A *very* interesting article on the mortgage mess
In my muddling about trying to get an understanding on how and why the mortgage mess has happened (and now what the heck to do about it), I run across this article...a little history lesson from just a couple years ago. Look who the major players are in the story, it might affect your judgement come this November!
Direct Link: http://www.bloomberg ( Read more... )
And thus, it's the Minority's fault that a problem that has been brewing from before 2005 is somehow all their fault?
Scott, that's quite a stretch.
Also.. if you are going to talk about the problems of corruption at Fannie Mae and Freddie Mac-something McCain himself has done, calling the problem the result of lobbyists and bureaucrats--see his comments in Green bay, ``At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac,'' he said last week in Green Bay, Wisconsin.
``Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy,'' he said. ``And now, as ever, the American taxpayers are left to pay the price for Washington's failure.''
It's then interesting to note, that McCAin's OWN Campaign Manager, Rick Davis, owns a lobbying firm that has been lobbying for Freddie Mac all this time.
Check this source out:
http://blog.newsweek.com/blogs/stumper/archive/2008/09/24/on-davis-s-ties-to-freddie-mac-mccain-gets-boomeranged.aspx
Quote:
My major example was McCain's attacks on Obama for associating with former Fannie Mae CEO Jim Johnson. The problem? McCain's own campaign is swarming with 26 advisers or fundraisers who have lobbied or are currently lobbying for Fannie Mae or Freddie Mac--including campaign manager Rick Davis. When the New York Times reported Monday that Freddie Mac had previously paid an advocacy group run by Davis $30,000 a month until the end of 2005, the McCain campaign vehemently denied that Davis still had ties to the mortgage giant. In fact, Davis told reporters during a conference call that "it's been over three years since there's been any activity in this area and since I had any contact with those folks."
Unfortunately, that's not quite accurate. As NEWSWEEK's tireless investigative ace Mike Isikoff reports this morning, Freddie Mac also paid Davis's consulting and lobbying firm Davis Manafort a consulting fee of $15,000 a month starting in 2005--before Davis took a leave of absence to work on the McCain campaign--and ending only last month, when the U.S. government acquired the firm. (The New York Times has also posted a story on the payments.) Davis is still a partner and equity-holder in Davis Manafort, so he continues to benefit from its income. So far, Team McCain has attacked the messengers--as usual--but they haven't disputed the allegations, except to say Davis isn't profiting personally from Freddie Mac and therefore doesn't have, according to the Atlantic's Marc Ambinder, a "direct financial conflict of interest in helping McCain develop policy." But that ignores the larger issue: whether Freddie put Davis's firm on retainer--at Davis's request--because of Davis's relationship with McCain. "The story's not about profit," writes Ambinder. "It's about influence buying."
So Scott... if you are going to try to vaguely blame this on the Democrats, you might want to have your numbers correct (if the Rep. controlled committee couldn't get a bill out of committee that they had a majority in, then maybe it's not the minority's fault that the bill didn't pass) and you should not go throwing stones when McCain's close friends are at the center of all this.
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neither man will be good in the long run....
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This whole debacle reinforces my belief in libertarianism.
That the two main players this November are each knee or neck deep in this corruption is just icing on the cake.
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To uses a rather simple historical analogy--if we look back at the Great Depression, the central problem that occurred was the existence of holding companies that issued stock and banks that did not abide by good accounting rules.
Would your solution to the great depression have been just to claim that if we got rid of banks and large private finanicial holding companies, that we could just prevent all such problems?
It's true--but it's also true that if we went back even further, we could just eliminate currencies altogether and solve all problems such credit and financial problems.
In any case the problem with Freddie Mac and Fannie Mae is not, in my view, that they exist--but that over the past 25+ years (since Reagan, actually), the strict rules that governed how they could do their job have generally been jettisoned. Oversight and stricter regulation and harder terms for credit and mortgages has been regarded by various people--most of them Republican Wall Street types (with a large helping of greedy democrats)--as unnecessary. This was bad.
Additionally, the existence of government institutions that offered such mortgages seems less central to the problem, in my view, than the unsupervised creation of "new financial instruments" like mortgage backed securities and these credit default swaps, etc etc--that were all done without anyone actually monitoring whether people were abiding by good accounting rules. The fact that mortgages just started getting passed around as if they were guaranteed sources of income--rather than as contracts with varying levels of risk--is a central problem here..
In the end, I would argue again that the central origin of the problem is not that these mortgages existed from the FM's.. but that people just stopped obeying common sense accounting rules. If people had made sure that these mortgages were assigned the proper amount of risk when they were offered to poor people at high rates--then people would not have treated them as guaranteed sources of income and would have been much more leery of accepting them as securities--or rather, if there had been someone who had evaluated such things and bitch slapped firms that didn't do this, then we would have stopped such shenanigans a long time ago..
Basically, I would conclude with another analogy that should make the point... Just a couple of years ago, a number of firms went belly up in catastrophic ways. Enron and WorldCom are two great examples. They enganged in faulty accounting practices--and then got caught. Their failure, however, was due to grand deception on their part, but also due to lax oversight by the government.
however, I do not think you would want to argue that because corporations can engage in questionable accounting and fuck a lot of people over, that we should ban corporations. We should just make sure they are watched.
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