Our elite media tries to blame the financial crisis on poor people and Democrats: "[I]t was a thorough, massive, systemic mispricing of the risk attendant on lending to people with bad credit. (These are, mind you, the same people that five years ago the Democrats wanted to help enjoy the many booms of homeownership.)"

Well, no. For Megan McArdle to say this is about people with bad credit is ignorant or willfully dishonest.

More alarming: the types of loans falling delinquent. It's not those shady subprime mortgages that put Wall Street into its funk starting last year. It's loans to prime borrowers--the people who are supposed to be good credits.

On a conference call Thursday, JPMorgan Chase CEO Jamie Dimon said losses on prime mortgages could triple in coming quarters, particularly in California and Florida.

"Prime looks terrible," he said.

Indeed it does: "[T]here are now more prime mortgage delinquencies in the United States than there are subprime delinquencies. This is almost certain to mean some major losses on mortgage-related securities like CDOs and RMBSs."

Last year it was popular for the head-in-the-sanders to say that subprime was such a small part of the total economy that it couldn't lead to a meltdown. A big problem with that argument was that Wall Street works on leverage.

Another big problem is an interlocking and incredibly opaque financial system that the bankers themselves didn't understand -- a system with problems that go way beyond subprime.

Comments

[Doug H]

Who "mispriced" the risk, anyway? Wasn't it the lenders? How can that be blamed on the poor people and Democrats?

[David Wharton]

Thanks for the illuminating links, but I agree with Doug H that it's a gross distortion to characterize McArdle's piece as blaming "poor people."

She puts the blame squarely on those who did the pricing: "Lehman, Bear, Merrill and so forth did not sneakily lend these people money in the hope of putting one over on the American taxpayer while ruining their shareholders and getting the senior executives fired. They got it wrong. Badly wrong. So did everyone else."

She also says Bush's policies were essentially the same as Bill Clinton's, so I guess she's blaming both Democrats and Republicans.

[JAT]

This is a bipartisan mess roughly 60 years in the making.

More importantly, in the short term, is whether Ken Lewis as effectively killed off Wachovia.

[Doug H]

I wouldn't say that I was calling it a "gross distortion."

However, I also don't think Lehman etc "got it wrong." I think they played the game along with the rest, and got burned.

I'm more interested in how the regulation evolved to allow the situation to happen.

[Ed Cone]

DW, your selective quoting elides the fact that she's blaming the companies for lending to people with bad credit. So, yes, she blames the companies, but for a woefully incomplete account of their mistakes.

No question that there is blame across the political spectrum for much of what's happened. That includes the repeal of Glass-Steagall.

[scharrison]

I'm not a financial analyst by any stretch of the imagination, but I think both of these points of view are missing the boat on causality here.

Yes, there were some loan officers playing it fast and loose as far as assessing bad credit, but if that was actually the root cause of the crisis, most of those loans would have been in default before the ARMs matured. They weren't, not on any major scale, anyway.

The real driver of default (initially) was the intentional disregard of risk assessment based on debt burden. Even with an ARM, the loan officer is supposed to gauge whether or not a person can continue to afford the monthly payments after the rate has climbed. But there just wasn't a big enough pool of applicants that fit that criteria, combined with an incredible amount of money waiting to be utilized, so they ignored the predictable (future) instability of the loan and focused on whether the applicant could afford the initial low rate.

And as far as stage 2 of this crisis (prime failures), that was also easily predictable: sub-primes fail, housing market slumps, property values plummet, prime borrowers realize they now owe more than their property is worth, so they go into default to escape negative equity. But the root cause of (many of) these prime failures can still be tracked back to sub-primes.

And yes, the downward-trending economy has cost a lot of these "prime" folks their jobs and subsequently their ability to keep up with their mortgage. But that is also deeply connected to the subprime mess.

[Ed Cone]

Of course it's deeply connected to subprime.

Had she written that, instead of trying to score a cheap political point by blaming the failure of a massively overleveraged and highly opaque global industry on a "systemic mispricing of the risk attendant on lending to people with bad credit," we wouldn't be having this conversation.

[Thomas]

"...so they go into default to escape negative equity."

Does anyone really think there are thousands (or millions) of people simply defaulting on home loans because they're upside down? I think it is a simple truth that folks will keep making the payments as long as they are able. Defaults are forced, in the vast majority of cases. So you're upside down. Is that any cash out of your pocket? Not unless you sell or default.

