with high ratings. In March the NY Fed issued a report laying out the causes of the subprime mess. FM/FM figure nowhere in the report. It's probably an exaggeration to say the subprime mess had nothing to do with them, so I'll say almost nothing.
And that's the series of falsehoods.
You came perilously close to a falsehood of your own. I believe you've been corrected on this point before:
iht.com/articles/2007/07/30/business/bxprime-web.php
Truncated to pass the soup-nazi spam filter, please add the standard prefix to the front in order to view the link. (And do note the article date.)
Practically speaking, it makes little difference whether the FM twins issued subprimes or merely bought them by the shovel-load, either way it encouraged more of the same. In fact, it may have been worse this way, because smaller lenders in regional markets could spread the mess far and wide with the full confidence that they could roll the dung uphill.
I demand that Palin produce one gay friend for the cameras and John McCain produce one friend who isn't a lobbyist.
Til then, I refuse to believe.
Political "spin" from The Atlantic? Never...
Truth is that Frannie-Mae's former CEO has been tied at the hip to the Democratic party for years. In 2004 he was used as a witness to testify to his former company's situation. he was good enough for Barney Franks and the black democratic committee, but now that we know what we do, Barack won't even admit to knowing the guy, let alone admit he has advised his campaign. Where do you think they got that crazy idea about renegotiating the principle of a loan? Well to be fair, ACORN could have suggested it.
http://clancop.wordpress.com
Megan - I think you might, using the current phraseology, move this from 'baseless lies' to 'lies.'
For more Fannie goodness, see Jamie Gorelick. Not only did she help slaughter 3000 New Yorkers by inventing rules to hamper anti-terrorist investigations, she also was vice-chair of Fannie between 97 and 03. She was DeputyAG during the Clinton Admin and is touted as an AG candidate during an Obama disaster (er, administration).
If you want other scary connections, there's Obama and an interstate conspiracy to committ election fraud - ACORN. Unfortunately all attempts to prosecute them under RICO laws will be described as racist, no matter how many times they falsify registrations. Obama only trained their staff, praised their organization, and worked in an allied group.
Obama is corrupt, a friend of interstate conspiracies to subvert democracy, and relies on terrorists for critical political support. But yet he's the best candidate? Megan is showing hr NYC roots and wants to bring us back to the 70s. Maybe next time Bill can get a BIG bomb to the Pentagon. But then if you want to be a Dem Presidential candidate, you have to be friends with terrorists - John Kerry supporting the VC, SDS, VVAW, Clinton pardoning Puerto Rican terrorists, Hillary hugging Suha Arafat, Obama relying on Bill Ayers for a job and his first political fundraiser. But don't question their patriotism!
Conn posted this above, but it's been ignored so I want to repost:
http://www.politico.com/blogs/bensmith/0908/Johnson_to_lead_Obama_briefing.html
Evidence that Jim Johnson is still highly involved in the Obama campaign.
To say that James Johnson bears no responsibility for the GSE debacle, because he left the CEO position in the late 90s, is simply ignorant. It is also completely ignorant (or dishonest) to assert that the GSEs had no role in the subprime sewer, as was noted above.
Even without the subprime sewer, however, the GSEs played a huge role in the housing speculative bubble which has led us to our current unhappy condition. Having two financial giants dominate the industry by purchasing loans, and then reselling them with an inmplied taxpayer guarantee, with all the benefits that such a guarantee entails, was questionable enough. To do so, however, while also telling the giants that their charter was not to simply package and resell loans in a responsible manner, but also to expand rates of homeownership, while also making it possible for top level management to makes tens of millions of dollars in incentives by doing so, nearly guaranteed a slowly, and eventually rapidly, increasing rate of erosion in underwriting standards. Anyone who thinks that underwriting went in the crapper solely in the case of subprime dreck is ignorant of the industry. What typically constituted a prime grade Fannie Mae loan in 1988 was far different than was the case even in 1998, to say nothing of 2005.
This fecal storm was decades in the making, and there are dozens, if not hundreds of people, who should be eligible for a symbolic tar and feathering, if not a real one. Any person with an ounce of decency, which of course excludes nearly any Presediential candidate, would be ashamed to have picked James Johnson as a key advisor.
Blaming Obama and by extension the Democrats for this mess is the most cowardly thing I've ever seen. The Republicans have controlled all three branches of governement 6 of the last 8 years. If the Republicans saw this coming and didn't do something to stop it they should be strung up for treason. Blaming the party out of power is pure cowardice.
Never in my life did I think I would see the Republicans turn into whining, yellow bellied, identity politics peddling, victocrats. For some odd reason the Republicans decided to imitate the Democrats, and, as usual, the imitation is worse than the original.
Barney Frank probably wins the award for the best friend the GSE's ever had in DC. Thus even the most liberal of politicians up to this very moment, as he was head cheerleader of the bailout. don't have a clue.
Weirdly it was the administration which was intermittently skeptical of the GSE's. One of the few cases where they were right on a big economic picture issue. That said they were driven mostly by ideological concerns and free market fetishism but any opposition to the GSE's took some real political courage. Not that they ever went very far to stop the train wreck.
Obama doesn't seem to have a clue either. It's possible his getting aboard the bailout train was a political calculation and I can accept that as probably the right tactic, even if I don't have to like it. One can suppose on taking office he will go after the pigmen and start the revolution against the financial caste, but I'm not holding my breath.
Well, at least John McCain didn't obtain pork for the lobbyist-son of his running mate, isn't that right Hunter Biden, registered lobbyist?
Sorry, but just because someone else at Davis' firm was lobbying for the GSEs does not make him a lobbyist for the GSEs - sure it is a connection, but it is a lot weaker than the Raines / Johnson connection to Obama. And now we have learned that Barney Frank's boyfriend was an executive at Fannie. I'm not claiming that the Dems own this mess, but the links are clearer and stronger, with the likes of Johnson, Gorelick and Raines.
The Republicans efforts to rein in the GSEs was frankly kind of weak, and abandoned in the face of opposition, but let's not forget that it was the Dems who were that opposition. Last night I heard Joe Biden rail on and on about deregulation, yet his party are the ones who repeatedly blocked oversight of the GSEs - and no amount of repeating "Rick Davis" like a mantra can change that. I assume Biden was referring to the repeal of Glass-Seagalman under Clinton, which Clinton maintains was a good move and which may have allowed the large banks like Citi, BofA and JPM to weather the current storm.
brookesfoe babbled that this was damning of McCain:
"When mortgage giant Freddie Mac feared several years ago that Sen. John McCain was too outspoken on the issue of executive pay, it pinpointed a lobbyist known for his closeness to McCain and hired him to work with the senator.
"Mark Buse, a longtime McCain adviser who had been staff director of the Senate commerce committee, signed on as a Freddie Mac lobbyist, and his firm, ML Strategies, earned $460,000 in lobbying fees in late 2003 and 2004, according to lobbying disclosures. Buse is now chief of staff at McCain's Senate office. [...]
Gosh, let's see, what did McCain do in 2005 and 2007 (you know, after they tried to "bribe" McCain)?
Oh, oh, I know! He proposed laws cracking down on Fannie and Freddie.
And what did Obama do? Why, IIRC he fought those bills. He certainly didn't support them. And, as a regular Democrat Party line voter, I'm going to say it's quite fair to tar him with the Democrat's Party line votes against more regulation for F / F.
So, nice try brookie, but you fail.
