Clinton, Congress and the Mortgage Meltdown
By: Guest Authors
By: Chad MacInnes
Here We Go Againâ€¦
OK. By now youâ€™ve probably heard that the US government has seized control of yet another failing company, AIG and the Federal Reserve is going float them a sustenance loan to the tune of $85 billion. The government will have 79.9% control of the company and the loan must be will be repaid in 24 months, at an interest rate of 11.56%. You also probably know that The FDIC has seized control of Wachovia and brokered a deal with Citigroup to buy up its assets. Earlier FDIC did the same with Washington Mutual and brokered the deal with J.P. Morgan Chase. For those who are counting, that means now we have only three megabanks plus the Federal Reserve to service the economy with credit and cash. No worries, right?
When the Fed and the Treasury and the Presidentâ€™s â€œeconomic working-groupâ€ decided on this course of action, they did not call Congress for approval. This is a big deal, and just in case you donâ€™t know, Congress and Congress alone holds the purse strings of this nationâ€™s government. Per the Constitution, no monies in the Federal treasury can be appropriated without the approval of the Congress. Not only did the Fed in itâ€™s infinite wisdom opt not to contact the Congress and even inform it that they had decided upon another multi-billion dollar bailout for AIG, they also talked with a bunch of central banks from around the world and decided to inject $180 billion into the global monetary system.
But donâ€™t worry: according to the government they didnâ€™t really need to get approval from Congress to do this because they were not going to spend money we already had, they just printed more! Get the picture?
Did You Knowâ€¦
Let me put this as clearly and succinctly as I can: there is nothing Federal about the Federal Reserve. It is not a branch of the US Government. It is a bank. It is a central bank of the exact type that our Founding Fathers warned not to create. It is an entity that operates entirely outside of the constraints and limitations of the Constitution because it is entirely unconstitutional. It is completely and utterly unconstitutional, yet is the de facto controlling agency of the US Government. Congress is supposed to hold the purse strings, yet it is the fed that routinely dictates to the Congress what it intends to do, and then summarily receives a blessing to do so. It operates with impunity, and you and I pay the price itâ€™s activity incurs.
A Wall Street Journal article entitled U.S. to Take Over AIG notes that: â€œIt puts the government in control of a private insurer – a historic development, particularly considering that AIG isn’t directly regulated by the federal government. The Fed took the highly unusual step using legal authority granted in the Federal Reserve Act, which allows it to lend to nonbanks under â€˜unusual and exigentâ€™ circumstances, something it invoked when Bear Stearns Cos. was rescued in March.â€
Some economic analysts and talking heads are speculating that this could be a good thing â€“ that when the loan is repaid, the government will actually make money on the deal because of the steep interest rate. They must be assuming that the loan will actually be repaid. And you know what happens when you assume, right? They think this is a good thing because they have totally lost sight of the fact that the US Government has absolutely no Constitutional authority whatsoever to seize control of a privately owned business and bail it out with taxpayer money.
What is going on here is sheer, unadulterated, unconstitutional, government-run-amok madness, and its high time we took the gloves off and stopped dancing around the issue of why we are here in the first place, and start naming it for what it is. And naming names. We may as well do that here in the blogosphere, because you sure as hell know that these subjects and names of the people responsible for this mess will never, ever, come before Congress. I donâ€™t think I need to tell you why.
Hereâ€™s the Deal-eo
Before I get into the down-and-dirty politically-incorrect reality of what is presently transpiring in the national cesspool known to most people as Washington DC, let me first provide the reader with a breakdown of where we are so far. The government has thus far exceeded its Constitutional authority in bailing out the following companies and financial institutions: Bear Stearns $29 billion; Freddie Mac and Fannie Mae $200 billion initially (with a potential ceiling of $1.5 trillion, yes, trillion, due to the debt they carry); AIG 85 billion; the â€œofficiallyâ€ acknowledged version of the federal deficit $400 billion; loans floated to various other smaller banks and institutions, plus FDIC replenishment $109.6 billion. Put this all together and as of today weâ€™ve just tacked another $1.2 trillion onto the taxpayerâ€™s bill.