McArdle's piece may not read as blaming Democrats, but she clearly says that Bush & co. are blameless, which is at best a stretch.

[scharrison]

http://news.bbc.co.uk/2/hi/business/7529277.stm

"It is impossible to know for sure how many of the people who are now walking away from their homes could have gone on paying their mortgages.

But Professor Nouriel Roubini of New York University, one of the first economists to warn of the dangers of the American house price boom, believes the number of people positively choosing to walk away is growing rapidly.

"This is becoming a tsunami of voluntary defaults," Professor Roubini says.

"The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion."

[Fred Gregory]

Some bankers understand .

Obama's subprime buddies

"As Senator Obama and his Democratic colleagues attempt to tie this weeks financial meltdown to John McCain, perhaps we need to re-examine the candidate who has benefited the most from the very Wall Street Executives who have brought us this financial crisis."

"Throughout the campaign season Obama has attacked Wall Street’s financial sector and run a campaign based largely upon his “good judgment”. The problem with Obama’s rhetoric rests in the fact that tucked away in his database of 2.5 million donors is the approximately 180,000 power brokers that have funded nearly 60% of his campaign. Included in this list are the more than 594 campaign bundlers including 15 lobbyist bundlers who have accounted for over $140 million in contributions. "

RTWT

[Kim]

Ed, have you ever heard of The National Homeownership Stategy

[Beelzebubba]

But weren't the FHA, Fannie Mae, Ginnie Mae, Freddie Mac and the Federal Home Loan Banks created by Congress for the sole purpose of helping citizens buy homes? Congress schemed with Wall St to create privileged lenders to get rich off citizen sweat and labor. Congress receivied contributions from the privileged lenders and in return assured their incumbency. The bubbly guzzled by the executives was shaken, put between their legs and squirted in each others face. Obama has benefitted more than anyone running in the current race. But in the long haul, McCain has stashed his share away. The change will occur not because of politicians, but in spite of them.

[Kim]

There is plenty of blame to go around-from Wall St, to DC, to Main St. The speculators that merely flipped properties during this unsustainable bubble of market appreciation (California, Florida, Las Vegas) need to be punished. Their access to easy credit designed for first time buyers was the gas on the fire.

[mick]

Ding Ding Ding

No more calls please... We have a winner!

[Fred Gregory]

Wait Mick, there's more.

The Real Culprits In This Meltdown

"The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but predatory."

"There's a political root cause to this mess that we ignore at our peril. If we blame the wrong culprits, we'll learn the wrong lessons. And taxpayers will be on the hook for even larger bailouts down the road."

"But the government-can-do-no-wrong crowd just doesn't get it. They won't acknowledge the law of unintended consequences from well-meaning, if misguided, acts."

"Obama and Democrats on the Hill think even more regulation and more interference in the market will solve the problem their policies helped cause. For now, unarmed by the historic record, conventional wisdom is buying into their blame-business-first rhetoric and bigger-government solutions."

[Spag]

The percentage of subprime deliquencies is still higher than prime, but nice try, Ed.

[Ed Cone]

The chart shows that the number of prime delinquencies is now higher than the number of subprime delinquencies, as stated in the article linked in the post.

The percentage data reflects the fact that there are far more prime loans than subprime loans -- a fact that underscores the point of the post.

[Spag]

It does not underscore the point at all. Using raw data instead of percentages tells us nothing, Ed. That's like comparing today's dollar to a dollar in 1950 without indexing it for inflation, or comparing the dollar value drop in today's stock market with the 1987 crash without considering that the Dow is five and a half times higher than it was in 1987.

Again, nice try.

[Ed Cone]

Sam, I can never quite tell if you are simple or just shameless. This thread suggests that it could be both.

The fact that more prime mortgages are delinquent than subprime underscores the fact that this global financial crisis is about more than subprime -- the point of the post.

Your examples of unadjusted numbers do not pertain to this data set, as the "raw data" in this case are from the same time period and apply the same metrics (i.e., delinquency rates) to different parts of the market, all of which tells us something important (see preceding peragraph).

The percentages do tell us that the much smaller suprime market is in relatively worse shape than the prime market. This is news to no one.