As an "in the task delusional elitist" Obama supporter':
1) yep. he's a politician
2) Thus, imperfect
3) I'm reading this blog because he has inspired me to think it's a good idea. Think about it. (no matter how you vote, it's clear that he is on the verge of "community organizing" himself into the White House. Compare - RNC Palin speech)
4) Thank you for actually debating the issue instead of spewing Barack HUSSEIN Obama nonsense
5) Last night was a really bad night for women internationally. Again, think about it - seriously
I'm a 44 year old AA woman who gave up on RP after the famous Pat Robertson "culture war" speech. Ironic that W is now the most effective civil rights activist in history...
Oh, oh, I know! He proposed laws cracking down on Fannie and Freddie.
No, he proposed that regulation of Fannie and Freddie be handed to a private company. I'm sure they would have done a great job as well. However, by 2005 it was too late the bubble had already reached its peak and the damage was done. The majority of the crap paper originates in the 2003, 2004 and 2005 era of home lending. It is also mostly held by private investors, and not by Fannie and Freddie. If we had taken decisive action in 2005 the damage may have been less, but we still would have had a major problem on our hands.
Second, Fannie and Freddie were nationalized in a misguided attempt to prop up home prices by lowering mortgage rates. The mortgage rates did fall with the nationalization, but even at 5.75% interest the homes were still unaffordable.
A stupid voter might think that all this talk about the FMs was enough to prove that the Republicans would save this economy from corruption. An equally stupid voter might imagine that John McCain, the last of the Keating Five, was somehow on the side of honesty in business and deeply opposed to the corruption that comes when Washington is married to Wall Street. Alas, there are fewer and fewer stupid voters as the economy under the stupidest Republican president ever becomes worse and worse.
And just to bring this whole incestuous affair full circle I present Barney Frank.
Why Barney? Well it was his live in lover from 1991-98 who designed Fannie's (no pun intended) low income loan campaign and lobbied for its existence.
Revisit Barney's floor speeches and they take on a whole new meaning.
The gays? I thought it was the blacks, and their damn desire to have homes just like white people.
Patrick, you are an education.
Please explain to me why, if Fannie and Freddie had nothing to do with sub-prime paper, they both went into receivership? Just for giggles?
I have heard a lot of venom, but little to challenge the Snopes.com assessment of the e-mail McArdle mentions.
I suppose it could be said that Snopes was 'in the tank' for Obama because it has a history of discrediting the other rumors surrounding the Democratic nominee: e.g. that he is a Muslim.
"The gays? I thought it was the blacks, and their damn desire to have homes just like white people."
Little Boots
It this some kind of race baiting that you picked up from the Rev's especially Wright?
Why don't you instead get that remnant of a brain stem around the fact that Barney had a conflict of interest. Come on now, it will set you free.
Noo lets not do that. Lets instead bring up the Keating five. Yes, that should do. Five Senators, only one was a Repub and he was cleared. Reprimanded for poor judgement he was. Keating was a personal friend and fellow resident of Arizona.
Sort of like the poor judgment Barney showed when one of his lovers was running a prostitution ring out of his basement. Of course Barney didn't know. Right Little Boots.....
FNM and FRE didn't buy subprime loans, on purpose. The issue was that total mortgage lending exploded and so then too did home prices as demand rose relentlessly. So that on paper their mortgage portfolio looked pretty good, as long as pries didn't fall. Then prices started to fall. The last sucker and speculator bought the last house at an inflated price and then demand dropped a bit. Then inventory built up. Then prices started falling. The subprime owners were the first to get foreclosed and they brought down the value of all homes. Even the ones the GSE's mortgaged.
They hold trillions of dollars in mortgages and have sold a couple of trillion of them as mortgage backed securities into the private market. Those they sold they guaranteed, insured against the loss of interest and principal.
The two kinds of losses are related but different. On those they hold they have to account for on financial statements. Of course like everyone they are trying to say these losses aren't so bad, but it's just numbers on a ledger sheet. On the ones they sold and guaranteed they have to send cash to the buyer. Oooops. They don't have enough cash. Now while accountants can argue if they are or are not bankrupt based upon their balance sheet, accounting, financial statement when someone knocks on the door and says "look, I've lost $100 million on this shit you sold me, pay up" they have a problem. Some $50 billion in cash, they say, and hundreds of billions in losses waiting to be have their 'insurance' paid off.
Now foreign central banks own $960 billion in GSE issued mortgage backed securities. Why they bought them is an enduring mystery but it's not a mystery that they wouldn't be happy if they don't get their insurance payment. Being that all central bankers are friends Uncle Sam decided to say that he would pay off what Freddie and Fannie couldn't.
Three questions for you, Megan:
1) Why the implicit bashing of lobbyists? Lobbying is a legitimate part of our political system, a way for various constituencies -- from corporations, to the armed services, to the victims of various diseases -- to advocate for their interests.
2) Why ignore Obama's receipt of donations directly from the GSEs? He and the rest of the Dems have been getting away with murder blaming the real estate and credit bust on "failed Republican policies". It was Republicans who tried to regulated the GSEs more tightly and it was Democrats who resisted.
3) Where's your omnibus post on different proposed solutions to the credit crisis?
Please explain to me why, if Fannie and Freddie had nothing to do with sub-prime paper, they both went into receivership? Just for giggles?
Posted by jl | October 3, 2008 9:27 PM
Well there's the dirty little secret. While Fannie and Freddie didn't actually write the mortgages they bought for investment purposes the little nuggets.
How many did they buy? In the end, piglets that they were spurred on by the likes of Barney and friends, they owned, I believe, 44% of the toxic waste. They bought so much that local loan offices couldn't write enough liar loans to keep up with the demand. Everyone on the street knew Fannie was buying. Such was their commitment to put everyone in a house by hook or crook.
Now because of their wonderful enterprise we own it all.
Of course, all of this omits the fact that the finance chief for the 0bama campaign ran a failed subprime lender:
http://www.suntimes.com/news/politics/obama/919177,CST-NWS-pritz28.article
America has gone batty.
There's a recession coming, the Russians are back in the Caribbean, Asia is playing economic hare to our tortoise and America has suddenly decided we need a rerun of the 1970s with a President whose greatest achievement was dancing with Ellen on the Degeneres show.
Megan: claiming that Barack Obama has three former Fannie execs as key advisors; a reader just emailed me to ask if it was true. No.
Would you believe "two advisors?" That's what it sounds like from the link -- or rather "two advisors and we have no information about the third".
Regardless, two or three, the whole Freddie/Fannie/congress tete-a-tete sucks.
whatever current ties mccain had with ex fannie mae lobbyists, it did not let him affect his criticism and demand for reforms for fannie mae.
and it showed.
http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html
Americans love easy credit and easy money. It's the grease that makes the system operate. They expect it and demand it from their institutions and they get it. They always have and they always will.
Chastised now, Americans will adopt caution as the order of the day as a new economic cycle begins. (that's some way off yet as the death of this cycle is going to drag on)
Then someday a new age of easy wealth creation will take flight.
http://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/051788433X
Megan,
I'm going to miss the Christmas wish list, but goodbye. This is a deliberate attempt to mislead, and the first few comments set you straight.
So . . . it seems that most everyone above is pointing fingers at people failed to regulate.
I take it then that we can all agree that libertarianism, minimal government intervention, etc. is dead, dead, dead, as a governing philosophy?
It do warm the cockles of my heart to see Republicans accusing Democrats of behaving like Republicans.
Scent, that's clever. Given that we're talking about a failure to regulate a quasi-governmental agency, it isn't accurate, but it's still clever. But I take it that we can all agree that the sort of market intervention we saw from the GSEs is dead? Or am I right that you and Barney Frank want to draw some bullshit philosophical point and ignore the fact that these Democrat-dominated agencies were a horrendous idea, poorly executed?
ScentOfViolets -
It's simplistic and deliberately misleading to argue that free markets means no regulation. No regulation is anarchy, not capitalism.