But it gets better, as we may as well just factor in the actual debt that Fannie and Freddie have accrued, $1.5 trillion, because you and I both know the bottom line is that when the government steps in to pay for something, they pay the full asking price. So the real number up to $2.3 trillion. But weâ€™re not done yet. Far from it. You know that â€œofficialâ€ deficit figure of $400 billion? Well, that does not include the obligatory welfare/nanny-state social and financial programs such as Social Security, Medicare and Medicaid, federal education loans, grants and the like. Oh, and donâ€™t forget the trade deficit where we lose big to foreign tariffs and, of course, the interest we will ultimately have to pay to all those other corporations and foreign central banks who are buying up US debt auctioned off by the Treasury like candy. So just keep that little $2.3 trillion kiss-in-the-mail in the back of your mind and understand that the actual figure is far, far higher.
On September 15 the Investors Business Daily published an Op-Ed piece called, â€œThe Real Culprits In This Meltdown.â€ This piece sums up the current financial crisis nicely and places the proper blame exactly where it ought to be placed â€“ on those people who were responsible and complicit in the criminal activity that resulted in the unprecedented action of the US Government nationalizing industry.
First off, let us understand exactly what was the catalyst of this mess. Subprime lending is a high-stakes financial game played by massive financial institutions, most notably Freddie and Fannie, where loans are made with the higher expectation of risk and are therefore made with a higher interest rate than normal. This means loans are made to people or entities that the lender understands may not be able to pay back, and so a higher interest rate is the price of the loans. If the loan is paid back the lender wins big. But if the loan is defaulted upon, the lender loses all.
The notion of subprime lending generally refers to those types of loans in categories apart from those specified in loan guidelines established by Freddie Mac and Fannie Mae, which is a bit of irony seeing as the whole problem snowballed from these two institutions. Loans would be considered subprime due to several factors including, but not limited to, income, income and job history, and the credit status of the borrower. â€œSubprimeâ€ also denotes bank loans taken on property that cannot be sold on the primary market and such lending encompasses a variety of credit instruments, including mortgages, car loans, and, of course, the all-American staple that those with no money just canâ€™t do without, credit cards.
Now that we understand what we are talking about, let us move on.
Letâ€™s jump back in time to the late 1970s for a moment. You remember it, donâ€™t you? The booming economy, massive economic development, national pride abounding, and all under the leadership of the best President that the United States that has ever had: Jimmy Carter! You remember that little gem he got Congress to pass called the Community Redevelopment Act that was meant to promote minority home ownership? Well, that particular piece of legislation was employee by the Clinton Administration fro the first days he was in office to ensure that he could declare how he was the champion of the poor and of minorities and how it was he who was able to provide them with â€œaffordable housing.â€ Do you know what â€œaffordable housingâ€ is? â€œAffordable housingâ€ is when people who canâ€™t afford it buy a house and you and I pay for it.
So, Clinton used this legislation to pander to minorities and the poor. In doing so, he also put the full weight of the Federal Government behind it so as to â€œencourageâ€ lenders to â€œhelpâ€ the â€œless fortunateâ€ to obtain â€œaffordable housing.â€ What that really means is that Clinton resurrected the Community Redevelopment Act and to make good on his campaign promise to provide said â€œaffordable housing,â€ it quickly became well understood that every lender had to make â€œaffordable loansâ€ â€œavailableâ€ to basically anyone who was not of white Anglo decent who wanted one. Of you were a lender, you did not want to turn anyone down, because then you were subjecting yourself to bearing the full brunt of the US Government penal code as enforced by the relevant agencies. You could be investigated for anything from â€œunfairâ€ loan practices to racism and discrimination, and as we all remember after Waco and Elian Gonzales, Janet Reno was more that anxious to wield her power.
Caught up in the hysteria of the typical liberal obsessions of enforcing multiculturalism and pandering to the poor, the Administration was more than willing to levy hefty fines and other penalties on those who did not share the Administrationâ€™s enthusiasm for such high risk lending. Any anyone who does not think that such conditions not only enable but strongly encourage predatory lending practices â€“ that is lending to people that you know will never be able to pay it back â€“ needs to pull their head out of their hind-side and get with the reality of the actual situation as it was and as it presently is.
