Ignored Warning Signs

For years leading up to the current financial situation, the Congress and the President knew something bad was going to happen. They saw the warning signs, and the flags were waved.

The crisis has roots in economic (actually, social) policies of the the Carter and Clinton administrations:



This Congressional hearing was held in 2004:



Both Bush and McCain introduced legislation in 2003 and 2006 to help prevent the trouble that we are in now.

Bush tried to reform Fannie Mae and Freddie Mac back in 2003:

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

Who blocked the legislation? Can you guess?

"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

McCain tried to do something himself in 2006:

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

Let's not start pointing fingers. Of course, this is an election year, and the biased media does have much desire to report on "history." Granted, I don't agree with a lot of Bush's policies; however, he at least had the foresight to see change was needed. The Democrats stopped the plan; now, when there is trouble, they start blaming others. I'm not sure if this is what you would call "change." Sounds pretty old-fashioned to me.

Tweet