Skip to comments.How We Got Financial Disaster: A Tale Of Democrat Lies And Deceit
Posted on 02/12/2009 7:21:49 AM PST by Michael Eden
For all the media's irresponsible coverage of the 2008 elections, they were the most blatantly dishonest and biased in their allowing Democrats to use the airwaves to present a blatantly false narrative that Republicans were to blame for the tanking economy due to their "failure to regulate."
We could go back to House Speaker Nancy Pelosi, who demonized "the Bush administration's failed economic policies -- policies built on budgetary recklessness, on an anything-goes mentality with no regulation, no supervision and no discipline in the system." The airwaves have been filled with Democrats and liberals presenting their talking points of Republican recklessness, anything-goes mentalities, and refusal to regulate or supervise the system, with virtually no investigation or even basic fact-checking by the media.
But no one has been more dishonest than Rep. Barney Frank. Not only is Frank a true shameless liar, but as Chairman of the House Financial Services Committee Frank had direct supervision over the real cause of the financial meltdown. He presided over Fannie Mae and Freddie Mac while their stock plunged 90% in value.
Frank came out with a TV ad that said:
"The right wing is losing control," the narrator says, as footage of Frank's recent appearance on Fox News' The O'Reilly Factor plays. "For 12 years the Republic majority refused to regulate the financial system. Last year, Barney Frank became chairman of the House Financial Services Committee and started working on the subprime mortgage crisis, outrageous CEO compensation and other Wall Street abuses."He is referring to his appearance on the Bill O'Reilly program. Then, like Sunday morning on NBC's "Meet The Press", he's interrupted because of his unrelenting lies:
"I'm Barney Frank, I approve this message and the chance to be on TV without interruption," he says.
REP. FRANK: I don't know exactly what it is. I will say this, there's a real difference here--there's a split within the Republican Party here...(unintelligible)...Representative Pence. They believe that nothing should be done, let the market basically do--except...Earlier in the same Meet the Press program, Frank had referred to the Republicans as embracing:
SEN. ENSIGN: That's not true.
REP. PENCE: That's not true.
SEN. ENSIGN: That's, that's not true.
REP. FRANK: I--what's the interruption? Because as you guys say things I disagree with...
REP. PENCE: Well, when you misrepresent me, I'll interrupt you.
REP. FRANK: Well, there is no very good approach because, frankly, a philosophy of let the private market do whatever it wants, don't regulate capital, keep capital--keep the, the government out of it. Alan Greenspan acknowledged, the leader of that philosophy, it caused a lot of problems. And we now have to try and fix them.We live in a culture that is so completely ignorant that over 57% of Obama voters even realized that it had been Democrats - not Republicans - who were in control of Congress for the last two years. And we live in a culture in which the media broadcasts outright lies without any attempt at correction when those lies favor Democrats.
Let's go back and correct the record. Let us document that Barney Frank, and his fellow Democrats, are lying demagogues who were actually responsible for the very "failure to regulate" that they deceitfully blame on Republicans.
What was the cause of our current economic meltdown? Let's turn to a CNN Money article:
The panel heard from former Fannie chief executives Daniel Mudd and Franklin Raines; former Freddie Mac CEOs Richard Syron and Leland Brendsel; a former Fannie Mae chief credit officer. Fannie and Freddie, publicly traded but federally backed companies, control or guarantee about $5 trillion in mortgage loans. They purchase large amounts of home loans, bundle them together and divide them into securities that can be sold to investors.It was DEMOCRATS who failed to see the risk or take action in the developing housing finance crisis. Just watch them doing it here. If you do nothing else, watch this!
The companies, which were taken under federal control in September, have drawn criticism for taking on too much risk, exacerbating the credit crisis when the housing market declined.
"Fannie and Freddie had a role or a primary role in this crisis," said Rep. Darrell Issa, R-Calif. "They gave people home ownership without telling them their personal dream could become their personal nightmare."
Lawmakers repeatedly referred to a 2005 Fannie Mae memo outlining future corporate strategy. The document acknowledged that more private investors were investing in risky loans, and it spelled out the potential consequences of taking on that risk.
"The risk in the environment has accelerated dramatically," the document stated.
And you have only to do a little basic fact checking to see that the people who ran Fannie and Freddie were virtually ALL career Democrats.
And we are now on the hook for trillions of dollars in bad debt - bundled to disguise the risk - due to the catastrophic failure of these Government Sponsored Entities Fannie and Freddie.
