The truth about the meltdown

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Nancy Pelosi, Barney Frank and other congressional Democrats went out of their way to blame Republicans for the Wall Street meltdown.

Pelosi, the Speaker of the House, sounded like an opponent of the bill she was urging members to support when she took to the floor to disparage the financial mess and to pointedly claim the $700 billion price tag was "only a part of the cost of the failed Bush economic policies to our country."

Frank, a Massachusetts congressman and chairman of the House Financial Services Committee, mocked Republican leaders' inability to pass the bailout bill on Monday, and ridiculed reports that some GOP congressman were offended by Pelosi's highly partisan speech -- and condescendingly offered to round up 12 Republicans and "talk uncharacteristically nicely to them" to get them to support the bill.

The problem with this sort of rhetoric -- other than the fact that it's divisive and unproductive, particularly coming as it does in the midst of a great crisis -- is that Democrats are the majority party. More than 90 of them voted against the bailout bill, so it's a bit disingenuous to hang its failure on the other party.

Moreover, Pelosi is a disgrace. A Speaker of the House, third in line to the presidency, should be above such frothy-mouthed partisan rabies. That's hardly the bipartisanship she promised in 2007. And it's nothing akin to leadership.

And speaking of disingenuous: While Barack Obama is blaming the crisis on Republican policies and lack of regulation, it comes out that he was the second-biggest recipient of Fannie Mae lobbying funds -- and has employed the services of former Fannie Mae fat cat Franklin Raines.

Meanwhile, Barney Frank and other Democrats seem to forget that they actually opposed Fannie Mae and Freddie Mac reforms a few years ago that might have prevented this crisis.

You can't make this stuff up. We've seen the video. We've listened to the Democrats in committee arguing that Fannie Mae and Freddie Mac -- the government-sponsored entities (GSEs) that ignited this credit meltdown and had to be bailed out by the federal government recently -- were fine and should be left alone.

"Frankly, we were trying to fix something that wasn't broke," Rep. Maxine Waters, D-Calif., said in a 2004 hearing. "Mr. Chairman, we do not have a crisis at Freddie Mac and, in particular, at Fannie Mae, under the outstanding leadership of Mr. Frank Raines."

Rep. Gregory Meeks, D-N.Y., said the GSEs had done a "tremendous job," and angrily questioned the competence of federal regulators attempting to rein in practices at the GSEs, saying, "There's been nothing that was indicated that's wrong with Fannie Mae."

Rep. Lacy Clay, D-Mo., called the hearing a "political lynching of Franklin Raines," who is black. "I get the feeling that the markets are not worrying about the safety and soundness of Fannie Mae as (the Office of Federal Housing Enterprise Oversight) says that it is."

Rep. Frank said at the hearing, "I don't see anything in the report that raises safety and soundness problems" regarding the GSEs, adding that "I think it serves us badly" to question the safety and soundness of Fannie Mae and Freddie Mac.

Now they want to blame the mess on Republicans.

The truth about the meltdown is that, at Democrats' urging and with the sorry acquiescence of Republicans over the years, the government encouraged and cajoled and forced mortgage companies to hand out loans to people without regard to their ability to pay them back -- in a perhaps well-intentioned attempt to increase home ownership, particularly among minorities.

As Harvard economist Jeffrey A. Miron put it for CNN.com, "beginning in 1977 ... Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

"This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle."

It's folly for the government to be involved in such social engineering. It's absolutely ludicrous to force the financial sector to go along.

There's plenty of blame to go around when an entire nation is scammed.

