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Bush Did What? Obama Hired Who?
By Meg | October 10, 2008
I don’t want to point any fingers, but….since the media loves to hate President Bush and loves to love Obama, I want to link to a few articles with some interesting information that I haven’t heard anywhere else (Note to those of you who hate reading about politics: stop reading here):
“Bush Called For Reform of Fannie Mae and Freddie Mac 17 Times in 2008 Alone…Dems Ingored Warnings” and Obama’s Subprime Conflict (quote below is from the first link, a conservative blog which references/quotes the second link, a liberal website; second link is longer and more thorough article on the subject).
For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.
Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.
The article lists in detail with dates and quotes every instance of Bush publicly warning about the reform needed and urging Congress to vote on the issue. The Democratic congress ignored all warnings and blocked all proposed reforms (including the one proposed by John McCain in 2005).
I’m definitely NOT saying Bush is blameless in the face of the economic crisis, nor am I trying to blame the Democrats for everything. I’m just saying that I was surprised at this information and wanted to spread the news. Here’s another interesting post I’d like to highlight:
Sub-Prime Slime: Obama and Pritzker
Barack Obama has slammed the banking industry for its predatory use of sub-prime mortgages, which are pushing millions of American homeowners toward foreclosure.
But his campaign’s Finance Chair, Penny Pritzker, owned a failed Chicago thrift that helped pioneer sub-prime financial instruments and faced accusations of abuse.
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…
Now I know some of you probably have lots of opinions and might even be offended or huffy or defensive or angry about some of these issues and accusations. Feel free to leave a comment - and please link to or summarize other articles and opinions on the subject, conservative or liberal. But please spare us the “I will never read your blog again and you suck for having a political opinion!” indignations that sometimes follow posts which discuss political issues. The financial markets ARE political, and sometimes you have to address how the government is involved in and contributing to a crisis.
So I’m sorry if you hate politics, but hey, it’s election season. There’s plenty of time after the election for “fundamental financial planning” advice and “how not to panic during this crisis” talk. So for now, let’s discuss! Who is more to blame for all of this? Republicans? Democrats? Banks? The American People?
For a basic summary of the causes and leading events that brought us to where we are in this financial meltdown, see The Story of Our Time.
Topics: Miscellaneous |
October 10th, 2008 at 12:25 pm
I am done reading your blog and am unsubscribing from the RSS feed. I have been reading it because it is a personal finance blog, but more and more you push your conservative viewpoints instead of focusing on what the blog is supposed to be about. I just thought I would let you know.
October 10th, 2008 at 12:31 pm
I think all of the above are to blame. And hey, this is YOUR blog, you can blog about whatever you want!!
October 10th, 2008 at 12:34 pm
“The American People?” Bingo.
October 10th, 2008 at 12:44 pm
I appreciate a good debate, but I have to say, linking to a couple of blog posts, both of which clearly with their own agendas and biases? To me, that doesn’t set the scene for a dialogue on the issues. Would you like it if I responded with a bunch of HuffPo links?
And if you want to start a discussion about “blame”, I really think you need to bring Phil Gramm into the mix, even if you can subsequently put forward some information to exonerate him.
October 10th, 2008 at 1:00 pm
I disagree with the article. Everything I’ve read points the blame at both parties. Clinton administration passed the deregulation bill in Dec 2000 that started the problem, but with a republic congress at the wheel.
Then in 2003 the Attorney General was forewarned about predatory lenders by the AG’s of North Carolina and Iowa. From this article they were abruptyly discounted and then Washington pursued states that tried to stop predatory lenders. Unbelievable.
Both parties are to blame.
October 10th, 2008 at 1:20 pm
Nancy Zimmerman on her blog over at:
http://nancyzimmerman.com/2008/10/07/tuesday-econ-101-an-another-devils-advocate-post-the-dems-messed-up-too/
Has a great video on who to blame for the housing mess. Things aren’t always as they appear, especially with politicians.
October 10th, 2008 at 1:33 pm
That was another Frank, not me. Jeez, wish I didn’t have such a common name.
For a more comprehensive list of people/entities to blame, here you go: Aleph Blog - Blame Game.
As many other have said, it’s everyone’s fault.
Moreover, people have been calling on reform to the GSEs for a while now because of the systematic risks they posed.
I don’t mind reading about politics, even those that I disagree with, but spare me the conspiracy-mongering talking points, i.e. “mainstream (Obama-loving) media”
What next, are you going to post about how he’s secretly a Muslim too? Heck, even his middle name is Hussein! Come on now Meg (and JLP), you guys are better than that.
October 10th, 2008 at 1:48 pm
If we are going to try to blame either of the political parties, that would make us no better than them blaming each other.
In the end, we’re the ones that vote for them, and the whole idea of a democratic system is to place the power in the hands of the people.