And Barack Obama - who took more campaign contributions from Democrat-to-the-gills organizations Fannie and Freddie than anyone but fellow Democrat Chris Dodd - also had disgraced and frankly criminal Franklin Raines as an economic advisor to go with former Fannie Mae CEO Jim Johnson serving on his campaign. In addition, Barack Obama and Chris Dodd also topped out the list of disgraced and now bankrupt Lehman Brothers. And of course Senator Chris Dodd was taking sweetheart mortgage deals from corrupt Countrywide even as Barack Obama was taking the same sweetheart mortgage deals from corrupt Tony Rezko. And both Democrats were engaging in these cozy relationships even as the housing industry was in the process of going to hell and killing the economy.
Now perhaps you begin to see why even former Democratic President Bill Clinton acknowledged that it was actually Democrats who bore the failure for refusing to regulate the housing financial market while he was President:
Bill Clinton on Thursday told ABCs Chris Cuomo that Democrats for years have been resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac.Did Republicans fail to regulate Fannie and Freddie, whose risky and ultimately disastrous policies created the economic meltdown when they imploded?
Not according to The New York Times from September 11, 2003 - the first time President Bush tried to regulate them. In that article, which describes Bush's goals and the Democrats' united opposition, Barney Frank is quoted as saying:
These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis, said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.Democrats managed to kill that bill.
And Barney Frank was singing the same, "Everything's fine at Fannie and Freddie, so why fix what aint broke?" song as late as July 14, 2008 - JUST BEFORE EVERYTHING WENT TO HELL:
REP. BARNEY FRANK, D-MASS.: I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. Theyre not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.What little Frank and his Democrats did was way too little and way, way, too late.
Theyre in a housing market. I do think their prospects going forward are very solid. And in fact, were going to do some things that are going to improve them.
Between these two statements from Barney Frank, George Bush and Republicans tried yet again to regulate what they perceived was a growing potential crisis. John McCain wrote the following letter urging support of the Federal Housing Enterprise Regulatory Reform Act of 2005. I bold-faced key passages:
But Democrats ignored that message and united against that bill, too, threatening filibuster.
Sen. John McCain [R-AZ]: Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.
What happened to that bill?
On January 26, 2005, hoping for a different result in the new congress, Sununu, Hagel, and Dole re-introduced legislation (S. 190) to improve oversight of Fannie Mae and Freddie Mac. The bill incorporated many provisions of the Sununu, Hagel, Dole legislation from the prior congress. It passed out of the Committee on another party-line vote of 11 9 on July 28, 2005. But again, without a single Democrat vote, the bill was doomed if brought to the floor for the critical 60-vote cloture. Only 41 Democrat votes would doom it. In a growing negative atmosphere created by the left based on the war in Iraq and Afghanistan, a fight over an unreported crisis brewing in Fannie Mae and Freddie Mac was likely considered futile. Again the bill was not scheduled to go to the floor where Democrats would certainly have defeated it by voting against cloture and prevented an up or down vote.Democrat Sen. Charles Schumer - another hypocritical lying weasel who has repeatedly blamed Republicans for failing to "regulate" - wrote an opinion piece for The Wall Street Journal in 2006 which warned about what he called overzealous regulators and opposed a bill in 2005 that would have transformed Freddie Mac and Fannie Mae from large investment funds into conduits that only bought mortgages, packaged them into securities and sold them on the market.
Sadly, Barack Hussein Obama was more effective in his lies than John McCain was with the truth. And Barack Obama - who was the 2nd largest recipient of Fannie Mae's using "its political power to lobby Congress," and who had disgraced former Fannie executives on his campaign - is now the President of the United States, along with the very party that created this mess and successfully scandalized Republicans whose "mismanagement" was largely the result of failing to reign in Democrat stupidity and corruption.
The American people were lied to by a blatantly corrupt and dishonest media. And they rewarded the very people who created our current economic disaster by giving them total power. And as a result the American people are going to spend the next four years paying for their failure to do due diligence and find out the truth for themselves.
I forgot to mention Penny Pritzker, who was Obama’s national finance chair and who is now sitting on Obama’s team of economic witch doctors.
She was at the epicenter of the subprime loan fiasco from the very beginning.
“For all the media’s irresponsible coverage of the 2008 elections, they were the most blatantly dishonest and biased in their allowing Democrats to use the airwaves to present a blatantly false narrative that Republicans were to blame for the tanking economy due to their “failure to regulate.”