[scharrison]

Fred, that IBD story is the biggest load of tripe I've read in a while. Vague accusations against Clinton-era Democrats notwithstanding, it was deregulation in the late 1980's and this craziness from Gramm-Leach-Blily that allowed exotic (risky) products to change hands virtually unobserved between numerous entities in a "free market juggling act":

http://www.aba.com/NR/rdonlyres/2CF88344-6B2F-46EC-9A0B-2D98443A0C18/38627/GLBsec3.pdf

[scharrison]

I'm not paying attention, Ed. I just saw your separate posts about Roubini and Gramm's destruction of Glass-Steagall. Didn't mean to waste anybody's time. ;/

[Spag]

Ed, it seems to me that the post was to take attention away from the subprime market, where the Democrats might absorb more of the blame for encouraging subprime lending and shifting it to the broader market by arguing that more prime loans are defaulting than subprime. Maybe I was lead astray by the quote you posted:

"[T]here are now more prime mortgage delinquencies in the United States than there are subprime delinquencies. This is almost certain to mean some major losses on mortgage-related securities like CDOs and RMBSs."

I guess I just didn't read between the lines, but I don't have glasses that can magnify print that small.

I guess you are just simple or intentionally deceptive, or both.

So for the third time, nice try.

[Fred Gregory]

Harrison,

Even a teleprompter won't help this.

Grading Obama's Essay

Nice try is right, Spag.

The chickens have come home to roost as Classical Values tells us, it all started in Chicago.

The Best Congress Fannie Could Buy

This is a long and complicated story about how Obama backers were behind the mortgage industry meltdown. It hast to start some where, so lets start with a well known Chicago name Penny Pritzker. It starts with a bank failure.

"Unfortunately, this wasn't the case for the 1,406 people who lost much of their life savings when Superior Bank of Chicago went belly up in 2001 with over $1 billion in insured and uninsured deposits. This collapse came amid harsh criticism of how Superior's owners promoted sub-prime home mortgages. As part of a settlement, the owners paid $100 million and agreed to pay another $335 million over 15 years at no interest.

The uninsured depositors were dealt another blow recently when the U.S. Supreme Court let stand a lower court decision to put any recovered money toward the debt that the bank owners owe the federal government before the depositors get anything.

But this seven-year-old bank failure has relevance in another way today, since the chair of Superior's board for five years was Penny Pritzker, a member of one of America's richest families and the current Finance Chair for the presidential campaign of Barack Obama, the same candidate who has lashed out against predatory lending."

[Beelzebubba]

Well, there ya go.

[Beelzebubba]

Since both candidates have promised to deliver blood to the masses if elected, I dont see what the finger pointing and flip flopping is all about. Three out four higher power seekers come from the worst Congress blood money could buy and you guys are fighting over teleprompted prattle when you should be greasing each other's taterhole. "Have fun storming the castle."~Miracle Max

[Ged Maheux]

Yes, try and pin the economic meltdown on Obama guys, that'll work just great. Even better, blame it all on Clinton which is what I just saw in another one of Ed's threads.

The only one this week's news is significantly hurting is McCain and the Republicans. His idiotic line that the economy is fundamentally strong will be seen as foolish in the eyes of Americans especially if they have to keep picking up billion dollar tabs like AIG and now Washington Mutual Inc.

Then again, if the history of this campaign is any indication, this could all be very good news for John McCain.

[Ed Cone]

Sam, there's nothing to read between the lines. It's as straightforward as could be.

Here it is, again: "[T]here are now more prime mortgage delinquencies in the United States than there are subprime delinquencies. This is almost certain to mean some major losses on mortgage-related securities like CDOs and RMBSs."

What's the confusion? It says, as the referenced chart indicates, that more prime mortgages are now delinquent than subprime mortgages.

The statistic is offered to flesh out the comment from JPMorgan Chase CEO Jamie Dimon, who said this summer that "losses on prime mortgages could triple in coming quarters, particularly in California and Florida." He concluded, "Prime looks terrible."

I'm not trying to deceive anyone. If there's an error, then it should be corrected. But you have not identified any error.

The point of the post is that the issues run way beyond subprime. As noted, those issues include the incredibly opaque structure of many deals. And, as the numbers and the bank execs make clear, those issues also include prime mortgages.

If you believe that prime loans are not a problem, you should call Jamie Dimon. I'm sure he would be relieved.

[Spag]

Ed, you offer up as proof of your thesis that Democrats can't be blamed the increasing number of primes in default. But this is a phony argument, because the whole numbers aren't what matters, it's the percentage/ratios that do. That is deceptive. You were trying to make a political point by deflecting the responsibility away from the programs that Democrats pushed to the broader market using deceptive numbers.

