Democrats Responsible for the Current Financial Crisis

http://www.kentuckypoliticalreview.com/?p=188

Filed Under Opinion/Editorial

History is a beautiful thing, but not if you’re a Congressional Democrat. History also bears out that our current financial crisis can be placed at the Democrat’s doorstep. For many that is no surprise, but for those who are not up to date on their facts, lest you be fooled by more Democrat blame shifting, here are the facts as reported in part in Bloomberg.com to back it up.

Fannie Mae and Freddie Mac has been the problem for several years and had the Republicans gotten their way back in 2005 this whole mess would never have happened. The turning point historically was back in 2005 when Fannie and Freddie were embroiled in accounting scandals. In late 2004 the Securities and Exchange Commission’s chief accountant told Barak Obama’s advisor, Franklin Raines who was Chief of Fannie Mae, that Fannie’s position on pertinent accounting issues was essentially off the charts of allowable interpretations. Legislation emerged in an attempt to create a “regulator” that would oversee Freddy and Fannie, imposing strict requirements on excessive risks.

Alan Greenspan in 2005, advised Congress of the need for the legislation and that it was of the utmost urgency. Referring to Fannie and Freddie, Greenspan said that if they “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” …. “We are placing the total financial system of the future at a substantial risk.”

A serious Fannie and Freddie reform bill was reported in the Senate Banking Committee, wherein a regulator could crack down and eliminate their risky investments. The bill didn’t become law because Democrats opposed it on a party-line vote in the committee. Republicans could not get the Senate to vote on the matter.

Peter J. Wallison, as reported in the American Enterprise Institute back in 2005, stated, “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”

What the Senate Democrats did in 2005 is unforgivable in view of the current collapse when the Democrats had an opportunity to stop it. Barack Obama, Hillary Clinton and Chris Dodd received substantial amounts of financial support from Freddie and Fannie over the years. Those senators and other Democrats threw the nation to the wolves in furtherance of their own political careers. In return for killing the reform of Freddie and Fannie, Obama got more than $125,000 and Dodd $165,000 in campaign contributions from employees and PACs of Fannie Mae and Freddie Mac. Clinton got $75,000.

Senator McCain was one of three sponsors of Senate bill 190 that would have prevented the crisis we are now in. Because we elected so many corrupt socialist Democrats to Congress, we are now going to pay the biggest price/tax, ever in a bailout of institutions once lead by none other than the same people who are now advising Obama on economic matters.

Jack L. Richardson, IV