Can we take the media to court over this in a class action suit by any chance? On the grounds of failing to do their job in objective reporting?
I just heard that
Debbie Stabenow (D-MI)
are just three Dems talking about bringing back to ‘Fairness Doctrine.’
In the name of “Fairness,” they want to impose total domination of the media by liberals and deny conservatives any voice at all.
So probably not.
Fairness Doctrine, abortion and gun control. That’s the absolute bloody limit for me.
Well, as of now it’s socialism rammed down the country’s throat, $1.3 trillion in Porkulus, socialized medicine featuring medical rationing to let old people die of medical neglect, refusing to try the USS Cole terrorist even as we say we’re closing Gitmo, installing a tax cheat as our Treasury Sec, and on and on.
But yeah, Fairness Doctrine, taxpayer-financed abortion for the babies of the world, and gun control are worth getting pissed off about, too.
I think Glenn Beck nailed it yesterday.
He referred to David Copperfield, and how he does his magic tricks by presenting all kinds of distraction to take your attention away from what he doesn’t want you to see. You’re looking around here and there, and miss the REAL trick.
Beck said that there was so much going on to be outraged over that he frankly didn’t know WHAT to focus on; that he could do whole programs on any of a dozen different simultaneous outrages. And that he thought this was part of a deliberate campaign of misdirection.
The thing that continues to sicken me beyond description is the fact that Obama’s polls continue to remain high as the worst policies in our lifetime are being rammed through one after another.
Good facts about the economic crash but remember also the Credit Default Swaps.
I love the testimony of hitting the EPS number to the penny to kick in bonuses...classic. If you’re going to be a prostitute, you may as well make it lucrative.
Great article with many links. Bookmarked.
See tagline below . . A couple of days ago, I heard Rush throw down the gauntlet to Obama and the Democrats, with a THUD! He meant it, and I think they will soon rue the day they became the “Party of Piranhas”. Rush has the “gravitas” to back it up, and Democrats are comical every time they tangle with him. It’s sort of like watching a “Road Runner” and “Wiley E. Coyote” show.
“...And that he thought this was part of a deliberate campaign of misdirection.”
It is Alinskyism. Throwing everything of the system at the system to cause it to become choked up on itself. Mass confusion...It’s deliberate.
Re Post #15 NOT Alinskyism. I meant Cloward-Pivenism dang it.
Thanks so much for a great piece! Easy to share with some ill-informed folks I just happen to know.
First of all, I honor you and yours for your family’s service and sacrifice. May God bless you all and keep you safe.
Also, appreciate the note. My ultimate goal is 1) to provide information and links to the truth and 2) to leave behind a permanent record for when the Democrats lead us to ruin.
I said to my husband as we watched Glenn that I am beginning to think that a lot of the pork put into this bill was designed to draw all the attention so that the real socialist stuff in there would get lost in all the outrage over the spending.
As Tomas points out there are issues like credit default swaps, changes to Banking regulations for insurance-like vehicles to allow banks to hedge bad investing, commodities standards of trading altered by the Gramm Banking committee and vastly changed rules in shorting, hedge fund operation and arbitrage operations.
I would love to see the focus put on the history of this finacial disaster because the primary blame is on socialist policy and corruption. A secondary role has to lie with finacial interest largely assisted by Republicans.
Like the old movie line goes of the lawyer talking his client into being forthright in his testimony goes: “You have to be crucified, before you can be resurrected.” We have to be honest that outside of traditional conservatism lies a group riding in the side car that chants free-markets, free-markets at every road juncture and they have played a role. We might as well include discussing that secondary role if we want conservatism to be properly understood.
Conservatism since its first recognition in the era of Burke realized the value of what we inherited in western civilization and knew that change was necessary for the preservation of society and that cultural inheritance. They knew that this change MUST be careful small empirical reform to avoid destructive revolution rationalistic change. With conservatism adhering to the inherited role of Property and Free Exchange we are often found riding in the same bus with Free Marketeers who care little for careful reform with empirical testing and trial.
Empirical knowledge of the effects of careful reform allows for the bad effects of wholesale change to be mitigated and oftern avoided. Men can rely upon their property, their interest and their decisions because they know, under a conservative system, that in the future the rules won’t change so much as to steal from them by arbitrary power under careful reform.
We all have seen (Hernando DeSota, The Mystery of Capital) that in countries outside the western europeon and American model Free Markets alone don’t bring prosperity. Only with the full culture of settled Property Rights and settled law can property be brought into action as capital.
