Wednesday, October 15, 2008

Cowardice on Fannie/Freddie

Peter J. Wallison, of the WSJ, brings to light a couple of important points on the current financial mess. First, contrary to Obama's claims (he's wrong again) this crisis did not happen because of deregulation:

While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector.

Second, Obama himself bears complicity. By his own account, Obama wrote a letter to the Secretary of the Treasury that the subprime loan situation was dangerous. Here is what happenned next:

In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate.

However, Obama was unwilling to confront his own party on this issue, an issue in which he claims to have had "special" knowledge that a crisis was in the offing. This is the most revealing example of political cowardice I can imagine. The job description of Senator is to vote on legislation. Legislation was offered that might have mitigated the current crisis. Obama claims he knew a crisis was brewing. He did nothing. Great leadership.

H/T HotAir.


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