Comments (167) Add comment
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johmbie
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johmbie 10/01/08 - 05:30 am
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Yep. We broke it, we bought

Yep. We broke it, we bought it.

jsterett
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jsterett 10/01/08 - 05:32 am
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Great editorial. The best

Great editorial. The best thing about it is that it is all verifiable fact and not "opinion". Anyone who cares about knowing the truth can easily do the necessary research to confirm the facts that Democrats set the stage for this crisis and are the ones responsible.

jebko
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jebko 10/01/08 - 05:33 am
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What came to my mind as I

What came to my mind as I read this was a scene from the infamous film 'Birth of a Nation'... the one that shows the black members of the Senate and House on the chamber's floor. I feel a little guilt at mentioning this scene, but reality bites!

justus4
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justus4 10/01/08 - 05:42 am
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The opinion's last sentence
Unpublished

The opinion's last sentence is the most accurate referring to plenty of blame. However, republicans believe that governmental regulations are not good for businesses and place undue restrictions on the American spirit. It saddles citizens with too much paperwork and too cumbersome to enforce. It's been stated, spoken, defended and honored since Reagan's string of deregulation successes. But now, the jig up. It took twenty five yrs of governmental hands-off treatment to get to this point and now, (R) they want to flip-the-script and say, "democrats are to blame" Wow! And the next thing they'll be saying, " it's those minorities that caused the meltdown" or something to that affect. The fact is, embedded in the (R) core principles is so-called less government oversight beliefs, while (D) does not adhere to such foolish beliefs and reconized the value of oversight. That fact alone, differentiates the two parties and is material to properly place blame, regardless of some hearings where statements are being taken out of context.

christian134
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christian134 10/01/08 - 05:56 am
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Truthful editorial

Truthful editorial Chronicle...Thanks...The problem is ongoing with the people seeing, hearing and believing this to be anyone and everyones problem but the Democrats who are in control of the purse strings of the Congress...That is what has happen and still happening when people that apparently lack integrity and loyalty to the people of this nation fall into the "whatever is best for my party and pocketbook" mentality...

factchecker
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factchecker 10/01/08 - 06:01 am
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See, I told you all the other

See, I told you all the other day. You can show fact and reason and the Democrats still do not want to take any responsibility. justus4 proves my point. We know justus4, the democrats never do anything wrong. It's OK though because your fantasy world is being exposed for just what it is: a fantasy world.

jsterett
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jsterett 10/01/08 - 06:02 am
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"The fact is, embedded in the

"The fact is, embedded in the (R) core principles is so-called less government oversight beliefs, while (D) does not adhere to such foolish beliefs and reconized the value of oversight.
Posted by justus4 on Wed Oct 1, 2008 5:42 AM "............... Then why did Democrats block increased regulation of Fannie and Freddie. I see you havn't checked your facts yed.

JesusIsComing
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JesusIsComing 10/01/08 - 06:09 am
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Excellent editorial except

Excellent editorial except for the fact that Republicans who voted against the bill did not vote against it because their feelings were hurt - they voted against it because it was a bad bill and they listened to the people. Newt Gingrich's free market plan is the way to solve this crisis.

randon
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randon 10/01/08 - 06:15 am
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There is a great deal of

There is a great deal of "research" left out of this editorial (see Phil Gramm antics). This financial mess is going to land right on the Republicans--and John McCain doesn't know which way to go on it!

patriciathomas
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patriciathomas 10/01/08 - 06:23 am
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While it's the Dem attitude

While it's the Dem attitude of wealth redistribution that precipitated this debacle (CRA of '77), it was the combination of government interference (Fannie Mae, Freddie Mac), RINO capitulation and stupid market greed that perpetuated it. Plenty of blame for typical congressional action and typical congressional passing of the blame. The American voter that returns these politicians to office is to blame for the continuing problems.

factchecker
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factchecker 10/01/08 - 06:36 am
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Wanna see if your views on

Wanna see if your views on the issues matches Obama's? To take the test go to http://www.barackobamatest.com/?fuseaction=home.options

Ga Values
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Ga Values 10/01/08 - 06:41 am
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Our 7 CONSERVATIVE Republican

Our 7 CONSERVATIVE Republican Congressmen voted against this rip off of the taxpayer because it was bad for American.

JohnRandolphHardisonCain
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JohnRandolphHardisonCain 10/01/08 - 06:46 am
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According to McClatchy

According to McClatchy newspapers President Bush called 5 Texas Republicans but one 1 voted 'yes'. You're doing a heck of a job, Bush baby!