To correct the failure and expose the corruption we must take those short sighted gross ideologues that hitched a ride on our Virtues and expose them along with the corruption and mechanics of the leftists.
I included Dave in this response as perhaps he can shed some light on wholesale rule changes to short selling, or other systems, that were brought about in too sudden a manner so as to produce a fertile climate for instability
Good to see you over on the other thread. This article and the position I hold in #21 might benefit from your opinion as well. I know my take won’t be wildly popular.
Thanks so much Mr. Eden for your kind words. Please keep the information coming.
FAZ FAS are two examples. Folks making mucho dinero on the down days too. Today FAZ is up around 9 percent. It Crazy.
And we have a weak President being buffeted by economic advisors that are scaring him into doing singing and dancing the very way they want. I'd like to know what those advisors were saying in 2007.
And the real trouble is that the world leaders are going to try the same tactics against US.
I’m presuming you’re speaking of the Gramm-Leach-Bailey Act which essential repealed the Glass-Steagall Act. Basically, the repeal allowed banks/bank holding companies to own other financial companies and increase their rich (and, of course, increase their risks).
A couple of things: first of all, President Clinton signed it, so you can’t JUST attribute it to Republicans. And second, that act in and of itself didn’t create any disasters, but were in the mix of a LOT of things that all contributed.
But, your basic point is correct. Republicans did a lot of screwing up. They abandoned their conservative principles. The BIGGEST example? As the size of government and government debt increased, Pres. Bush never vetoed a single spending bill while Repubs were in charge.
Your understanding of The Mystery of Capital needs a caveat: that capitalism by itself does not transform a society/culture. Rather, capitalism - a product and invention of Christianity - depends on a particular moral worldview in order to function. As we become less and less religious and less and less moral (i.e. less and less ‘Protestant work ethic,’) you can expect to see capitalism reveal its failings. Right now, it is no longer Christianity, but Darwinism, which is prevailing. And therefore you can expect to see “social Darwinism” creating disasters of greed, predation, and abuse. And since we do not seem willing to return to our Christian heritage, I would expect these issues to become more and more of a problem.
As a society becomes less moral and religious, it requires more and more oppressive laws/regulations to keep the people in check.
Our founding fathers understood this crucial point:
“We have no government armed with the power capable of contending with human passions, unbridled by morality and true religion. Our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
- John Adams
And let us with caution indulge the supposition that morality can be maintained without religion
reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle.
- George Washington, Farewell Address, Sept 17, 1796
Religion and good morals are the only solid foundations of public liberty and happiness.
- Samuel Adams, Letter to John Trumbull, October 16, 1778
The great pillars of all government and of social life [are] virtue, morality, and religion. This is the armor
and this alone, that renders us invincible.
- Patrick Henry, Letter to Archibald Blair, January 8, 1789
Without morals, a republic cannot subsist any length of time; they therefore who are decrying the Christian religion
are undermining the solid foundation of morals, the best security for the duration of free governments.
- Charles Carroll (signer of the Constitution), Letter to James McHenry,November 4, 1800
Religion is the only solid basis of good morals; therefore education should teach the precepts of religion, and the duties of man towards God.
- Life of Gouverneur Morris, Vol III
Let divines and philosophers, statesmen and patriots, unite their endeavors to renovate the age, by impressing the minds of men with the importance of educating their little boys and girls, of inculcating in the minds of youth the fear and love of the Deity
in short of leading them in the study and practice of the exalted virtues of the Christian system.
- Samuel Adams, Letter to John Adams, October 4, 1790
In contemplating the political institutions of the United States, I lament that we waste so much time and money in punishing crimes, and take so little pains to prevent them. We profess to be republicans and yet we neglect the only means of establishing and perpetuating our republican forms of government. That is, the universal
education of our youth in the principles of Christianity by the means of the Bible.
- Benjamin Rush, A Defense of the Use of the Bible as a School Book, 1798
In my view, the Christian Religion is the most important and one of the first things in which all children, under a free government, ought to be instructed
no truth is more evident to my mind than that the Christian Religion must be the basis of any government intended to secure the rights and privileges of a free people.
- Noah Webster, Reply to David McClure, Oct. 25, 1836
“Information to those who would remove (or move) to America”: “To this may be truly added, that serious Religion under its various Denominations, is not only tolerated, but respected and practised. Atheism is unknown there, Infidelity rare & secret, so that Persons may live to a great Age in that Country without having their Piety shock’d by meeting with either an Atheist or an Infidel. And the Divine Being seems to have manifested his Approbation of the mutual Forbearance and Kindness with which the different Sects treat each other, by the remarkable Prosperity with which he has been pleased to favour the whole Country.”