I'm not claiming the problem lays solely with the Democrats, but your defense is incredibly weak.

[Ed Cone]

No, Sam, it's not just the percentages that matter. If you are driving through a minefield, the absolute number of things that are blowing up is one of your chief concerns.

By your "logic," prime mortgages are not actually a problem. If prime is not a problem, then Dimon has nothing to complain about on that score. Yet there he is, talking about the problem with the prime mortgage market.

More here: "There are now more foreclosures on prime mortgages than on subprime ones."

The post is not about exonerating Democrats, it's about getting the facts straight. The facts are that this is about a lot more than lending to people with bad credit.

I understand that you've only got a hammer, so everything looks like a nail, but you seem to have hit yourself in the head a few too many times.

[scharrison]

"it all started in Chicago."

I would say, "nice try Fred", but it really wasn't. My analogy machine is on the fritz today, but trying to blame Penny Pritzker for our current mess is like unlocking all the cages in a zoo, and after bedlam ensues, claiming: "Everything would have been fine if the other animals hadn't seen the rhesus monkey push open his cage door."

You guys can squirm and dissemble and misdirect all you want to, but there's no escaping Phil Gramm. Even if McCain tried hard, he'd have trouble choosing someone who played more of a role in the financial crisis we're in right now.

http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html

"It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."

These unregulated swaps have been at "the heart of the subprime meltdown," says Greenberger. "I happen to think Gramm did not know what he was doing. I don't think a member in Congress had read the 262-page bill or had thought of the cataclysm it would cause." In 1998, Greenberger's division at the cftc proposed applying regulations to the burgeoning derivatives market. But, he says, "all hell broke loose. The lobbyists for major commercial banks and investment banks and hedge funds went wild. They all wanted to be trading without the government looking over their shoulder."

No one in Washington apologizes for anything, so it's no surprise that Gramm has failed to issue any mea culpa. Post-Enron, says Greenberger, the senator even called him to say, "You're going around saying this was my fault—and it's not my fault. I didn't intend this."

Whether or not Gramm had bothered to ponder the potential downsides of his commodities legislation, having helped set off an industry free-for-all, he reaped the rewards. In 2003, he left the Senate to take a highly lucrative job at ubs, Switzerland's largest bank, which had been able to acquire investment house PaineWebber due to his banking deregulation bill. He would soon be lobbying Congress, the Fed, and the Treasury Department for ubs on banking and mortgage matters. There was a moment of poetic justice when ubs became one of the subprime crisis' top losers, writing down $37 billion as of this spring—an amount equal to its previous four years of profits combined. In a report explaining how it had managed to mess up so grandly, ubs noted that two-thirds of its losses were the fault of collateralized debt obligations—securities backed largely by subprime instruments—and that credit default swaps had been "key to the growth" of its out-of-control cdo business. (Gramm declined to comment for this article.)"

Considering his previous brain-fart as a member of the Keating Five, it doesn't surprise me that McCain would choose Gramm to help him formulate economic policy. It does surprise me, however, that so many Americans are oblivious to the potential ramifications of such a choice.

[Fred Gregory]

Harrison

Flog your little DNC meme if you must and ignore the vote which was 90 to 8 with

Biden voting for it

[Fred Gregory]

Tom Maguire pulls back the curtain on Pelosi
Back In 2003 Bush was pushing for stricter regulation of Fannie Mae and Freddie Mac but was been blocked by Congressional Democrats

So What Happened ?

"In September 2003, Treasury Secretary John Snow urged Congress to get tough with Fannie Mae, the giant mortgage company run by former Seattleite Franklin Raines.

Snow said lawmakers needed to create a strong federal regulator to scrutinize Fannie Mae, which controls almost $1 trillion of home mortgages.

Raines, Fannie Mae's chief executive officer, said he welcomed the idea.

"Fannie Mae looks forward to working with Congress and the administration to see the proposal enacted into law this year," Raines told the House Financial Services Committee.

But behind the scenes, Fannie Mae's Chicago office mobilized to gut Snow's plan."