2tired2argueanymore
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2tired2argueanymore 10/01/08 - 07:35 am
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Let's all play Robin Hood. If

Let's all play Robin Hood. If I remember correctly it means we steal from the rich and give to the poor. Is there oversight in stealing? Oh yeah, that would be the law that was portrayed as bad in the story. Seems a bit contradictory but that is what the Dems are saying.

SupremeChancellor
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SupremeChancellor 10/01/08 - 07:36 am
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Cain, you're right. President

Cain, you're right. President Bush lacks the serious ability to threaten to have people killed if they don't fall in line that Bill Clinton had. Perhaps he should have had Cheney make the calls.

Bizarro
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Bizarro 10/01/08 - 07:48 am
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Bush is a lame duck and

Bush is a lame duck and neither presidential candidate will truly crapple with the issue and "act" presidential. Now even Obama is stating that we will have to wait to pursue his economic plans until the economy stablizes. Anyone with half a brain will quickly realize that to initiate Obama's plans for our country by raising taxes to those over 250K won't generate the kind of funds needed for his new expansive federal govt.-taxes will go up for everyone. Clinton promised the same crap and then raised taxes-that is what Dems do. Congress is to blame for most of this mess and not the "fat cats" on Wallstreet (although I'm sure some criminal activity is there too) and now we expect Congress to solve the problem. Sheez. I hope this issue and how Congress deals with it highlights the inefficiency and destructive patterns of a two party system. Anyone who says "and our opponents on the other side of the aisle" should be shot on sight. We are all in one big pot called America and we want solutions from anyone who can offer them and not these grade school theatrics derived from political machines. Congress spends more time trying to blame rather than seeking gains to a problem.

Bizarro
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Bizarro 10/01/08 - 07:51 am
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I can't wait for a federal

I can't wait for a federal program of universal health care. I wonder how long it will take before we will have to bail out this federal program once initiated? I predict the cost will be some 700 trillion rather than billion.

I4PUTT
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I4PUTT 10/01/08 - 08:14 am
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I'm ready to ride this thing

I'm ready to ride this thing out. I think prices are artificially inflated and need to come back in line. I think folks need to get out of debt and live within their means. I have a friend who has never gone in debt for anything. He & his brothers built his house on family property. If he didn't have the cash saved up, he didn't get it. More of us should think like that. The main reason businesses fail is they are under financed to begin with. Just say no to bail outs!

LaTwon
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LaTwon 10/01/08 - 08:17 am
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they left out one

they left out one FACT............ obama and acorn went around suing banks to make them give subprime loans to people that could not afford a house. of course he shook them down for legal fees. google it.............

LaTwon
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LaTwon 10/01/08 - 08:30 am
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700 billion dollars in 100

700 billion dollars in 100 dollar bills is 475 miles high. or the distance from atlanta to new orleans........

patriciathomas
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patriciathomas 10/01/08 - 08:31 am
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That seems to be the most

That seems to be the most obvious point La Twon. Obama has been tied up in this subprime mess for 20 years. Why do Dems think one of the major contributors to the bank failures is now going to be able to contend with the problem? It's as crazy as having Barney Frank involved with the solution. Why does it always appear you have to fail the IQ test to qualify to vote Democrat?

LaTwon
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LaTwon 10/01/08 - 08:35 am
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if lindsay graham makes you

if lindsay graham makes you vomit and have diarrhea at the same time like he does me........... here is a link to his opponent. Bob Conley. he is very conservative and a constitutionist and is only 9 points back with no
money................. send him 5 10 15 20 100 1000 whatever and lets throw that scumbag out of office.................
http://aimhighwithbob.com/

disssman
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disssman 10/01/08 - 08:36 am
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The representatives could

The representatives could bypass all this hoopla by simply televising the meetings or by having a pool reporter in the room. But I guess if they did that we would see them talking to their lobbists or business friends!! By the way they claim the problem will dry up credit for you and me. Now honestly, how many are planning this year to: finance a kid to college, make a loan for home improvement, buy a new car, open a line of credit for improvements, borrow money for investment in the stock market? In fact just how many people in Augusta have a job with a retirement plan with a stock portfolio? I would bet not many of us, and yet those are the base arguments our representatives are making for hurrying up the process.

justthefacts
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justthefacts 10/01/08 - 08:49 am
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disssman, are you saying most

disssman, are you saying most of us don't have a 401K? Maybe I misunderstood your post. I would bet most everyone on the board has a 401K or IRA.