- Ben Franklin, 1787 pamphlet to Europeans
“Independent of its connection with human destiny hereafter, the fate of republican government is indissolubly bound up with the fate of the Christian religion, and a people who reject its holy faith will find themselves the slaves of their own evil passions and of arbitrary power.”
- Lewis Cass, A Brigadier-General in the War of 1812, Governor of the Michigan Territory, a Secretary of War, a Senator, a Secretary of State. The State of Michigan placed his statue in the U.S. Capitol’s Statuary Hall.
“God who gave us life gave us liberty. And can the liberties of a nation be thought secure when we have removed their only firm basis, a conviction in the minds of the people that these liberties are a gift of God? That they are not to violated but with His wrath? Indeed, I tremble for my country when I reflect that God is just; that His justice cannot sleep forever.”
- Thomas Jefferson
“Yes, we did produce a near perfect Republic. But will they keep it, or will they, in the enjoyment of plenty, lose the memory of freedom? Material abundance without character is the surest way to destruction.”
- Thomas Jefferson
“I shall need, too, the favor of that Being in whose hands we are, who led our fathers, as Israel of old, from their native land and planted them in a country flowing with all the necessaries and comforts of life; who has covered our infancy with His providence and our riper years with His wisdom and power, and to whose goodness I ask you to join in supplications with me that He will so enlighten the minds of your servants, guide their councils, and prosper their measures that whatsoever they do shall result in your good, and shall secure to you the peace, friendship, and approbation of all nations.”
- Thomas Jefferson
Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports
In vain would that man claim the tribute of patriotism who should labor to subvert these great pillars of human happiness, these firmest props of the duties of men and citizens
- George Washington, Farewell Address, Sept 17, 1796
Statesmen, my dear Sir, may plan and speculate for liberty, but it is Religion and Morality alone, which can establish the Principles upon which Freedom can securely stand.
- John Adams, Letter of June 21, 1776
True conservatism demands true religion. We cannot have the freedoms that conservatives wish to have without the constraining bonds of morality which is produced by religion and by nothing else.
I was in the Army infantry once myself. But I’m too old and busted to fight on the battlefield now.
So I have a new weapon (writing) and a new battlefield (the world of politics, religion, and worldview) to fight upon.
Thank you for your encouragement!
“I said to my husband as we watched Glenn that I am beginning to think that a lot of the pork put into this bill was designed to draw all the attention so that the real socialist stuff in there would get lost in all the outrage over the spending.”
I’ve really appreciated Beck’s program since he’s come to Fox from CNN. And I think he nailed that analysis.
Radical change proposes radical risk. So smaller, verifiable, manageable change is valuable. Convulsive change is nothing but disruptive, even if it eventually subsides into a worthwhile endeavor.
In the case of Obama's socialism, first of all, there is really no change there. It is simply the retreaded (and thoroughly discredited) marxism of the past. Secondly, it is convulsive in that America has long been a model of free enterprise. Only since FDR has the socialization process begun in earnest, and the resulting corruption of the free market has contributed more to its failure than any inherent flaws in free market economics.
The basis of free market capitalism is untrammeled control of private property (i.e., capital). Where that becomes regulated, in any degree, the rules of free market capitalism become compromised and the resulting mutation is neither free nor market-driven. And, in accordance with Gramscian dialectics, the resulting problems can then be "solved" with the application of more socialism.
Yea, it’s nice to be able to watch him without feeling dirty:)
I also watch Lou Dobbs from time to time.
He hated Bush, but a bunch of his reasons were valid (e.g. the Bush failure on Illegal Immigration).
And every once in a while I watch Anderson Cooper.
But it’s nice to see Glen Beck on Fox. I just wish he came on at 7pm PST.
Derivatives Oversight Spurs House Turf Battle ..................................................................................................
The House agriculture committee bill dropped a provision that would have banned market participants from trading in credit-default swaps unless they had a position in the underlying security. The provision on so-called naked credit-default swaps was widely criticized by Wall Street groups.
The bill does give the CFTC the authority under certain circumstances to suspend trading in naked credit-default swaps after conferring with the president. It would also require the CFTC to set limits on the size of positions taken on nonfinancial commodities.
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