Well it seems that someone at that evil Heritage Foundation
Saw the perils

" As the early postwar record indicates, existing private credit markets were perfectly capa­ble of driving the homeownership rate into the mid-60 percent range. However, as more credit is forced into the system through the creation and expansion of subsidized GSEs, mortgage interest rates may fall somewhat, but this encourages pri­vate financial institutions that provide housing credit to look elsewhere for investments with better yields. While the slightly lower interest rates encourage and/or allow some moderate-income borrowers on the margin of eligibility to become homeowners, this stimulative effect may be partly or wholly offset by a credit-induced rise in home prices in excess of the growth in personal incomes."

[Eric]

In a sense (though not at all in the sense Fred suggested), it is true that it all started in Chicago. Forget Penny Pritzker, think Milton Friedman and his kindred ideologues in the University of Chicago economics department, who touted the magical unregulated market as the cure for all that ailed the economy. Of course, Fred is entirely correct in noting that it wasn't just Republicans who sang and danced along to the Chicago Boys' tune.

[scharrison]

Fred, of course Utt "saw the perils" of a government-subsidized mortgage operation. He's a rabid proponent of privatization, and pretty much doesn't want the government involved in anything. Which actually made me laugh outloud when I read one of his "solutions" to the Fannie Mae/Freddy Mac issue:

"Eliminate the GSEs’ exemption from state and local income taxes."

:)

Taxes are bad, unless they're used to...weaken the financial position of taxpayer-subsidized institutions?

[Spag]

"By your "logic," prime mortgages are not actually a problem."

That isn't what I said. I did say that your attempts to absolve the Democrats by laying this on prime mortgages based on raw numbers instead of percentages was ill-conceived. The bigger the minefield the more spread out the mines. 1 out of 10 is the same as 2 out of 20.

[Ed Cone]

So prime delinquencies are a problem.

Yet the percentage of delinquencies in the large prime market remains lower than the percentage of delinquencies in the much smaller subprime market.

You insisted that this percentage comparison was the relevant measure.

So how do we know prime delinquencies are a problem?

Because of the total number of such delinquencies, and the upward trend.

Just like the post said.

[meblogin]

any solutions or still just bickering.... :-)

[Ed Cone]

I think we're getting somewhere, because there's no place left for Sam to hide.

If we know that prime delinquencies are a problem, and yet the comparative percentage data is not the indicator of the problem, then we have to ask, what tells us there's a problem?

The answer, obvious to all but Sam from the beginning: the number of prime delinquencies, and the trend in prime delinquencies.

I do wonder if it's worth pursuing these nonsense threads after a while.

[Fred Gregory]

Ed,

This thread is filed under " Finger Pointing " , right? Fixing blame , which you tried to deflect in your post. I have pinned the tail squarely on the guilty party ( Donkey ) with several comments containing undisputed facts while you are wallowing in minutiae.

Ed Morrisey nails it AGAIN !
McCain was leading the 2005 charge for Fannie Mae reform while Obama was cashing checks from Fannie's supporters.

[John Burns]

I have to be careful what I say here, but I post it under my own name so nobody can accuse me of trying to hide my comments. I have to be careful because the mortgage meltdown is occupying a large portion of my practice right now, and I kind of know a little bit about it as a consequence - unlike most of the idiots I see on cable TV bloviating about it.

Subprime loans themselves are not inherently bad. Subprime is a category of loans, a category of borrowers, a portion of the market that needs to be served with loan products. Provided the brokers and lenders serving that market are following TILA and RESPA and not committing fraud, that market deserves to have access to credit as much as anyone else. They pay a premium for it, however.

Federal programs which incentivized home purchasing for everyone are also not inherently bad, regardless of what that ridiculous rag Investors Business Daily has to say about it. Home ownership is a good thing. Neighborhoods where people own their own homes are kept up better than areas where they don't. Home ownership in a good economy is a pathway to prosperity. Equity is a good thing. Home ownership = security. Or it's supposed to.

Debt trading is also not a bad thing in and of itself. The structures built by the players in this mrket to trade debt and, they thought, reduce the risk of any single default negatively impacting those who own the debt, were ingenious and did spread the risk out. They also enabled the movement of enormous amounts of capital and funded a lot of the development that we see around us here in North Carolina, for good or ill.

The problem was that EVERYONE THOUGHT HOME PRICES WOULD ALWAYS GO UP.

The entire structure, from 2 year ARMS to bond companies agreeing to insure sub-sub-prime no doc loans as AAA risks, makes sense if home prices always go up.

That was the core assumption of everyone involved.

What if my ARM readjusts to a higher rate in two years, will I be able to afford it? Sure, I'll have equity then by virtue of my home value increasing. I'll enter this ARM and get in now while the getting is good, then refinance later.