Both liberals and conservatives believe in regulation - the difference is in the type that they support. If you think in terms of sports, free marketers believe that government should set reasonable rules for the game and then act only as a referee, to make sure that both sides play by those rules. As long as both sides play by the same rules, it's not the role of the referee to choose the winner.
Liberals, on the other hand, think that the government should be more than a referee, and should redistribute goals in the name of fairness. To make sure that both sides come out equal, liberals believe that the government should take goals from the side that's ahead to give to the side that's behind.
We got into this mess because liberals felt that it was unfair for loans to go only to those who could pay them back. They felt that people should have homes whether or not they could afford them. Who could possibly have predicted that making bad loans could lead to problems? Obviously, the real reason for this crisis is that we didn't give enough money to ACORN, an error that the Democrats tried to fix. And Obama has funneled money to ACORN every chance he got, so this can't be his fault.
No, SOV, we can begin with the fact that having the state dominate the housing industry, in the form of GSEs, is a bad idea. It bores the cockles of my heart to hear compulsive statists make snide remarks about those who advocate a limited state, after the statists put in place the mechanisms and incentives which led to a disastous speculative bubble. Is Saturday morning your scheduled silly spell?
Uh huh. The state 'dominates' the housing industry, but is simultaneously not regulated enough. Freddie and Fannie are now 'quasi-governmental', whatever that means (primarily, something that sounds good to the tin ear of the Right, I would imagine.) We also have the contradictory supposition that the 'statists put in place the mechanisms and incentives which led to a disastous speculative bubble.'
Why don't you all get together and come up with a consistent story?
The funny thing about this is, 'statists' in general don't have anything against free markets, they just don't attribute to them magical restorative powers, or certain ahistorical outcomes.
People like me are in fact (modulo the social conservatism) more aptly described as Eisenhower Republicans. The only time we agitate for government intervention is when the 'free market' conspicuously fails.
Nobody, for example, simply woke up one day and thought on the basis of a 'statist philosophy' that regulating the commerce of food and drugs was a dandy idea. No, it happened because of conspicuous failures of the free market to regulate itself. No one thought on the basis of a 'statist philosophy' that the government should intervene in the hiring practices of private business, or in the selling of housing to minorities, or in the . . . you get the picture.
No, there was government intervention because the markets explicitly failed. Here's another example of where the government stepped back from it's regulatory functions - on the basis of advice from those who projected 'gravitas':
And of course, despite the pseudo-justification:
Watching rightwingers/libertarians/'conservatives'/Republicans squirm and reveal themselves as not serious, not reputable, not men of their word, not people who practice what they preach, namely personal responsibility affords me a certain satisfaction, I admit, especially after accusations (even now!) that I am somehow a 'statist'. But I'd much rather these types had never had the influence to bring about such mischief in the first place.
Sigh. The curse of Cassandra, and all that, I suppose.
I'll buy into Libertarianism as soon as Libertarians agree that corporations should be banned. Unless and until all economic actors are not given a waiver on personal liability the Libertarian model makes no sense.
It is not a coincidence that the great Wall Street investment banks, all with roots a century long or more were completely destroyed in a period of less than 10 years as they went from privately held corporations and partnerships to public corporations. As their behavior became divorced from the names of the owners all restraint was lost. Go up and down a list of all the great corporations, even the ones now dead or dying, and find one single person at the top who has suffered one slight bit of discomfort save perhaps some hit to their gigantic net worth if they were dumb enough to have much of their assets in their own company.
Goldman Sachs paid out $40 billion in bonuses over the last 5 years. If they would have retained a good portion of that as capital they would not be in trouble. Ah, but therein lies the key. Paulson is worth at least $500 million, he got his. The triumph of individualism. The rewards to the innovators, the creative. As to the parasites, well they lose their jobs and get forclosed on.
Wow, this is one of the more intentionally inaccurate political "fact checks" I have ever seen. At least the link is provided so that is quickly apparent.
We got into this mess because liberals felt that it was unfair for loans to go only to those who could pay them back. They felt that people should have homes whether or not they could afford them. Who could possibly have predicted that making bad loans could lead to problems? Obviously, the real reason for this crisis is that we didn't give enough money to ACORN, an error that the Democrats tried to fix. And Obama has funneled money to ACORN every chance he got, so this can't be his fault.
While the rest of your post is nonsense, this is the most offensive part of it. Why? Because it is totally not true. Not to mention you are being cyrpto-racist. What you are really trying to get at here is the CRA. And even the Federal Reserve says to stop being so stupid. In fact, CRA loans get paid back at a higher rate then the general public.
SOV, what has occurred in your brain to prevent from realizing that a market or industry in which 6 trillion in notes receive an implied taxpayer guarantee, thus allowing the two entities which sell the notes to borrow money at rates lower than any potential competitors, and as the OMB used to note, have the effect of lowering interest rates for all consumers in the industry, is, yes, an industry or market which is dominated by the state? Is this sort of cognitive problem common for you? There is nothing contradictory in noting that GSE's who sell loan portfolios with an implied taxpayer guarantee, while being told by Congress that they should expand rates of homeownership, while the top executives of the GSEs can pay themselves tens of millions of dollars by doing so, will over time experience an increasing rate of erosion in underwriting standards, and have an effect on the entire industry.
Yes, William H. Donaldson, notable Obama supporter, really screwed up when he approved of changing the alowable ratios for those five companies form 5:1 to 30:1 or higher. What of it?
I'll buy into Libertarianism as soon as Libertarians agree that corporations should be banned. Unless and until all economic actors are not given a waiver on personal liability the Libertarian model makes no sense.
I'm right there with you, though I do call myself a libertarian. But I find it a more practical problem...I believe that the corporate model is doomed to failure just as the concept of a benevolent dictator is fundamentally flawed. I believe many corporations and their practices are detrimental to economic well-being and freedom.
Will, you and yours have screwed up, and screwed up bad. We've gone from a privatized Fannie and Freddie to an F & F with an 'implicit guarantee' to 'dominated by the state'. More and more soaring rhetoric, anything to admit that - gasp! - You Were Wrong.
You are, in my opinion, treasonous scum. You _don't_ care about the good of the country; you care only about absolving yourself and your philosophy from any of the blame. I have yet to see any of you low-life traitors accept a scintilla of responsibility for this fiasco, let alone fifty percent, half, let alone (and properly) the vast majority of the blame.
Oh, and for the record - actually, for the record again - I don't absolve anyone who happens to have a D in front of their name of any blame. In fact, I'll post yet another few links:
How about this bar graph showing which party slurped up what percentage of the total contributions from the big players?
Or how about the article this graph accompanies, showing at least some of the blame slops over onto the Democrats?
The difference is, with Democrats, it is easy to see that this is a quid pro quo, cash for influence (such as they may have had in 2004.) There really isn't a pretense that this is just good economic policy.
In contrast, the right wing has made it part of their philosophy that deregulation, a diminution of government oversight, privatization, etc. is a good thing, as scientifically (ha!) determined by their cockeyed brand of economic theory. They have suggested for literally decades that disagreeing with them these points is 'not being scientific' or 'not understanding elementary economics', etc. Or that 'statists' know that what the Chicago school peddles is true, but that they are selfishly denying this in order to further their own grubby little careers.
Very obviously now, that particular philosophy simply isn't true, and equally obviously, that's become apparent to the vast, vast majority of the public who aren't locked in to some sort of tribal identification holding pattern.
But what despicable people like Will Allen want is to have their cake and eat it too. After things are set right again, does anyone doubt that he'll keep on parroting right-wing talking points? Or that, somehow, he will find a way to blame this all on 'big government', the Democrats, etc.
Jesus Will, at long last, don't you at long last have any sense of shame?