It’s our responsibility to use this power wisely, and not blame politicians for the problems we’ve created by continuing to vote for them.
That may sound like idealism in the face of political reality in America, but the most important thing our founding fathers had when they created our constitution was their ideals.
Our ideals may have changed over time (which the constitution was designed to allow), but they are still the heart of our democracy, and if our politicians don’t represent what we believe, then it’s our responsibility to remove them.
October 10th, 2008 at 1:58 pm
Good points, all. And just to clarify, I do not think EITHER party is to blame, nor do I think that either candidate has ANY idea what to do about the situation.
I mainly wanted to bring up this topic so we can all share information that might not have been widely circulated regarding regulations and events in history that might have contributed to our current situation. Of course no one intended for this to happen, but unintended consequences come along with every new rule and piece of legislation.
So if anybody knows of anything else, please DO share! I don’t care how liberal or conservative the source - or the informaion - is!
October 10th, 2008 at 2:02 pm
I don’t think Meg was out to put the blame on the Democrats. Rather, I think she was trying to show that there was plenty of blame to go around and that the media, for whatever reason, seems more apt to shed the light on Republican wrong-doings than they are on shedding the light on the problem in general.
The fact that Bush warned about these problems hasn’t been shared through the general media (at least I haven’t heard or seen it).
Whether you want to believe it or not, the media likes Obama. He’s the “feel-good candidate.”
October 10th, 2008 at 2:18 pm
Stick to finance, I don’t give a rat’s ass about your political views.
October 10th, 2008 at 2:42 pm
@ Josh - Actually the quote above IS from a very liberal blog - the conservative blogger (linked) who I referenced was actually quoting the Huffington Post via Consortium News (a left leaning journalist website). I will reference them as well, since they are the actual source of the quotes above.
October 10th, 2008 at 3:12 pm
I think a lot of people are missing the point. The politicians got us into this problem by deregulating legislation that was already fiscalling sound. You can call it political, but it had a direct impact on us all financially.
The media has not been fair with Bush or McCain and they really love Obama even though he has very little experience.
Some of us did not vote for Bush or Clinton, but we have to deal with the mess anyway.
It used to be you had to put 20% down to purchase a home. Now you can do it for zero down. Let’s hope are politicians vote to move it back to 20% down requirement, otherwise the banks will lose money on mortgages during every future recession and every property value decline.
October 10th, 2008 at 3:12 pm
@ Ted - this IS about finance. In case you haven’t noticed, we’re experiencing a stock market crash and global meltdown in the financial markets. This is unavoidably related to politics, since our government can, has, and will act because of these issues.
Besides, I have espoused NO political views WHATSOEVER in this post.
October 10th, 2008 at 3:15 pm
Thanks for filling us in Meg. I don’t think there’s anything wrong with you adding your two cents as to who’s to blame for the current crisis..
I think Ted Robinski is WAY out of line. At least this post is on a site that’s finance-related. I read Engadget (tech site) and Autoblog (car site) and they constantly bash Bush/McCain/anyone opposed to the Democratic party on financial or whatever subjects. Truthfully, I’d rather read your thoughts on the subject…
October 10th, 2008 at 4:10 pm
I don’t give a flip who was responsible, what I want to know now is who has the credibility and intelligence to fix this mess.
The GOP/Bush record:
9/11: Incompetence for not preventing attack.
Iraq War: Incompetence, Poor Planning & Poor Strategy
Katrina: Incompetence, Poor Planning & Poor Response
Financial Meltdown: Incompetence, Poor Planning & Poor Response
Note that there are hundreds of sub-failures within each of the categories above from torture to Abu Graib to simple logistics during hurricane response to stupid bailout programs (i.e. Treasury gets absolute power).
Burn me once, shame on you, burn me twice, shame on me, burn me over and over and we all burn to death.
October 10th, 2008 at 4:33 pm
And what about Phil Gramm, the former economic adviser of McCain who bares the bill with his name in 1999 de-regulating the market that has flooded the world with $50 plus trillion credit default swaps? You want to focus on peanuts here and not look at the entire system. You sound like McCain going gaga over $18 bilion in earmarks when he is going to kick down his cronies with $300 billion in tax cuts.
And you have got to be kidding about Bush. He is the President! He had a Republican controlled Congress for 6 years of his power and if he really wanted to, he could have reigned it in. Talk about revising history.
No problem with an opinion but don’t try to come off as balanced and unbiased. You clearly are.
October 10th, 2008 at 8:15 pm
I agree with John. Bush had control for 6 years and he let Wall street go wild. Between his three tax cuts, which were targeted to the wealthy, and his lack of supervision of business and the financial markets, the income and wealth gaps in this country have grown to unbelievable proportions. He will surely go down as the worst president in the history of the U.S.
