Obama Vs. Bush on the Sub-prime Mortgage Crisis Part One

If you watched the three presidential debates you surely heard Sen. Obama blame President Bush for the current economic situation that we find ourselves in. Sen. McCain certainly wasn’t going to step in and defend the president since he is desperately trying to separate himself from the Bush persona.

In at least two of the debates Sen. Obama blamed the “deregulation” of the banking industry for the current crisis. He states corporate greed as proof.

Now Sen. Obama was partially right, lack of regulation was half the problem.

There are two corporations whose greed made a tangible impact in forming the current situation. I am referring to Fannie Mae and Freddie Mac, who overstated earnings in order to trigger executive bonuses.

Who actually tried to stop these runaway organizations goes largely unreported. In 2003 the Bush administration proposed a regulatory agency within the treasury department (taking it away from congress) to oversee Fannie and Freddie.

In 2004 the house held hearings on the fraudulent book keeping practices that had been exercised by Fannie and Freddie. During these hearings Republicans stated that regulation was necessary for these two organizations while Democrats fiercely opposed their notion that there was any problem at all.

Rep. Clay (D-MO) said that “this hearing is about the political lynching of Franklin Raines.” That’s a pretty fierce defense of a man who received up to $50 million due to fraudulent accounting.

In 2005 a common name again attempted to do something to avert our current situation. The Federal Housing Enterprise Regulatory Reform Act of 2005 was co-sponsored by Senators Dole, Sununu, and John McCain.

This bill was blocked in committee and never made it to the floor of the senate for a vote.

Now why would so many people be opposed to reforming such obviously corrupt organizations? Well here is a list of politicians who received sums of money.

Perhaps most note worthy is that the man on top of that list is the chairman of the Senate Banking Committee, the same committee in charge of putting together the bailout package.

Though I am pretty sure this is not what Sen. Obama meant by deregulation I’ll give him the benefit of the doubt.

But all this was set in motion years ago by too much government intervention by regulation, which I will explore in part 2.

Some Sources:

http://www.govtrack.us/congress/bill.xpd?bill=s109-190

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63

http://www.bloomberg.com/apps/news?pid=10000103&sid=aG0So0WiI94g&refer=news

http://www.iht.com/articles/2006/12/12/business/suit.php

http://www.youtube.com/watch?v=_MGT_cSi7Rs

http://www.safehaven.com/images/mauldin/6329_a.gif

http://www.webcpa.com/article.cfm?articleid=22660

http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html