In the spirit of full disclosure, I should let you all know that, late Friday and still with some misgivings, I registered as a Democrat.
All enraged responses please below, and not to my email, thank you.
ScentOfViolets,
I spent my formative years cruising the meatpacking district in the 1970s, parlaying it into a go-go dancer in the early 1980s.
Do you really think I have any shame left?
Well now we've really gone off the rails but I disagree totally that corporations are doomed. Instead they have just begun to hit their stride as the dominant human organizational model, replacing states. Somewhat modified in form if not concept they now might be said to dominate China and Russia. Certainly the majority stake holders in the great corporations in those places are so entwined with the political leadership that they are essentially as one.
While corporations are created by the state they have now co opted much of the political decision making process. Has the failure of the huge financial corporations now caused some some rethinking of how this outcome took place. Hardly. A giant of the financial world was made Treasury Secretary and has just cowed the state into providing him with the capital for his own hedge fund which will help financial corporations.
I don't see any doom there.
Megan McArdle:
Can we please have a blog post telliing us why you did this? It doesn't stop you from voting in November so I don't see the reason for it. Secondly, you don't live in Steny Hoyer's district(as I believe you live in DC), so you can't help us DFH's get rid of his corrupt butt.
In the spirit of full disclosure, I should let you all know that, late Friday and still with some misgivings, I registered as a Democrat.
What, there no "person of privledge who pretends to be a liberarian" box to check?
after the statists put in place the mechanisms and incentives which led to a disastous speculative bubble
You should keep repeating this falsehood to yourself. It'll help you sustain the illusion that you're a Rugged Individualist and not a "compulsive statist."
Thanks for the unintentional comedy; "compulsive statist" brings the unmeant funny.
Oh, and thanks for the Bush Boom. As with the Iraq Invasion, it's so awesome.
Here's the thing Megan: I would agree with you if by electing Obama we were electing a "unitary executive" who didn't have to answer to Congress. But, of course, we're not. So while Obama's connections to FM/FM might be less than the GOP is making them out to be, the Democratic leaders of Congress who will bring him to heel are up to their necks in it.
It's very reminiscent of 1977 and 1993. Carter and Clinton got elected by voters who were firmly rejecting Republican rulers, but were looking for something different than an old-line Democrat. They didn't want a liberal, they wanted someone more in the middle who they could trust to do the right thing, regardless of partisanship. And I believe Carter and Clinton had the best of intentions to govern just that way. But Congress simply wouldn't let them. They dismissed the new presidents' reform ideas as if they'd been written by children. They were determined to get their pent-up agendas addressed first, second, third and fifth.
So whatever Obama says he's going to do, the first act of legislation he's going to sign will be the Employee Free Choice Act, which will hugely expand union membership by allowing organizers to intimidate workers into signing cards rather than voting in a secret ballot. Fannie/Freddie will not be reined in, because Barney Frank and Nancy Pelosi will make it very clear to Obama that his legislative agenda is DOA if he doesn't handle it their way. There will never be a middle-class tax cut, although there will be a Patriotic Contribution Act raising taxes on rich people making $110,000 and up.
Hillary could have stood up to this, because she'd seen it before. If McCain wins, we'd at least have a fight between equals. Obama is not strong enough to be anything but Congress' toy.
Vail Beach:
Old-line Democrat? If you mean Clinton/DLC crap, I agree. If you mean FDR Democrat, then I disagree. The problem is all the corporate donations to both parties. The thing is, there are those of us that are trying to clean up the Democratic Party. Intimidate workers? You mean like the bosses do? I hope you realize that real wages have been declining and if you did, you'd know why the EFCA is important. Fannie/Freddie will be changed because they don't have lobbyists anymore.
Joe, here's the thing: we spent thirty years marching into the wilderness. Better figure on another thirty to march back out of it.
Once the Democrats have a filibuster-proof majority, the next thing to do is to initiate a few modest reforms, such as reforming the bankruptcy laws, giving the courts the ability to reset mortgages, beefing up the various federal oversight agencies, getting capital gains taxes in alignment with taxes from income, etc. And then eject the blue dogs. They aren't needed any more, and will simply use their power ala Lieberman to pursue their own agendas. Then we can start working on the real reforms: lobbying, political contributions, a new Fairness Doctrine, etc. We could also kill off the various propaganda 'think tank' organizations, perhaps with the threat of heavily taxing them or their donors. Raze the Chicago school to the ground.
Finally, we could do something about paring back the military and cracking down on abuses like the whole big pharma sector and insurance industries. Oh, and easing the hacks off the highest court in the land and appointing people who will actually do their jobs in that position. No more Scalia's, Thomas's, Robert's, etc. Those people make the Supreme court a laughing stock.
None of this is going to be easy, and all of it will take a lot of time. But by '40s, America might finally enter the 21st Century.
SOV, you are quite possibly the most ignorant, drooling, lackwit to ever post in this forum. Congratulations. How much bad acid have you dropped, in order to give you the notion that there was ever a moment when Fannie and Freddie were privatised? Why the hell do you think that these entities were able to borrow at below-market rates for decades? Because they were nice people? SOV, if you can't grasp that these entities had an implied taxpayer guarantee from the moment that they were formed, which is why they could borrow money so cheaply from the moment they were formed, well, why don't you just go down to your local zoo, and offer to trade places with a chimp; I sure your simian cousin could use the day off, and you certainly fling crap as well as him already.
Look, you yammering dolt, people like me have been saying FOR DECADES that Fannie and Freddie were inevitable trainwrecks, because, yes, all the incentives were in place to make them so. People like me have been saying FOR DECADES that it was lunacy to have Congress give these entities the goal of expanding the rate of homeownership, while also allowing them to bundle and resell paper with an implied taxpayer guarantee, while also letting their management pay themselves huge sums of money while they carried out these tasks.
Truly, you titanic cretin, the fact that you haven't yet grasped that there was never a day when Fannie and Freddie were private entities (for cripes sakes, you moron, just what the hell do you think the "government sponsored" part of "government sponsored entities" means?) indicates that you could press your neck across the externally moving part of a running chainsaw, and not lose any cognitive capacity. If I wanted to be mean, I'd suggest that you give it a try, if it weren't for the fact that it is apparent that you might just take the suggestion, such is your brain.
By old-line Democrats, I mean the "lions" of Congress who are more concerned with pork and the perks of chairmanship. They rolled Carter and rendered his presidency a joke. They rolled Clinton for the first two years. His presidency was saved, ironically, by Newt Gingrich booting out the old Demo establishment and then overreaching to render himself less powerful than he could have been. But whenever the Democrats get back in control of Congress, they revert to form -- promising fiscal responsibility and an end to backroom deals, while carrying on as always.
You're obviously pretty young or history-challenged if you think the DLC was "old-line." Dude, without the DLC, Republicans would be about to enjoy their eighth straight presidential victory. The DLC reformed a Democratic brand that was in the toilet and made viable again. You think Obama isn't a DLC type candidate because he panders to you by seeming to ignore the DLC. But he is campaigning using the DLC's song, which is the only song that gets a Democrat elected in this still-conservative country.
EFCA will not raise real wages. You've got to be kidding. It will increase domestic unemployment because -- talk about old-line -- it is a nostalgic fantasy that empowering organized labor will bring back a 50s-style economy. You want to see how global the economy can become? Pass the EFCA. Real wages will not increase by any government action because government cannot increase the nation's wealth.
If you're on a union payroll, I forgive you for supporting for EFCA. Like the guy in "Thank You for Smoking" said, everyone's got to pay their mortgage. But if you actually said those words without someone first slipping you a fifty dollar bill, then someone should be tasting your Kool-Aid.
