Investor's Business Daily - Tuesday September 14, 2010
After the global financial crisis, no politician would dare chide another for too much "safety and soundness." But in 2004, 76 Democrats actually asked President Bush not to manage Fannie Mae responsibly.
There are smoking guns and then there are smoking bazookas. The June 28, 2004, letter from Rep. Barney Frank, D-Mass., House Speaker Nancy Pelosi, D-Calif., and dozens of other House Democrats to President Bush, posted by Moe Lane on Redstate.com last week, forever squashes Democratic claims about the mortgage crisis not being their fault.
"We urge you to reconsider your administration's criticisms of the housing-related government sponsored enterprises (the 'GSEs') and instead work with Congress to strengthen the mission and oversight of the GSEs," states the missive of nearly a page and a half, signed by a rogues' gallery of 76 House Democrats.
They include not only Frank, current chairman of the House Banking Committee; but Rep. Maxine Waters, D-Calif., now being probed for reportedly laundering TARP money in her husband's bank; and erstwhile House Ways and Means Committee Chairman Charles Rangel, D-N.Y., who is charged with more than a dozen counts of violating House rules and federal laws.
Almost comically, the letter states that the Democrats are unhappy the Bush administration is "emphasizing only safety and soundness," claiming that "an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing."
And the Democratic representatives charged that "because Congress has not been willing to jeopardize the GSEs' mission, the administration has turned to attacking the GSEs publicly."
Such attacks could mean "negative opinions in the financial markets regarding the GSEs, raising their cost of financing."
It turned out, of course, that the negative opinions of Fannie Mae, and its evil twin Freddie Mac, in the financial markets were due to the GSEs taking a lead role in crippling the global economy.
The GSEs used the taxpayer-funded financial power of the federal government to give ultralow rate mortgages to millions of Americans with rotten credit ratings — which ended up poisoning the portfolios of investors around the world.
That Fannie and Freddie are disasters is, of course, today undeniable. Even Frank last month told Fox Business Network's Neil Cavuto regarding Fannie and Freddie, "I think they should be abolished."
In an election year in which voters are sick of governmental largesse and Uncle Sam's mismanagement of everything, and in which even Frank's "safe" seat in Taxachusetts is endangered, Frank doesn't dare say anything less.
Six years ago was another story: "Join us," Frank and the 75 other Democrats were demanding, "in advocating for more innovative loan products and programs for people who desire to buy manufactured housing, similar products to preserve as affordable and rehabilitate aging affordable housing, and more meaningful GSE affordable housing goals."
They insisted that President Bush "place a high priority on working with the GSEs to close as many loans as possible this year" and reiterated "that an exclusive emphasis on safety and soundness . .. is misplaced."
The 9.6% unemployment that Americans now suffer is directly connected to the many years of Democrats' demagoguery. They said that any attempt to rein in Fannie and Freddie was anti-poor and anti-minority — fiscal soundness be damned.
With the worst attributes of government entity and private business, Fannie Mae holds about $6 trillion in mortgages. These GSEs' reduced capital requirements and exemptions from state and local taxes let them eventually corner about half of the entire U.S. mortgage market.
President Bill Clinton added a "Trillion Dollar Commitment" to give 10 million poor Americans their own homes, and he intensified President Jimmy Carter's Community Reinvestment Act.
The cumulative result was that banks and other lenders were pressured to give mortgages to unqualified borrowers in the name of social and racial justice. Last year, the Obama administration raised Fannie and Freddie's $400 billion borrowing cap.
Every single politician who signed this letter is guilty of taking part in the gross financial mismanagement of this country. They betrayed the trust of those who elected them, and that trust should be rescinded this November.