Originally published by Mike DeVine, the Legal Editor for The Minority and HinzSight Reports
[Update - Since my friend called for McCain to act, he has, all week. McCain has called out Dems, including Obama, by name in pinning the cause for the Fannie Mae induced economic crisis on them and showing that he and Palin are the real change.]
I had been considering doing a post-mortem on the recent two-week debate over the Paulson Panic Prevention Bill that was finally signed into law late last week. Given my exhaustion (and the recently announced retirement of alter ego Cockstradamus until after the election) from reading enough pages to have re-read Tolstoy’s War and Peace and having written five columns in 12 days that resembled Dostoevsky’s Crime and Punishment, it was a great joy to me that an executive with one of the largest Banks in America (who also happens to be a close friend) wrote the following to me after I requested he identify three issues he wanted addressed refuting Obama and Democrat positions on the great issues of the day, with facts, that he considered not being effectively addressed by the McCain campaign or the media.
My friend shares much of our (conservative segment of the GOP) frustrations with the campaign and the past eight years and echoes many of my own thoughts, but he brings more of an insider’s perspective on the current state of banking affairs, as well as an outsider’s perspective, not being a blogger or columnist.
He shall remain anonymous, but given that this is only the first of a series of columns featuring my friend’s thoughts and desires, and given that my offer to try and address concerns that would “float his boat”, I will refer to him as “Boata”:
IT'S THE ECONOMY, STUPID The Dem mantra is 'We can't afford another eight years of the failed Bush economic policies', and McCain will not refute it - and neither will Bush Jr! Here's the truth of the matter:It started under Carter, and it accelerated under Clinton. The so called noble idea was that home ownership should be expanded from 60% to at least 70%. Through PR pressure and arm twisting on lending institutions by the government, the fear of being labeled as discriminatory by Jesse Jackson or other extortion thugs, and the Community Reinvestment Act (CRA),requirements for mortgage loans relaxed. The CRA has various methods and penalties to persuade lending institutions to make available a certain percentage of their portfolio for 'affordable housing' (and they still do - Countrywide just received a directive to make loans to applicants with credit scores of 500-580! If nothing is done it will happen again). Urban communities that no bank would seriously consider lending to were now badges of honor. Credit scoring, financials, current job, etc. - these were no longer paramount. This was doubly encouraged because Freddie Macand Fannie Mae would buy these loans so the lending institutions didn't really have to worry. GSE's hold approximately 50% of the nation's mortgage loans. In fact, the GSE's were established under the theory that bybuying loans, packaging, and reselling them as investment instruments (CDOs, Auction Rate, etc.), they would be freeing up more cash for lending institutions to make more loans so everyone could own a home! On top of this, ARMs were invented and pushed as an easy way to afford a loan - the catch of course is that they are extremely risky and irresponsible. If you can't afford a fixed rate loan, you shouldn't be contemplating adjustables, but many lenders started pushing them to increase their commissions. Ditto for sub primes.This is where the 'greed' comes in that Wall Street is accused of. On Bob Brinker's Moneytalk show yesterday, he had a NY Times economist on who posited this as the big reason the lenders and the GSEs hit hard times. He is right about the snowball effect, but how it started he is not (after all, he works for the NY Times). It started for the aforementioned political reasons. Now it really gets complicated! With tried and true institutions failing or struggling, lending amongst themselves starts to dry up. Companies that depend on short-term lending for the regular business of stock and supply start freezing up because creditors don't have the money or fear default. This credit crunch is the fear that prompted the federal bailout (rescue) last week. Prior to all this, both Bush and McCain tried to rein in the GSE's and their excesses, but the attempt fell on deaf ears in Congress - yet neither of them will explain this to the public. Former Fannie CEO Franklin Raines and his successor should be investigated for hiding the true dire financial situation there, but they won't be because the Dems hold sway in both houses and the Republicans have no backbone. The Republicans are complicit in the whole situation also because the sub prime lending really ramped up after the turn of the century. They raised no protests or red flags (outside of a few like McCain) for fear of being called racists or 'evil, rich Republicans'. Lastly, Obama and Pelosi's continued hammering of the eight years of a failed Bush economic policy' is a non sequitur - they're two separate things. I blame the Bush Administration and the House Republicans for acting like drunken Democrats in spending even more, and adopting pork and earmarks as their own, but this is not the reason for the crisis.However, this gives the Dems the ammunition they need; they would have done better to take the heat up front and do what's right. So the reason we are where we are all boils down to this: Republicans didn't have the gumption to stand up for what they believe when they finally gained the power to make REAL CHANGE!
I trust that Boata, like most of us in the conservative movement, is encouraged by the McCain campaign’s post-bailout bill signing, fact-laden refutations of and attacks against Obama and the democrats that echo much of the above, as well his the McCain ad that began running during the bailout bill debate that features the NYT praising McCain’s Fannie-Freddie 2005-6 reform attempts, and Bill Clinton’s assessment of blame against the democrats in congress (2003-2008), including the Obama-occupied, filibuster threatening Senate.
Gamecock echoes Boata’s call for McCain-Palin to show America that they represent real change for the economy.
[Despite the lack of a complete post-mortem following up on my econ columns (see my archive) opposing the bailout – albeit as a close call given the GOP improvements – especially given post-bailout market disasters here and abroad, I deem it appropriate to heed Boata’s desire for shorter columns and less self-congratulatory pajama geek echo chamber chatter! – I will address the other issues on a blog this week concerning Big Government central planning Bernanke-Paulson’s attempt to force Wachovia to be split in two, rather than let the free market and the legal system sort out the claims of Wells Fargo and Citibank.]
Mike DeVine’s Charlotte Observer columnsLegal Editor for The Minority and HinzSight Reports"The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief JusticeRace 4 2008"One man with courage makes a majority." - Andrew Jackson