Can I afford to purchase eight or nine houses to flip in the next six months? Sure. Home prices will be higher when they sell, so the payments will be taken care of. heck, I can afford this interest only payment loan until then, because I don;t need to pay down the principal to have equity. The house will do it for me.

What if this borrower loses his job and can't pay on this loan? We'll just refinance it or foreclose, and there will be enough value in the house to pay the loan. Maybe even return some cash to the borrower.

We can go ahead and insure this bottom tranche of the CDO, no problem, even if a few of the loans go bad, the majority won't, and we'll be make enough to cover the losses. So we'll guaranty they are AAA quality, you can go ahead and issue your bonds.

While the programs encouraging home ownership were in place under Clinton, it wasn't until the crazy run up in home values over the last 6 or so years that the system began to first feed on, and then throw up all over, itself. When that bubble burst, and the burst coincided with resetting of a whole generation of ARMs, well, you got trouble, right here in River City.

Truth is, everybody is to blame, but SOMEBODY should have been looking over the shoulders of the dealmakers and the traders over the last few years as the situation became more and more untenable. The fact is, we had an administration that was almost comically averse to actual regulation at the wheel when the need for oversight and regulation was at its highest. What form that regulation should have taken is an entirely different question I am not qualified to answer.

[scharrison]

John, I agree with most of what you said, but (imo) this property value jump:

"While the programs encouraging home ownership were in place under Clinton, it wasn't until the crazy run up in home values over the last 6 or so years that the system began to first feed on, and then throw up all over, itself."

was an artifact of the huge volume of monies that became available for mortgage products. The demand for housing grew much faster than developers/constructors/raw material suppliers could keep up with (at first), so property values soared. And it was the deregulating of financial institutions that made these monies available.

The bubble bursting and the arms resetting at the same time wasn't a coincidence, the arms themselves made the bubble in the first place.

[Spag]

Ed, the point of your post is pretty clearly to all but you (and you wrote it, which is odd), and that is to shift the problem to prime and away from subprime to absolve Democrats of any responsibility. You attempt to play a zero sum game here by arguing its the primes "because there are more of them". Math for idiots. Do you care to explain how this works? The percentage remains the same, but there is a crisis because the actual numbers went up? We need a little more causation than the quote you provided which is the wrong benchmark and you know it.

So assuming that primes are part of the problem for whatever reason, that does not diminish the fact that the crisis started in subprime and that subprime has been the major cause of defaults.

Just admit that you were trying to shift the blame away from Democrats by making it appear as if the subprimes weren't the major cause of the problem.

[Fred Gregory]

McCain and the crisis

"For a decade reformers have tried to persuade Congress that they were allowing a serious risk to the government’s credit to develop in Fannie Mae and Freddie Mac, but few lawmakers would take action.

One of the reasons for this was the extraordinary power of Fannie and Freddie. They not only spent close to $150 million in lobbying over the last decade, but they also got their constituents—the securities industry, the homebuilders and the realtors—all powerful industries that depend on Fannie and Freddie’s largesse—to support their sole legislative objective: the defeat of any attempt to control their growth. Congress, as usual knuckled under to the special interest.

However, a very small number of lawmakers saw this problem for what it was, and were willing to stand up to the power of Fannie and Freddie—and I am proud to say that John McCain was one of them. In 2005, he joined a small group of Republican Senators to cosponsor the Federal Housing Enterprise Regulatory Reform Act.

In other words, as far back as 2002, John McCain realized that underlying what would ultimately become the Fannie and Freddie crisis was the willingness of Congress to provide financial support to private corporations. And he was willing to take on powerful interests to stop this process. If his bill had resulted in action at that time, the unprecedented steps that the Secretary of the Treasury and Congress had to take in the last two weeks would not have been necessary. "

Frum administers the coup de grace..

...By contrast, Barack Obama was accepting Fannie's political contributions - and inviting its former CEO to head his vice presidential selection contrast.

On the surge and the mortgage crisis, John McCain was both prescient and brave, while Barack Obama was opportunistic and wrong !!!

[Fred Gregory]

And now it is time to slam the door on some fingers and shut this down since it seems you defenders of the Democrats have gone mute.

Family

[Fred Gregory]

To those who care to give just more than partisan lip service to fixing responsibility for the failure of AIG don't overlook

Eliot Spitzer