I would say this too: right wingers have been claiming for a long time that inequality doesn't matter, as long as everyone's lot in life is improving, and that Laissez Faire is the best way to increase productivity, wealth, etc.
Now, there are certain normative arguments that can be made that given two societies A and B, with B having twice the wealth but forty times the inequality of A is somehow the 'better' society. That is, even if most people are better off living in society A, B is still to be preferred.
But now it appears - surprise - that policies that flatten the inequality in fact make society A the better engine of growth and productivity. So that even though the wealthiest in A are not as rich as the Wealthiest in B, A is, by the old argument, now the better place to live.
Is anyone surprised that the arguments have switched, the goalposts moved yet again? Now the argument by these types is that society B is _still_ better because it is possible to attain greater wealth than in society A. It's not an argument that right-wingers want to make, but it's all they've got at this point.
And at least it's to be preferred to the real reason why they prefer the setup in society B.
"In the spirit of full disclosure, I should let you all know that, late Friday and still with some misgivings, I registered as a Democrat."
What was the point of that? Aren't the primaries over?
Hey, SOV, is Joe Biden one of the Democrats who needs to be ejected, given he was one of the prime movers (I wonder how much Biden's son was getting paid by MBNA, while Biden was carrying that swell corporation's water!) behind the hideous bankruptcy bill? How does one eject a sitting Vice President from his party? Or do you intend to call for impeachment proceedings immediately after he is inaugurated? Do tell!
"Once the Democrats have a filibuster-proof majority.... And then eject the blue dogs."
Uh...how about some math help here for poor SOV?
You can't get to a filibuster-proof Democratic majority without the blue dogs. Ever. You can't even get to a majority.
Megan, how does it feel to belong to a tribe which has a lot of members who want to bring back the Fairness Doctrine? Mind you, the Republican candidate is clearly despicable as well on these matters, but I am curious as to what prompted the decision.
Vail, I was going to bring that up, but it's against the rules to tease the chimps.
Chuckle. Will, I think it's pretty obvious to all who's got the smarts and who don't, and who is well informed, and who ain't. And who has been right all along and who hasn't.
No, it's quite, quite clear that you are my intellectual inferior. Nothing wrong with that. What _is_ wrong is that you are also my moral inferior as well.
Oh, and of course, a few links, just to show you how it's done. Like how Fannie Mae was for example:
Or of course, the wiki:
It looks like you put a lot more energy into throwing poo when you've been overmatched than you do in making sure it's not pathetically easy to prove you're wrong. Hmmmm . . . consistent with the way you've been behaving, maybe your whole schtick is to encourage poo-flinging because that's all you're really here for.
Pathetic.
I'm not questioning the proposition that a more equal society is likely to be a more prosperous one. I'm questioning the proposition that the EFCA will do anything to increase prosperity or equality. It is a law for union bosses, period. Which is why the campaign to get it passed is entirely a stealth one. Did you hear Obama mention it in the debate? Did Biden? Did either of them even mention organized labor? But like I said, Obama's First Hundred Days will be all about organized labor. America will be very surprised, but it will be over quickly. Debate doesn't help this particular cause, so there won't be much of it.
SOV, you moron, the fact that Fannie and Freddie were still able to borrow at well below market rates after 1968 means that there continued to be an implied guarantee on the paper they sold. Do you know anything at all? Do you think private entities typically are told by Congress what they are required to support? How unspeakably stupid are you?
Sigh. If you're going to try some sort of takedown, would you please put some effort into it? You might start by asking how it is possible for a party to eject one of it's own at all. The answer is - playing favorites, both with comittee assignments and election help.
This being the obvious and well-known route, one thinks immediately of the 2010 elections. If there is a blue dog who won't get with the program, who is being obstructionist in a way that hurts the party or certain objectives of the party, one strips that representative of any sort of power above and beyond the simple vote. One pointedly does not endorse Huckleberry Hound, but his much more progressive Democratic challenger, Mabel Mae Jones. One does not direct any effort or funds towards Huckleberry's campaign, one flies in the top brass, complete with brass band for Mabel. It's not a sure thing by any means, but odds favor Huckleberry being cut off at the knees during the primaries. Statistically, the House loses Blue Dogs and brings in more progressives. And of course, this causes the remaining Blue Dogs to think very carefully about any obstructive maneuvers they wish to undertake.
None of this is hard to find out, if indeed you didn't know it already.
Again, we see who is offering intelligent commentary, and who couldn't outsmart a jar of pickles.
Please, Vail, if you're to do this thing right, would you at least _try_ not to make your responses not quite so dimwitted?
I think at this point, I'll just walk away from the rabid dog. Clearly he has nothing to offer except an invitation to roll around in the mud with him.
No thanks, guy; I pass. But otoh, thanks for demonstrating just how bankrupt, both intellectually and morally, you and all you stand in for are. Like Communism, your lot is destined to wind up in the ash bin of history (intended.)
I would like to also point it is another fraudulent impersonation, claiming I was sexually active in the 'meatpacking' area.
I'm too young for that, but did experiment sexually when I was younger (who doesn't), and regard sucking off a brass band which did one Saturday evening with embarrassment, but not the shame I have of having once been a Marxist.
The latter left a far worse taste in my mouth than the former.
ScentOfViolets:
You could have cut down on the typing by just referencing Donna Edwards. We(meaning progressive Democrats) took down Al Wynn and have one less Blue Dog in the House as a result. While Lieberman is still in the Senate, we can, without a doubt, say we caused his meltdown and soon to be slide in to irrelevancy. There is more to come.
I'm not questioning the proposition that a more equal society is likely to be a more prosperous one. I'm questioning the proposition that the EFCA will do anything to increase prosperity or equality. It is a law for union bosses, period. Which is why the campaign to get it passed is entirely a stealth one. Did you hear Obama mention it in the debate? Did Biden? Did either of them even mention organized labor? But like I said, Obama's First Hundred Days will be all about organized labor. America will be very surprised, but it will be over quickly. Debate doesn't help this particular cause, so there won't be much of it.
Old union bosses? In what industry? You obviously don't know much about unions or how they work, except for your right-wing nonsense. There is a lot of stuff that hasn't been brought up in any of the debates. Obama's First One Hundred Days will not be "all about organized labor". That is just one of many policies to be enacted.
You can't get to a filibuster-proof Democratic majority without the blue dogs. Ever. You can't even get to a majority.
The Blue Dogs are really a House group, not the Senate. Filibusters are used in the Senate.
I could have cut it down even further by just linking to Firedoglake.
I've got to wonder if these people are really as ignorant as they make themselves out to be, or if this is some sort of deliberate strategy. If so, it's not working.
You're obviously pretty young or history-challenged if you think the DLC was "old-line." Dude, without the DLC, Republicans would be about to enjoy their eighth straight presidential victory. The DLC reformed a Democratic brand that was in the toilet and made viable again. You think Obama isn't a DLC type candidate because he panders to you by seeming to ignore the DLC. But he is campaigning using the DLC's song, which is the only song that gets a Democrat elected in this still-conservative country.
You are the one who don't seem to understand what the DLC is. Two things make them up. One, they are neo-cons who chose to remain in the Democratic Party(see "Holy" Joe Lieberman) and 2.) They are what I call Corporate Democrats. Those are the kind like Ben Nelson, who calls himself a Democrat, but votes more often with Republicans(while selling himself out to corporate interests). What way is this county conservative? Enlighten me. The DLC is old news. Harold Ford, Jr. couldn't even help his protege win back his old Congressional seat. How did the DLC make the Democratic brand more viable? Gore and Kerry both lost(when each should have won .. and the same goes for Hillary). And pork? You mean pork like Don Young and Senator Ted "Toobez!!" Stevens put pork into bills?