October 10th, 2008 at 10:11 pm
You are right on the money and this is about personal finance. Political or not, this economic crisis is a direct cause of the failure of government in trying to plan the economy.
To make matters worse, the government is now expanding there economic their power over the economy so they can correct the failure of their economic planning.
Many politicians are to blame and I think the economic crisis will lead to a political crisis, as many politicians are likely to get prosecuted as the entire world looks for someone to blame for this mess.
October 11th, 2008 at 12:06 am
Bush and the Republicans were in power for at least six years. They push deregulation and they were responsible for the lax oversight. Wall Street came to the government looking for a solution not the other way around. Greed and manipulation of the
credit instruments were the main reasons for the meltdown. TO claim that Bush pointed this out in 2008 when clearly the problems existed from 2002,2003,2004, etc. does not absolve him of blame.
Twos weeks ago, some on saw no connection between the bailout and our personal finances. 2200 points down, I beg to differ.
October 11th, 2008 at 1:04 am
Don’t kid yourself, Meg. You know you pointed a finger squarely at the Democrats and you expressed a political view in your very first sentence: “the media loves to hate President Bush and loves to love Obama.” “The media is liberal!” is a basic tenet of the Republican party and it is constantly espoused by conservatives. It’s great tool because if the Republican party convinces its members that the media has a bias, then whenever the media finds something negative about the party, Republicans can just ignore it and blame it on the “bias.” No objective evaluation of the facts is necessary and it makes for some great party unity.
From all of the media reports that I’ve heard, there is plenty of blame to go around (though, I don’t think I deserve any since I live in a much smaller house than I can afford and have a 30-year fixed rate), so picking out some one-sided articles to throw out here doesn’t do anybody any good. If you wanted to be apolitical, I’m sure there is plenty of under-reported “interesting information” that blames the Repulicans.
It sounds to me like you’re just upset that McCain is bearing the brunt of this for the simple reason that the Republicans have been in charge for most of the past decade. I agree, it’s much more complex than that, but the ruling party always goes down in bad economic times whether it’s really their fault or not, just like the president always gets far too much credit when things are booming. Get over it and get back to what you do best, PERSONAL finance, not politics and macro-economic policy that none of us can understand anyway.
October 11th, 2008 at 2:11 am
Many are at fault and many things occurred over the years to create the possibility and exacerbate it, but it is useful to consider some statistics. In 2002, subprime was less than 2% of the market, and in 2006 it was 30%. Frannie did buy a lot of the safest tranches, largely from the same investment banks selling to everyone else, but were always a minority of the market and their share declined over this period. Congress passed a bill on Frannie that Bush vetoed. Finally, no one ever needs more laws to regulate; there is ample range for any administration with a will to do so.
October 11th, 2008 at 6:38 am
“One other thing I’ve done, is I’ve called on private sector mortgage banks and banks to be more aggressive about lending money to first-time home buyers. And the response has been really good. There’s a lot of people in this — our communities around the country that deeply care about the issue of homeownership, and they’ve been responsive.”
- George W. Bush, U.S. President, March 26, 2004.
October 11th, 2008 at 7:24 am
This is political, unfortunately it is also financial because this mess IS affecting everyone’s finances in some way or another. It really is irrelvant which political party the people responsible for this mess is affliated with. What WE need to do is find out who was behind the mess, WHY they were behind the mess, and hold these people accountable. Our country is moving closer and closer to a socialist system every year and this scares the hell out of me. The govt now has control of the mortgage system, they are trying to take control of the entire banking system and we NEED to stop them from doing that. The same people that had a hand in causing this mess, are now being put in full control of it. VERY bad idea in my opinion. This mess was caused by too much govt demanding certain things be done that seemed like a good idea on paper, but in reality had many unintended consequences. What ever your political views on this are, WE need to work together to take our country back away from the government and give it back to us, the people. We need to make the government hold to its role as a servant of the people, not a controller of the people doing what IT thinks is in our best interest, which is usually WAY wrong..
October 11th, 2008 at 11:00 am
What’s placing the blame going to do? Is anyone really going to go to jail or pay back the taxpayers billions of dollars? I think not. We’ll just spend millions more “investigating” and wasting more of our money.
Here’s an idea for jumpstarting our economy: halve everyone’s income taxes for a year. I for one would have plenty of places to spent/invest/etc $20,000+. Since we’re so eager to “print” billions of dollars, what’s a little bit more?
PS And yes, Meg, you stoked the fire w/your initial sentence, so I have to agree w/#21 Steve’s comment. A better approach might have been to state: “I found these links about our current finanical mess. Does anyone else have any to share?” That’s writing without bias.
…Just my 2cents, which isn’t worth as much anymore!
October 11th, 2008 at 11:50 am
1) home mortgage deduction (artificially increases demand)
2) CRA subsidized housing for poor (artificially increase demand)
3) artificially low cost of money (thanks to Greenspan)
The above created a small housing bubble, and is due to both parties and was in place before 2000.