Bizarro
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Bizarro 10/01/08 - 09:01 am
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I agree with PUTT. All they

I agree with PUTT. All they tell us is the sky is falling but then fail to explain crapola so the average man could understand the mechanism and solution. Further to ask for 700 billion with no strings was just beyond absurd, and now Dems and Rep are going to make a silk purse out of it and sell it to us. Given noble laureates in economics seem to think the bail out is a bad idea maybe we should give some pause to what is going on. I wonder what is really going on, and I wonder if the govt is privy to information that they are not telling us about that would reflect on why such a drastic solution-doesn't sound like govt to not drag things out for months in a quagmire of legistlation.

dashiel
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dashiel 10/01/08 - 09:07 am
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There's plenty of blame for

There's plenty of blame for all to share, but our clueless Treasury Secretary has already broken more than we can ever pay for: (1) wiped out private shareholders when he took over Fannie Mae & Freddie Mac; (2) deliberately bankrupted Lehman and (3) seized the assets of AIG. Paulson is a typical Bush pick: arrogant and incompretent. The Chronicle and its zombie chorus are confusing talk radio and the cable shouters with reality. This country has been without leadership for nearly eight years and House Republicans have been in lock step until Monday when 228 of them voted against the bailout bill--one time they might have put country before self. Compared to politics, boil sucking is a noble calling. Politicians have two goals: (1) get elected, and (2) get re-elected.

GnipGnop
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GnipGnop 10/01/08 - 09:11 am
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I just wish everyone would

I just wish everyone would quit calling it a Federal bailout and call it what it really is. A taxpayer bailout.

effete elitist liberal
3112
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effete elitist liberal 10/01/08 - 09:15 am
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The question about this

The question about this editorial piece is whether Mike ("Oh, puleeese" Ryan) just doesn't know, or is lying again. For all of you posters who
insist on "the facts," chew on these for a moment. The Community Reinvestment Act (CRA) was passed in 1977. The mortgage crisis erupted in 2005, give or take, under a Republican President and Republican Congress. What about the first 25 years? More importantly, only about 20% of sub-prime loans were made by lending institutions subject to CRA regulations (the banks and thrifts). 50% were made by independent loan companies TOTALLY EXEMPT FROM CRA RULES!, and the failure rate for these loans has been significantly higher that CRA supervised loans. The other 30% were made by affiliates of banks and thrifts only marginally under CRA supervision.
Bottom line: the biggest cause of the mortgage mess has been the UNREGULATED portion of the mortgage industry. Facts, as so many of you insist, are facts. Now, all of you fact lovers out there, prove me wrong!!!!

effete elitist liberal
3112
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effete elitist liberal 10/01/08 - 09:15 am
0
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The question about this

The question about this editorial piece is whether Mike ("Oh, puleeese" Ryan) just doesn't know, or is lying again. For all of you posters who
insist on "the facts," chew on these for a moment. The Community Reinvestment Act (CRA) was passed in 1977. The mortgage crisis erupted in 2005, give or take, under a Republican President and Republican Congress. What about the first 25 years? More importantly, only about 20% of sub-prime loans were made by lending institutions subject to CRA regulations (the banks and thrifts). 50% were made by independent loan companies TOTALLY EXEMPT FROM CRA RULES!, and the failure rate for these loans has been significantly higher that CRA supervised loans. The other 30% were made by affiliates of banks and thrifts only marginally under CRA supervision.
Bottom line: the biggest cause of the mortgage mess has been the UNREGULATED portion of the mortgage industry. Facts, as so many of you insist, are facts. Now, all of you fact lovers out there, prove me wrong!!!!

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