'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles

In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase, and a failure to regulate our markets sufficiently.

Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.

Indeed, Democrats have so effectively mastered crony capitalism as a governing strategy that they've convinced many in the media and the public that they had nothing whatsoever to do with our current financial woes.

Barack Obama has repeatedly blasted "Bush-McCain" economic policies as the cause, as if the two were joined at the hip.

Funny, because over the past 8 years, those who tried to fix Fannie Mae and Freddie Mac — the trigger for today's widespread global financial meltdown — were stymied repeatedly by congressional Democrats.

This wasn't an accident. Though some key Republicans deserve blame as well, it was a concerted Democratic effort that made reform of Fannie and Freddie impossible.

The reason for this is simple: Fannie and Freddie became massive providers both of reliable votes among grateful low-income homeowners, and of massive giving to the Democratic Party by grateful investment bankers, both at the two government-sponsored enterprises and on Wall Street.

The result: A huge taxpayer rescue that at last estimate is approaching $700 billion but may go even higher.

It all started, innocently enough, in 1994 with President Clinton's rewrite of the Carter-era Community Reinvestment Act.

Ostensibly intended to help deserving minority families afford homes — a noble idea — it instead led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos.

The thing about this is that loans like these were allowed to be made in the first place and to get mixed in with everything else to where no one really knew what they were buying.

I guess that was the whole idea. Sort of like a dishonest company selling tainted food - mix the tainted food with the good food and hope no one notices. But then almost everyone thinks they can make a quick buck by selling a tainted product, so things get more tainted until everyone starts to get sick. Or something like that.

Carl Icahn is one of richest billionaires out there, and he has a theory...read it at http://www.icahnreport.com

I have been watching markets for months and getting Sovereign Society Newsletters saying the Market would tank and the Great Depression coming, and watching CNBC it appeared they had serious concerns. You can read my article at http://thefreedomplatform.blogspot.com
I do believe “the blank check” should have transparency to committee oversight, since Paulson has not been right always. It is necessary to have some intervention because fo severity of situation, however in my article I support the bailout. Not being an economic genius, then I have to listen to the experts.

Ordinarily I would say let it tank, but jobs are down, prices are high on food, gas, and necessities. When a bank closes, all your outstanding checks bounce, even if the money was in the bank. You can’t get money from ATM, and that is no matter how much money you have in the bank. Unless you have a years worth of grocery money at home, then waiting on the FDIC might be stressful. They are saying those 401K’s would be lost, and that isn’t good news no matter how you spin it. This has a national security risk attached to it also...

I don’t claim to have all the answers, and think we may be beyond the point of return, and think the bail out may work...but only time will tell. My feelings are that Bush and Paulson are worried about the terrorism that could come on the news that America’s banks are bust, and people are in turmoil.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.