â€œNow wait a minute,â€ you might say to yourself. â€œIs he saying what I think heâ€™s saying?â€ Well, yes and no. Let me be unequivocally clear here: the poor and minorities are not the ones to blame here â€“ they are as much victims as you and I, and probably even more so, as far too many of them are being or have been foreclosed upon. They are victims because the environment in which they purchased homes was artificial if it was the case, as it was with so many, that lenders knowingly convinced them that they could take out a loan worth far more than they could pay in reality.
An Economic Bermuda Triangle
Those who are to blame for this crisis are the ones who engaged in predatory lending practices and those who enabled them to do so. Who would that be? Letâ€™s start at Freddie Mac and Fannie Mae and then skip on over the Capitol Hill and the White House.
Whoâ€™s been working over at Freddie and Fannie? Funny you should ask that. According to the Investors Business Daily, when â€œFranklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud. Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million. Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses. In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.â€ Hey â€“ isnâ€™t that the same Jaime Gorelick who was on the 9/11 Commission? And isnâ€™t that Franklin Raines the same guy who was Director of the U.S. Office of Management and Budget under Clinton? Coincidence, or…?
Below is a list obtained from OpenSecrets.org:
Top 12 Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Name Office State Party Grand Total Total from PACs Total from Individuals
1. Dodd, Christopher J S CT D $165,400 $48,500 $116,900
2. Obama, Barack S IL D $126,349 $6,000 $120,349
3. Kerry, John S MA D $111,000 $2,000 $109,000
4. Bennett, Robert F S UT R $107,999 $71,499 $36,500
5. Bachus, Spencer H AL R $103,300 $70,500 $32,800
6. Blunt, Roy H MO R $96,950 $78,500 $18,450
7. Kanjorski, Paul E H PA D $96,000 $57,500 $38,500
8. Bond, Christopher S S MO R $95,400 $64,000 $31,400
9. Shelby, Richard C S AL R $80,000 $23,000 $57,000
10. Reed, Jack S RI D $78,250 $43,500 $34,750
11. Reid, Harry S NV D $77,000 $60,500 $16,500
12. Clinton, Hillary S NY D $76,050 $8,000 $68,050
Nancy Pelosi is number 17 on the list. The full list names just about everybody in both houses of Congress. Get the picture?
At the very least since the Clinton Administration took power, and likely long before â€“ like circa 1970 â€“ there has been a financial Bermuda triangle between the White House, Congress and Freddie and Fannie. Money and power and influence and corruption swirl round and round, yet the data, evidence and memories of those involved in government sanctioned corruption seems to just disappear into thin air â€“ especially when the good times go bad and someone else has to be blamed. It seems that it is always the same people involved in making your money disappear â€“ and right into their own bank accounts in one way or another. Ah, the revolving doors of Washington DC!
When you look at this list of politicians who took Freddie Mac and Fannie Mae contributions over the last twelve years and read their names and party affiliations, one quickly realizes that the spirit of bipartisanship is indeed alive and well, at least when it comes to taking campaign contributions from quasi-government agencies chartered by Congress, certainly with that potentiality in mind.
The whole list it is very incriminating to politicians of both parties. It is interesting to note, however, that most of the high dollar recipients were Democrats. This by no means absolves the Republicans – in fact it damns them. Not the number one recipient of these contributions, Senator Chris Dodd, Chairman of the Senate Banking Committee. This Senator also received a sweetheart deal on a loan, as it turns out. Surprised? You neednâ€™t be, because he is not alone.
According to Portfolio.com, â€œKent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywideâ€™s â€œV.I.P.â€ program in 2003 and 2004, according to company documents.â€
Hereâ€™s something else that wonâ€™t surprise you, because the MSM and the Democrat Party donâ€™t want you to know about it, lest your feathers get a bit ruffled. â€œOther participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.â€
Have you noticed anything that these folks, I mean crooks, have in common. They all workedâ€¦ for a certain guyâ€¦ at a particular address on Pennsylvania Avenueâ€¦ Have you figured out the connection yet? Hereâ€™s one more clue just to help you out: â€œJames Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign after the Wall Street Journal reported that he received Countrywide loans at below-market rates.â€
There are many, many more. All of these former high ranking government officials who worked for a particular Democrat who served two terms between 1992 and 2000, and who received VIP treatment were referred to in Countrywide company emails and documents as â€œFOAâ€s, or Friends of Angelo â€“ Countrywide CEO Angelo Mozilo.