I've got to wonder if these people are really as ignorant as they make themselves out to be, or if this is some sort of deliberate strategy. If so, it's not working.
They put an incurious twit in office and are thrilled with another as McCain's VP. They revel in their intellectual dishonesty. Do you know how Palin found out about "The Surge"?
"But now it appears - surprise - that policies that flatten the inequality in fact make society A the better engine of growth and productivity."
Where the heck did you get this? Have you been reading brochures from Cuba and North Korea on the 'worker's paradise'?
Also, SOV, can you find even one money and banking textbook that doesn't describe Freddie and Fannie as quasi-government agencies, explaining that they can borrow at below-market rates because everyone assumes that they're still backed by the government, even though they're supposedly private? It's been a few years since I taught a class that used one of these textbooks, but most publishers still send me review copies in case I ever assign one again, and all the money and banking textbooks I have contain a special section on GSEs, explaining that they're semi-government agencies. After all, why else wouldn't they be subject to anti-trust regulations and prevented from having such a ridiculously large market share?
"In fact, CRA loans get paid back at a higher rate then the general public."
JK's conscience -
Could you give your evidence for this? In the Federal Reserve link you gave, it claimed only that the rates weren’t all that different either way, and offered as evidence a study that said that CRA loan performance was worse (in terms of both default and delinquency rates). Here's the link to that study:
www.federalreserve.gov/BoardDocs/Surveys/CRAloansurvey/cratext.pdf
This study is apparently the best evidence we have, but it’s pretty limited. Out of 10,000 financial institutions, they sent the survey to the 500 largest and got back 143 responses, of which less than half were able to offer data on CRA loans specifically, so I guess one could argue that there’s not enough evidence to conclude anything.
But on the findings of the survey cited by the Federal Reserve report, here are the conclusions I found:
“On average, although experience varies, survey responses indicate that CRA-related home purchase and refinance loans do not perform as well as home purchase and refinance loans in the aggregate”
“about half of the survey respondents have higher rates for both measures of delinquency for CRA-related home purchase and refinance loans than for overall home purchase and refinance loans.”
“CRA-related home purchase and refinance loans do not appear to perform as well as other home purchase and refinance loans when the analysis is conducted on a per CRA-dollar basis (tables 3e and 3f).”
The study also surveys other research, which was mostly on affordable mortgage programs for low-income borrowers, many (but far from all) of which were CRA-related loans. It concluded that “Evidence on the delinquency, default, and prepayment experiences that mortgage market participants have had with affordable home loans has been fairly consistent. Affordable home loans tend to have higher delinquency and default rates than loans extended using traditional underwriting criteria.”
You were the one that brought up the CRA specifically. I was speaking about "affordable home loan" programs in general, of which CRA loans are certainly a significant part but not the only part. I'd be interested to see what evidence you have that they actually get paid back at a higher rate, since the links you provided before indicate the opposite.
One more point regarding the survey I already linked to that (counter-intuitively) appears to be the evidence for the claims that CRA loan performance is as good as non-CRA loans:
The survey looked at delinquency rates as of Dec. 31, 1999. For default rates, it measured net charge-offs during the calendar year 1999. Although the CRA had been around since the Carter Administration, it was only in 1995 under Clinton that the CRA was expanded to include subprime loans, and Fannie and Freddie were given affordable-housing credit for buying securities containing subprime loans. Thus this study could have the same problem that Michael Milken’s junk bond studies had – that the newer, riskier debt was still too young to show high default rates, while the overall sample was dominated by debt from an earlier era with higher standards.
Clinton only allowed subprime loans to be counted as CRA loans and purchased by Fannie and Freddie beginning around mid-1995, and it would naturally take time for the market to shift towards those loans. It takes time for a mortgage loan to become delinquent, then declared to be in default, and then charged off, so charge-offs for the 1999 calendar year would probably include very few of the newer subprime loans.
And note that it’s fair to blame the Clinton Administration for these changes, since the changes were through the Treasury Department and HUD (not through the Republican controlled Congress), and were part of Clinton’s National Homeownership Strategy. Here’s a link to an Investor’s Business Daily article on Clinton’s role:
http://news.yahoo.com/s/ibd/20080924/bs_ibd_ibd/20080924general01
Ben Smith at The Politico reported September 24, 2008:
Former Fannie Mae chairman Jim Johnson was dumped from Obama’s vice presidential search team, but he’s still playing a behind-the-scenes role on the campaign.
Former Senator Tom Daschle, a top Obama backer, emailed a select list this afternoon that he and Johnson would be leading a briefing intended largely for Clinton’s campaign brain trust next month.
“Jim Johnson and I have scheduled another informal breakfast discussion and update on the campaign early next month,” he wrote to a list including Senator John Kerry, James Carville, and Richard Holbrooke, as well as Clinton’s former top campaign aides, including Howard Wolfson, Geoff Garin, and Harold Ickes.
Johnson’s involvement comes at a moment when political association with the failed mortgage giants is particularly toxic. He was already the subject of a McCain ad attacking Obama.
Uh huh. You probably haven't heard me describe myself as an Eisenhower Republican maybe thirty or forty times, once at 12:58 in this very thread. But you think Eisenhower Republicans are somehow Communist. Rather telling, that is. Policies that have capital gains taxed at the same rate as income are clear evidence of Communism. Policies that are against the tomfoolery of awarding government contracts to Kellog, Brown and Root, or Blackwater in the way they were awarded is a symptom of solidarity with Che Guevera. Right. And so I find myself rather slack-jawed at this declaration:
You taught some sort of class with any sort of numbers in it? I find that extremely hard to believe. Y'know, you could actually post some cites if you think this point is actually worth pursuing. Instead we get this twaddle:
Notice the construction here, folks. _Ann_ makes an assertion, and _I'm_ the one that's expected to do the heavy work.
And also despite the fact that as far as CRA's are concerned, Frannie and Freddie weren't the problem:
And to the extent that they acquired toxic paper, well, there were worse offenders, offenders that I'm not entirely sure Ann won't claim were also not 'private'.
None of this stuff is hard to find, btw.
From the Washington Post 8/18/08 : " Fannie's Perilous Pursiu of Subprime Loans:
At the end of June, Fannie Mae owned or guaranteed $388.3 billion of Alt-A and subprime mortgage investments. In comparison, it said its capital -- the financial cushion that enables it to absorb losses -- totaled $47 billion, which exceeded the government's minimum requirement by $9.4 billion.
In his statement to The Post, Mudd said Fannie Mae's Alt-A investments have been hurt "by the most severe decline in home prices since the Great Depression." Making matters worse, the investments are concentrated in states "where home prices have fallen further and faster than in the rest of the nation," he said.
This month, Fannie Mae said it would stop taking on new Alt-A loans by the end of this year.
From the Washigton Post : " How HUD Mortgage Policy Fed the Mortgage Crisis":
HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.
Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.
The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.
Note, btw, that almost by definition, FM cannot originate a notionally subprime loan:
So these stories are just a wee bit . . . disingenuous. Yes, they bought securities. Just like everyone else did. But they most definitely did not do the lending that those securities were based upon.
Ann - Thanks for your effort to keep the record straight. Before you bother to trace back through SOV's latest links note that the reference is to wikipedia. And as if that weren't bad enough, the article has been flagged as one whose neutrality has been challenged.
I might also take the small responsibility of explaining to the uninitiated that independent mortgage companies typcially originate loans and then sell them to the likes of Fannie and Freddie. It is not unreasonable to describe them as acting, in these instances, as the contracted retail lending arms of those Government Sponsored Entities (SOV - please note the word 'Government' in the title. It actually means, you know, the government.)