Then we get to deregulation and
default risk is now rated via credit ratings instead of ability to pay
4) companies see how much they can make on subprime
mortgages
5) companies dispense with money-down mortgages
6) companies push exotic mortgages (alt-a, subprime, neg amort)
7) mortgage making and holding becomes almost completely decoupled encouraging questionable mortgages
The above makes the barrier of entry to housing so low that it drives up demand like crazy, even in non-subprime areas. That alone would be expensive, but not cause a credit breakdown.
But then we get to complete deregulation:
9) no regulation on swaps (eg credit default swaps), so banks and insurance companies have enormous counterparty risk.
10) markets expect Greenspan put, forget about risk (thanks again Greenspan)
11) hubris filled CEOs and traders don’t understand (or don’t care about?) the CDO securities or the web of default swaps they’ve created
Sure, the dems get some blame for toying with the market, creating a small bubble. But Fannie and Freddie are a small problem compared to the banks counterparty risk.
The republicans (or maybe more properly the Chicago school of economics and deregulation) get the lion’s share of the blame. If it hadn’t been subprime, it would have been something else like credit cards, car loans, or anything else that can be traded as a swap.
October 11th, 2008 at 11:53 am
I might well be censored on this blog for entering a negative comment months ago, but I’ll include this:
For good information on this see Larry Kudlow on http://bigpicture.typepad.com.
October 11th, 2008 at 2:41 pm
The `media’ loves to hate Bush?
Newsflash - his approval rating is the lowest in history, 26% approval. It’s not just the media that hates him. Perhaps, instead, the media is finally reflecting the overall disappointment this country feels with the Republican party, which has been driving this country off a financial cliff over the past several years due to a neverending occupation of Iraq, among other things. The Republicans like to preach financial conservatism, but their policies have been anything BUT conservative over the past several years.
I’m digressing here, and don’t mean to hijack this thread, but I do want to say:
Meg, since this post accuses the media of Bush bashing - let’s not forget that the media was implicit in spinning his trumped up war in Iraq. That tidbit came directly from NewsCorp owner Rupert Murdoch, who said that NewsCorp tried to help Bush with the war (it’s out there on YouTube for anyone interested, straight from the horse’s mouth). Let’s not forget that Bush/Cheney followed in Reagan/Bush 1’s footsteps in `perception management’ - i.e. infiltrating the media with Pentagon parrots that deceptively spinned the war in a positive manner for the Bush admin (NY Times investigation, April 2008).
If we’re going to talk about Obama’s finance chair, let’s also talk about McCain’s son, Andrew, who was associated with a bank failure at Silver State in Arizona recently.
Let’s also talk about Phil Gramm, who worked side by side with McCain to deregulate as much as possible. Gramm is still, in an unoffical capacity, McCain’s economic advisor. They’ve been close friends for years. We see how well their `unfettered free market’ policies have worked - and now McCain wants to do that with healthcare!?
Yes, this is your blog, post as you wish. But be careful with the blame game, because there’s plenty to go around. It’s counterproductive and divisive. Blame offers nothing to intelligent discourse about resolving the problems we face.
October 11th, 2008 at 4:10 pm
Thanks for all your great comments!
And I admit, I did stoke the fire with my comments about how the media hates Bush and loves Obama - but hey, they do, and I’m not even saying they shouldn’t! NO news or opinion source is going to be unbiased. The good news is that in this day and age there are literally endless news and opinion resources, especially for those with internet access.
In any event, very good points about artificially low interest rates and artificial demand created by the mortgage interest tax breaks. I hate to say this, especially as a real estate investor, but I really can’t see any reason why we should have that tax break (not to mention that we can’t afford it!).
And of course the rampant speculation and creation of wild new investment products on Wall Street is a huge factor here. Unfortunately the government is ALWAYS going to be one step behind with regulations and legislation, especially in this day and age with rapidly advancing technology and the flood of new products and services. All laws are created AFTER something goes terribly wrong, or AFTER some injustice is recognized.
October 11th, 2008 at 10:58 pm
I also agree with John, comment 17, and lorax, comment 26. I just have an additional small point to pick. Let’s not overstate McCain’s role in reform here. It’s clear from what I’ve read that the reform bill referred to as McCain’s is not actually his. He added his name much later. Not to mention, the bill had been shot down by the Republican-controlled Congress prior to his late addition. Here’s one analysis (I’ve read several): http://pbrla.blogspot.com/2008/09/unearthing-another-mccain-lie.html
It’s biased writing, of course, but the facts are good.
October 11th, 2008 at 11:14 pm
bye
October 13th, 2008 at 6:00 am
I am also here to look for personal financial advise, not uninformed political opinion.
October 13th, 2008 at 6:00 am
… so I will unsubscribed too.