It appears, again according to Portfolio, that Angelo had many, many friends in very high places. â€œHenry Cisneros, who served as secretary of Housing and Urban Development in the Clinton administration; former White House staffer Paul Begala, now a commentator on CNN; and Postmaster General John Potter. Countrywide also offered special discounts to Congressional staffers involved in housing issues.â€
Angeloâ€™s tentacles were far reaching: Countrywide spent over $1.5 lobbying Capitol Hill in 2005. Hereâ€™s an interesting anecdote. â€œJimmie Williams, a Countrywide lobbyist in Washington, was remarkably candid in emails about the purpose of V.I.P. loans. In November 2002, for instance, Williams urged Feinbergâ€™s boss, Doug Perry, to give â€œspecialized handlingâ€ to an application from a staff lawyer for the House subcommittee that monitors the Department of Housing and Urban Development. HUD regulates real estate settlements and closing costs and runs the Federal Housing Administration, the agency that guarantees mortgages. Williams pointed out that Clinton Jones III, senior counsel of the House Financial Services Subcommittee on Housing and Community Opportunity, was â€œalso an adviser to ranking Republican members of Congress responsible for legislation of interest to the financial services industry and of importance to Countrywide.â€ Jones borrowed $101,800. So what. Who is this Clinton Jones, anyway?
Clinton Jones III is now vice president for industry relations at Fannie Mae. The lobbyist, Williams, is currently state director for federal residential-mortgage bundler Freddie Mac â€“ you know, the guys who bundles up all this bad debt and sells it to firms on Wall Street. Also worthy of note is the fact that depending on the year, Fannie Mae bought anywhere from 10 to 30 percent of its loans from Countrywide, which they would bundle with other bad loans and then sell again. Are you holding your nose yet? Wait â€“ thereâ€™s still more!
Many current and former Freddie Mac and Fannie Mae executives received VIP loans from Countrywide. Former Fannie Mae C.E.O. James Johnson was given home loans at relatively low interest rates, and Countrywide waived points for him. In fact, company documents show that after leaving Fannie Mae, Johnson received more than $7 million in VIP loans. Just in case you forgot, thatâ€™s the same James Johnson who Senator Barack Obama appointed to vet his potential VP candidates. I think you get the point.
These were the just some of the players involved in the high-risk mortgage game. Granted, many of these people just named would have no problems paying back the loans, but when one is given such VIP treatments and so many of these types of VIP loans are made that may preclude a company such as Countrywide from adequately covering its costs, who do you think that cost gets passed on to. Did your Countrywide mortgage rate increase over the last couple of years? Mine did. Gee, I wonder why?
So, you had at least one major mortgage company giving away sweetheart deals to those who wield political power and leaving the rest of us to make up the difference coupled with pressure from the Clinton Administration to approve loans to millions of people who couldnâ€™t afford them and shouldnâ€™t have been given loans and lines of credit in the first place. What, then, do you have? According to the left you have a conspiracy theory, for it is understood in official circles that there were no Democrats involved. That means the MSM doesnâ€™t tell you about it â€“ so you have to hunt around to find the information, even though everyone in Washington knows who did what.
According to Politico, Nancy Pelosi had this to say â€œEight years of weakened regulation of our nationâ€™s financial system â€” including a failure to regulate risky, and often predatory, lending practices â€” by the Bush administration and Republicans in Congress have led us to this point, and could further erode our nationâ€™s economic health.â€
Doesnâ€™t seem to jive, now does it? Remember too that Pelosi has a vested interest in NOT being found complicit I this scandal â€“ sheâ€™s Speaker of the House and number 17 on the recipients list for Freddie and Fannie. Funny how these things always seem to triangulate in Washington, isnâ€™t it?
Obviously, if youâ€™re thinking that there might be some hearings on this little matter of our entire financial sector imploding, you can forget it. The left will blame Bush and McCain and the MSM will ignore the inconvenient fact that Obama is up to his ears in this mess â€“ if for nothing else than really, really bad judgment in appointing or having anything whatsoever to do with a miscreant like Johnson. If everyone is making some money, then all is well among the corrupted elite; no harm, no foul, right? That is at least if youâ€™re the DC insiders making the money, cutting the deals, brokering power and influence, and covering your tracks â€“ or at least trying to.