"Notice the construction here, folks. _Ann_ makes an assertion, and _I'm_ the one that's expected to do the heavy work."
I assumed that you would quibble with anything that I chose, or else simply refuse to believe it. But here's something from “The handbook of mortgage-backed securities” by Frank Fabozzi (the established expert on debt markets):
"Their charters allow Fannie Mae and Freddie Mac to hold $2.50 of risk capital for every $100 of assets – a leverage ratio of 40:1. The actual ratio of core capital to total assets for both agencies in the last few years going into 2005 has run at a slightly lower 32:1.... roughly three to four times the leverage of the typical bank. This means that if a GSE and a bank are both bidding for an asset, for example, the GSE can buy it profitably at a fraction of the spread to funding that the bank might require. If the GSE also brings a lower cost of funding to the bid, the combination of good funding and high leverage is powerful. .... The GSE’s origins in acts of Congress and their ongoing $2.25 Million lines of credit with the U.S. Treasury create political leverage for these constituencies. The GSEs also view their government ties as one reason why their debt has traded at lower yields that most other financial institutions"
So they've been allowed higher leverage ratios than any of their competitors, have lines of credit with the U.S. Treasury that are not given to their competitors, and have been able to borrow more cheaply. They themselves attribute their lower borrowing cost to their government ties.
Many people here have pointed out how these quasi-government agencies were different from their competitors. Every textbook puts these 'private' entities in a separate category. Rather than resort to cheap personal attacks, perhaps you could explain why you refuse to acknowledge a difference, in spite of the many specific differences that have been presented to you. Are you claiming that, from a regulatory standpoint, they were treated exactly the same as any other lender?
Ann,
Either you and Scent of Violets need to get a room, or you need to get new batteries for your vibrator.
SOV -
In the BIS working paper that you cited, Ellis claimed that the GSEs were supposed to be a key part of the enforcement of regulatory standards, which would be odd if they were just private companies. Here's a quote:
"The mortgage market in the United States has several unusual features that are seen in few other countries. As described in Green and Wachter (2005) and elsewhere, the US mortgage system evolved to receive indirect government support via the GSEs. The GSEs were long able to fund themselves in capital markets at advantageous rates."
He later talks about how the GSEs were supposed to enforce high lending standards.
As for Janet Yellen, again I went to the actual source and was unable to find even an unsubstantiated assertion from her that "most CRA loans have been responsibly made". She certainly didn't offer any evidence of this. She argued that CRA loans have helped communities, which is a different claim.
jl - You're right, I should have stopped sooner. Although at least Wikipedia often gives sources, and it's interesting what one finds by pursuing the original sources. But I'm done for the night. Thanks for explaining that GSEs don't just originate loans.
Just one more note to SOV -
When you looked at the BIS working paper itself, surely you noticed that Ellis's source for the role of the CRA was the speech by Yellen, didn't you? So you didn't give two sources, you gave the same source twice. And when you read that source, a speech and not a research paper, it offers no direct evidence and actually claims only that others were also making "high priced loans" (the question is over loan standards, not pricing) and that CRA loans are good for communities.
OK, I've said twice that I'm done, but I hadn't seen Megan's contribution before this.
Thank you, Megan, for approaching me with an offensive and disturbing sexual reference when I've worked hard to avoid personal comments, despite numerous provocations. I understand that hard data indicating a leading role for Democrats in the subprime lending mess doesn't sit well with your newly-announced blind allegiance.
Megan,
I am disappointed by your recent writings and I am disappointed by your decision to register as a Democrat. I was a regular reader and occasional poster to Asymmetrical Information and followed you to The Atlantic. As a conservative by philosophical inclination and an economist by training I sometimes had reason to disagree with your positions, but I found your thoughtful libertarianism interesting, particularly when you struggled to make that philosophy work practically as well as morally.
Your more recent writings have lost their intellectual center and are no longer the least bit compelling. You are just not terribly thoughtful anymore. Instead you are lashing out without justification. Do you expect anyone thoughtful to believe that someone with a mature intellect and a fondness for a libertarian ideal would register as a Democrat just as that party lurches toward the authoritarian left? And how can you seriously suggest that John McCain’s - not my favorite politician, by the way - associations with people who may have worked as lobbyists for Fannie Mae and Freddie Mac are more disturbing than the close connections the Democratic Party had with the people who hired those lobbyists, told them what to say, and who ultimately drove Fannie, Freddie and a good chunk of the American economy into a ditch? Or is it a plank in the new libertarian platform that we should release Andy Fastow and Jeff Skilling and lock up Enron's lobbyists?
I never had you pegged as political partisan, but things change. Good luck with the Democrats. I doubt that you'll care much, but I don't think I'll be reading anymore. Intellectual flailing is just not that interesting. Perhaps you will bid me farewell with a rude sexual innuendo?
Anyone can sign their comments as Megan McArdle. It doesn't mean that person is actually her. (I, for example, am neither her nor the vibrator comment person).
I'm convinced that SOV is a automated response program written by the Black Knight from the Holy Grail.
Up next: SOV argues the color of the sky.
Oh well, at least I tried...
Ann:
So you are calling a member(either current or former .. not sure) of the Fed Board of Governors a straight out liar?
1. CRA has been around since 1977. It's rather unreasonable to blaim a 30-year-old banking regulation for today's crisis, even more so than blaming somebody's gay lover.
2. FNMA/FHLC acquired Alt-A loans, not sub-prime loans. Whereas all of them have gone bad, there's a big difference in terms of standards applied to borrowers. For that matter, the default rate on conforming mortgages has increased 30 times in the last two years. FNMA/FHLC aren't the ones to blame.
http://economistsview.typepad.com/economistsview/2008/09/it-wasnt-fannie.html
3. What other investment opportunitites were available after 2002 aside from real estate? Would the markets (and investment opportunities)be more diversified, if the investment in infrustructure weren't declining from 1985? If $100.000.000.000 weren't sunk into sand every year? If the first Treasury Secretary in the W administration weren't sacked for ideological reasons?
P.S. I thought that the kind of folk who think that all Democrats are terrorists couldn't read. Apparently, some can even write and, amasingly, can find theAtlantic.com
I do hope the comment from October 4, 2008 10:48 PM wasn't from our kind hostess. She's always shown a great deal more intelligence and decency than that. Then again, she did register as a Democrat....
Uh, jl, notice that I quoted the parts with footnotes? Why do you think that was? As you should know, there seems to be a limit to how many links one can post in a certain time. You _are_ capable of going to the article and clicking on the link, aren't you?
No, you just don't want to do the work. You claim to be a teacher, though you don't say of what. I'll assume some sort of finance.
Then you should know that the burden of proof always falls on the party making the assertion. Period. End of story.
You tried to weasel out. You also tried to imply that I'm some sort of Communist or Communist sympathizer. Stop it.
Ann, get this straight - you're the one who has been provocative. Didn't you write this?
Stop playing the victim. We all know the dynamic here, right? It's called "Somehow, It's the Governments Fault. We Don't Know How, But We'll Find it."
Starting sometime last week, it was the conservative rage (pun intended) to blame it on CRA's. It quickly became apparent that no one was buying that particular talking point. Then it was the FF's taking on subprime loans. _That's_ barely worth the two lines it takes to refute it. Now it's the fact that these entities are somehow responsible coupled with trying to show that they are somehow government agencies.
Somehow, some way, these tossers are going to try to find a government connection. Can you say 'theory in search of the facts'? Sure. I knew you could. In a nice little whirl of synchronicity, Mark Thoma has a piece up today on the very subject.
Check out the comments. They are a lot more thoughtful and informed than what is usually found here. A sample:
Note also, that as Thoma says, that observing that the FF's were not the cause (or at the most, a very small part of it) of the current crises is in no way defending their behaviour. It's just keeping the heat on the free market maniacs.
