The Republicans are back in charge in the House of Representatives this week, and not a moment too soon!
Forget “stimulus” bills and “shovel-ready” bailouts (for public school teachers, who need shovels for what they’re teaching), the current financial crisis, which is the second Great Depression, was created slowly and methodically by Democrat hacks running Fannie Mae and Freddie Mac over the past 18 years.
As even Obama’s treasury secretary admitted in congressional hearings, “Fannie and Freddie were a core part of what went wrong in our system.” And if it’s something Tim Geithner noticed, it’s probably something that’s fairly obvious.
Goo-goo liberals with federal titles pressured banks into making absurd loans to high-risk borrowers—demanding, for example, that the banks accept unemployment benefits as collateral. Then Fannie repackaged the bad loans as “prime mortgages” and sold them to banks, thus poisoning the entire financial market with hidden bad loans.
Believe it or not, the loans went belly up, banks went under, and the Democrats used taxpayer money to bail out their friends on Wall Street.
So far, Fannie and Freddie’s default on loans that should never have been made has cost the taxpayer tens of billions of dollars. Some estimates say the final cost to the taxpayer will be more than $1 trillion. To put that number in perspective, for a trillion dollars, President Obama could pass another stupid, useless stimulus package that doesn’t create a single real job.
Obama’s own Federal Housing Finance Agency reported recently that by 2014, Freddie and Fannie will cost taxpayers between $221 billion to $363 billion.
Over and over again, Republicans tried to rein in the politically correct policies being foisted on mortgage lenders by Fannie Mae, only to be met by a Praetorian Guard of Democrats howling that Republicans hated the poor.
In 2003, Republicans on the Senate Banking Committee wrote a bill to tighten the lending regulation of Fannie and Freddie. Every single Democrat on the committee voted against it.
In the House, Barney Frank angrily proclaimed that Fannie Mae was “just fine.”
Rep. William Clay, D-Mo., accused Republicans of going on a “witch hunt” against Fannie Mae and attempting a “political lynching of Franklin Raines” (which, in a game of “bad metaphor Scrabble” would have been a double word score).
Fannie was pressuring banks to write mortgages with no money down and no proof of income. What could go wrong?
In 2004, Bush’s White House Chief Economist Gregory Mankiw warned that Fannie was creating “systemic risk for our financial system.” In response, Barney Frank went to a champagne brunch with his partner “just because.”
Democrats saw nothing of concern in the Fannie debacle. Bad mortgages don’t contain sodium, do they? They don’t engage in “hate speech.” And they don’t emit carbon dioxide. There was nothing to catch a Democrat’s eye.
In 2005, when the housing bubble burst, Sen. Chuck Schumer, D-N.Y., introduced a bill allowing Fannie Mae to buy up even more schlock mortgages, apparently reasoning that if owning some toxic mortgages is bad, owning lots of them must be better!
He accused Republican opponents of his suicidal bill of being against affordable housing. (And that is a specific example of how liberals love the poor so much, they promoted policies to create millions more of them.)
As late as 2008, Sen. Chris Dodd, D-Conn., who had received more than $133,000 in political contributions from Fannie Mae, called Fannie “fundamentally strong” and “in good shape”—which is the kind of thing the Politburo used to say about Yuri Andropov right after he died.
(Amazingly, Dodd was only the second most embarrassing Democrat to run for president in 2008, but only because John Edwards was also running that year.)
As the titanic losses were racking up, Fannie Mae’s operators, Franklin Raines and Jamie Gorelick, disguised the catastrophe by orchestrating a $5 billion accounting fraud—all the while continuing to pressure banks to make absurd, politically correct loans and denouncing Republicans as enemies of the poor.
In Gorelick’s defense, at least when she was wrecking the economy, she wasn’t able to wreck national security by building any more walls between the FBI and the CIA.
Have you ever noticed that whenever there’s a major calamity in this country, the name “Jamie Gorelick” always pops up? I think I’ll pull some articles about the Great Chicago Fire from Nexis to see if there was a “Gorelick” living on Catherine O’Leary’s block.
As Peter Schweizer points out in his magnificent book “Architects of Ruin,” which everyone should read, Enron’s accounting fraud was a paltry $567 million—and it didn’t bring down the entire financial system. Those involved in the Enron manipulations went to prison. Raines and Gorelick not only didn’t go to jail, they walked away with multimillion-dollar payouts, courtesy of the taxpayer.
(Here’s more fascinating Jamie Gorelick trivia: That giant wall she built between the FBI and the CIA, making 9/11 possible? It was financed with a risky loan from Fannie Mae.)
Under the Democrats’ 2010 “Financial Reform” bill (written by Chris Dodd, Barney Frank and Goldman Sachs), Raines keeps his $90 million, Jamie Gorelick keeps her $26.4 million, and Goldman keeps its $12 billion from the AIG bailout.
Let’s get it back. Twelve billion, one hundred and sixteen point four million dollars might not sound like a lot to you, but it starts to add up.