So, as the financial feeding frenzy really ramped up, Freddie, Fannie and the bulk of the remaining major lenders began delving into the high-risk loan market and issuing lines of credit and approving loans for more and more people who shouldnâ€™t have had them while jumping in bed with Congress and the apparently the whole former Clinton White House. They just couldnâ€™t control themselves, I guess, with the potential sitting there for such huge, monetary gains and political favors waiting to be granted.
The problem was that eventually the odds against making the money back have to become overwhelming because economies and markets, be they housing markets, credit markets, securities markets or what have you, are also cyclical: where there is boom there will eventually be bust, because the thing cannot continue to grow to infinity. As these high-risk loans were being blessed – if not pushed – by the government the conditions became more and more friendly for predators and for corruption system-wide across all strata of the financial industry. And where those in government and in management are overtly corrupt or sanctioning corrupt business practices, one must understand that corruption begets more corruption and this is a cycle that will continue until it is either too late to stop or it crashes. Why? Because when people are buying homes out the wazoo, spending on all sorts of stuff, taking out lines of credit and the economy is humming along nicely with barely a noticeable hiccup, no one cares about corruption. And even when red flags are raised, no one is going to listen â€“ except those kooky conspiracy theorists like us (and Ron Paul).
A Government Sponsored Culture of Corruption
Freddie and Fannie took on increasing amounts of high-risk debt because they could do it with impunity: they are backed up with an implied guarantee from the government, so for them high-risk is really no risk at all â€“ even if the loans go into default, Fred and Fan will be OK because they know the government will throw lots of money at them. Why? Because they own more than one half of the mortgage debt in the US. So they, and the government, encourage privately owned financial institutions to get on board the high-risk-high-profit gravy train and they also begin assuming high-risk debt. Banks and holding companies begin to consolidate and merge â€“ money is flowing all around, the economy is humming right along and the Dow hits record highs. Unfortunately for the rest of us, many of those companies and individuals who were raking in the money were doing so because of what would otherwise have been considered unethical business practices had government not been promoting it. An atmosphere of corruption facilitated and even encouraged by the government is only going to breed more corruption.
Housing was more in demand than ever, soâ€¦ the price of housing goes up, and up, and up. The demand is still there, so when the opportunity presents itself to make even more money, people and institutions will do it. Given the fact that the government was at least tacitly blessing these questionable activities, if not outright threatening regulatory enforcement if companies refused to participate, many people were taken advantage of by such relatively new inventions as so-called Ninja loans (No Income, No Job and no Assets) where said loans were made when there was really no probability that it would ever be paid back. Granted, one would think that when pursuing a loan for a home that one would have adequately assessed oneâ€™s financial standing and come up with a line in the sand that was an absolute limit, knowing they could afford nothing more. You canâ€™t argue with ignorance or sheer stupidity.
If people are too stupid to understand what they can or cannot afford, thereâ€™s not much one can do to help. A substantial part of the problem here, and certainly a part that only served to feed the beast and make matters even worse is the â€œcredit cultureâ€ that practically puts having as many credit cards as you want in the Bill of Rights and very bad regulations that allow banks and financial institutions to give credit cards to an unemployed homeless guy with leprosy and dementia, and then encourage him to seek even more credit.
Credit cards are great, right? You only have to make the minimum payment each month and you can spend as much as you want â€“ and, the more you spend the bigger your credit line seems to get. Let the reader understand that I am not making excuses, but simply relating a contributing factor. When you go into a broker and sit down to get pre-approved to buy a home and you have determined that your absolute maximum price you can afford is $200,000 you have given this a fair amount of thought. Then the broker sifting through your paperwork tells you that your assets show that you can really afford a $285,000 home. And then you start thinking about the one you saw last week that you thought was out of your price range and reconsider â€“ and buy it. Eventually you realize too late that the broker was wrong and you were right in the first place. You default, the bank takes the house and turns around and sells it and continues to make money â€“ that is until people stop buying houses. Then the whole bubble bursts and the ugly truth rears its head. And that is what happened leading up to the collapse of Freddie Mac and Fannie Mae.