I think the sports analogy above is a great illustration of modern day American business. Sports team owners ask the public (or rather, the public's elected representatives) to build them stadiums and the public agrees.
There is no problem with income redistribution, as long as it is redistributed to the right people.
I think SOMEONE'S got a crush! :)
This is getting to the point of ridiculous. SOV, the GSEs were in up to their necks in the mortgage mess. They made a market for these mortgages. They ran a de facto hedge fund with the taxpayers' guarantee. Overseeing them is not a question of regulation. It's a matter of simple credit management. Some Republicans tried to do this. They were cut off at the knees. Seriously, do you believe that the heros of all of this are Chris Dodd and Barney Frank? Do you think there's no problem with a member of the legislature carrying on an affair with a person who they're charged with overseeing? Do you think that the government had no role in creating this mess by encouraging bad behavior?
Easy. The GSEs are leading the cavalry charge at the front of the subprime avalanche perilously close to the elections, and it is painfully clear that the GSEs were administratively corrupted and holding a lot of subprime-backed debt while being encouraged to move forward in same by prominent Democrats and an activist group affiliated with the Democrat's current presidential candidate.
This incovenient truth can't be swept away at this point, since the financial meltdown and subsequent bailout have put the facts into the hands of too many adversaries. Hence, Plan B: "recharacterize" the GSEs as functionally private entities who made stupid investment decisions. With any luck, that will get them tarred as Republicans, or at the very least, more failures of the "unregulated free market" (whatever that is).
SoV knows quite well what a GSE is, and normally would have no hindrance explaining it back to you in the same terms you have outlined. But, there is an election at hand. Logical reasoning is out the door; this is all about power, baby.
Sigh. What is it with the 'wingers and their reading skills?
Why don't you go back through and find something I wrote that said that they weren't? Here's the deal - you find that, and I will immediately say I was wrong to do so, and apologizing for ever implying that this was not the case. If you can't find any such claim, then _you_ admit that _you_ are wrong in you characterization of what I wrote, and you apologize to me for putting those words in my mouth.
Deal?
Or is this where you weasel your way out of backing up your words while still trying to imply that what you wrote above is true?
_Nowhere_ have I written about the sterling performance of any members of the Democratic party (again, go back and look.) In fact, _you_ are agreeing with _me_. And further, the problem in this instance was a lack of oversight. A lack of regulation.
You know, what I've been saying all along? And deregulation is the sin qua non of the conservative brand. It's what they're known for. I repeat, to the extent that any Democrat can be blamed for this mess, it's to the extent that they adhered the Republicans philosophy of deregulation.
'Conservative' economics is dead, dead, dead.
And yet Fannie and Freddie didn't undergo deregulation. They were overseen by OFHEO, which was established in 1992 to watch and regulate Fannie and Freddie. OFHEO had hundreds of employees, its mission statement was never watered down by the deregulation movement of which SOV speaks - and yet OFHEO completely missed (a) the accounting scandals circa 2004 and (b) the impending collapse of those institutions.
Think about that: hundreds of federal employees had nothing to do all day but look for discrepancies and poor practices at Fannie and Freddie, and they were unable to predict or prevent any of the major problems. That looks an awful lot like a failure of regulation rather than a failure of deregulation. And since we can plainly see that regulation is far from foolproof, doesn't it make much more sense to remove the moral hazard of implicit government backing, rather than simply double down on a regulation scheme that has a miserable track record?
Conservative economics is dead?
How odd. It has never been tried.
What_s wi_th al_l the under_scor-es_? You a foreigner?
"CRA has been around since 1977. It's rather unreasonable to blaim a 30-year-old banking regulation for today's crisis, even more so than blaming somebody's gay lover."
Man I'm late to the party, but what a fun party it is.
CRA extant since 1977 implies it is irrelevant. Let me explain compounding to you. I know lefties don't do simple arithmetic, much less mathematics, but work with me, you'll find it worthwhile. (1+i)^n is the basic formula. As lefties all you need to know (or are able to understand) is that for larger values of n, say 31 (years) the formula results in a BFN (Big Effing Number)for almost any normal 'i'. The BFN I have in mind is the amount the taxpayer will pay to fix up this mess.
As for the gay lover, he's but a bit player. We blame Barney Frank who pretty clearly did what he did partly so he could keep on buggering the gay lover; or getting buggered, who knows, who cares.
Obama anti semitic connections are widespread.
Samantha Powers views on Israel. His closest advisor who said she would be back for an Obama administration. Look how she talks about the financial import of jews. She is his soulmate on foreign affairs
http://www.youtube.com/watch?v=-O5XxXm8wPE&eurl=http://hotair.com/archives/2008/10/05/video-former-obama-adviser-on-invading-israel/
General Mcpeak blamed the jews in miami and new york for the mess in the middle east.
Father Pfleger is an anti semite who Obama called his moral compass and had him on a committee for his campaign.
Wright: Zionism is racism, posting articles praising Hamas at the church. How about even after the 9/11 attack still praising Wright in July 2007 in a speech Obama gave.
Obama's discussions with Ali Abunimah
"[Obama]came with his wife. That's where I had a chance to really talk to him," Abunimah recalled. "It was an intimate setting. He convinced me he was very aware of the issues [and] critical of U.S. bias toward Israel and lack of sensitivity to Arabs. ... He was very supportive of U.S. pressure on Israel.
According to quotes obtained by Gulf News, Abunimah recalled a 2004 meeting in a Chicago neighborhood while Obama was running for his Senate seat. Abunimah quoted Obama telling him "warmly" he was sorry that "I haven't said more about Palestine right now, but we are in a tough primary race."
"I'm hoping when things calm down, I can be more up front," Abunimah reportedly quoted the senator as saying.
Abunimah said Obama urged him to "keep up the good work" at the Chicago Tribune, where Abunimah contributed guest columns that were highly critical of Israel.
Obama in 2004 was critical of the fence in Israel and only changed positions because of poltiics.
HotAir as a legitimate source? Get real!! We know about Palin's AIP connections. And her support for Pat Buchanan in 2000(the Israeli flag in her office is a cheap political stunt). We also know about John McCain's dealings with unsavory people(John Hagee, anyone?). What is your point? The point is that you don't have one.
I see. Obama does not have three former Fannie execs as key advisors. He had one former Fannie exec on his VP selection committee, and has consulted with another on "general housing and economy issues." Therefore, "McCain is going to have to bear his humiliating connections to lobbyists alone."
Like a steel trap, that one.
McTwaddle:
To scared to blog on the 500 point drop in the Dow? Thank God we listened to you and the other gasbags and passed that welfare plan for Paulson and John Mack so they won't lose their retirements (the non-Argentinian cattle ranch portion) like the rest of us. The extra 4 or 5 trillion for my two month old niece and nephew to pay off is a small price to pay so that you can keep the effluvium emanating on Mort Zuckerman's dime or whoever you and
Sully are suckling off these days.
While you're at it, why don't you get that noted baseball authority Gentle Ben Bernanke-where's he scurried off to BTW- to tell us why MLB can't effect a similar do-over for the Cubs with the Dodgers and the Phillies and the eventual AL Champs in the role of the average American taxpayer with savings and no mortgage debt?
Anybody here in teetering cubicleland who actually is interested in hearing the views of people who understand markets ought to spend their clicks on Roubini and Shedlock, or Jimmy Rogers if he has a blog.
People who can't do and make money at the MERC or Bd. of Options with their, (insert harrumph) U. Chicago GSB MBA pay off Sallie Mae with hackery that insults the intelligence of stiffs who actually work for a living.