Saturday, September 27, 2008

Five Years Ago! Financial Reform Killed

The following quotes are from the New York Times FIVE YEARS AGO.
Republicans proposed increased oversight and regulation of Fannie and
Freddie, but Democrats fought it.

"The Bush administration today ( FIVE YEARS AGO) recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios." Democrats pushed back. "Among the groups enouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing".

"These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis", said 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."

Representative Melvin L. Watt, Democrat of North Carolina, agreed. "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing," Mr. Watt said.

Let's face it.. The DEMOCRATS had a chance to fix this based on proposed legislation by REPUBLICANS five years ago. Records seem to show this has been brought up many times by Republicans and shot down consistently by Democrats who disregarded all financial caution to push home ownership to people who could not afford it - a way they viewed perhaps - to better distribute America's wealth and promote a stonger base of Democrat voters. I am the first to say this is a kind hearted approach - and well meaning. But kind hearted and well meaning actions have too often trumped logic and market forces in the manipulation of the American economy. When it does - UNINTENDED results often follow in the wake. Here we are with a boatload of mortgages secured by no assets at all and poor people being thrown into the streets- their homes foreclosed. It is amazing to me how this phenomenon is being effectively sold to the public as the result of REPUBLICAN policies !! Again, my lack of faith in Republicans to communicate with people is confirmed.
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