Let me reiterate once more: I am not advocating excuses for any people who knowingly overextended themselves and ended up in foreclosure sitting under mounds of debt that they could not pay off. Fiscal responsibility is an individual responsibility, and most of us understand and adhere to it. Unfortunately there has been a general attitude of entitlement in this country for a long enough period of time that many people simply think that having credit so they can get stuff they know they cannot afford is a Constitutional right. And, it doesnâ€™t help matters when the government steps in and acts as if this were so, creating a regulatory structure that not only encourages but forces banks and financial institutions to make loans to people it otherwise wouldnâ€™t because of quotas and threats of enforcement of anti-discrimination statues, etc.
The people on Wall Street and those who administer the financial markets of this country are not stupid. If someone with no job, no assets, no income, and no way of ever paying off a loan can to them and asked for a loan to buy a nice house in the suburbs, under normal circumstances the banks would have turned them down flat. But the government stepped in and said, in effect, â€œyou have to give them a loan because they deserve a home and a line of credit, and if you refuse we will have to audit your business practices.â€ In the beginning, the banks werenâ€™t given a choice. In the end, they succumbed to greed as they apparently could no longer resist the temptation to get themselves in deeper and deeper, issuing more bogus loans and justifying it by the â€œcollateralâ€ supposedly backing up those loans. But, the wealth of the companies was measured in terms of the â€œpledged collateralâ€ and assets backing up those loans, so on paper they were rolling in money. In reality they were being bled dry.
To say that the bursting of the mortgage bubble caught some off-guard is completely and utterly moronic, because common sense ought to dictate that when you make a loan to someone with no assets, job, or income, you will not be getting that money back anytime soon. The people who were making the decisions at these institutions are not by any means stupid: they knew full well what they were dealing with and what they were doing. They knew exactly the risks they were taking, and believed the potential for profit was worth the risk. And they were wrong. And they were warned many, many times.
Some people, however, apparently did see the eventual bursting of the bubble. In fact, the Bush Administration proposed some sweeping overhauls back in 2003. In a New York Times article dated Sept. 11, 2003 the Times reported that, â€œUnder the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.â€ This was seen as â€œis 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.â€
Furthermore, then Treasury Secretary Snow said that â€œCongress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.â€
However, â€œThe administration’s proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies’ exemptions from taxes and antifraud provisions of federal securities laws.â€
So, even though people in the know were openly acknowledging a very major problem and preparing somewhat for the inevitable downturn that they had to know would lead to a financial collapse, there was still little incentive to alter the prevailing practice of the day when both companies were exempted from antifraud provisions of federal securities laws. The result? No changes, just more debt. Freddie and Fannie continued to accrue debt and sell it to other firms, all of which were now totally on board the high-risk mortgage gravy train.
Not everyone saw a problem with this, however: â€œâ€™These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,â€™ said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. â€˜The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.â€™” You see, to some politicians, most of them progressive Democrats, pandering to a voting bloc is more important than the financial stability of the nation.
So for the far-left progressives who are in denial that their precious pandering policies are about to ruin the nation financially, and continue to blast the current President and any conservative thinker who would dare to question the validity of the standard progressive, or for that matter Congressional, solution of throwing as much money as possible at problems, might I inquire as to who you think will be paying for this? The progressive left blames the free market, but the real problem is that the market is not free and hasnâ€™t been for decades due to government meddling in things it has no business meddling in. And now it owns businesses â€“ and a ton of debt. That means YOU own a ton of debt, and you and your posterity will be responsible for paying it off because, despite its assertions to the contrary amidst the clatter printing presses running overtime in the basement of the Fed, you know and understand if you have read some of my previous articles on the subject of the government and its debt, that the Federal Government is flat broke. It has no money, and only keeps running because the Treasury auctions off that debt to the entity â€“ or country â€“ bidding to charge us the lowest interest rate.
This brings me to a final point. Remember that $2.3 trillion dollar figure we were discussing a while back? Well, that seems to have changed too. Recently the Fed printed out another $180 billion to pool with other central banks from around the world and pump into the global economy. Congress will likely will approve the recommendations of Fed chief Bernanke and Treasury Secretary Paulson and authorize close to $1 trillion for a new government agency and program to by up all the bad debt in the country. Itâ€™s amazing how fast things can happen in Washington when those responsible for it realize that the proverbial you-know-what has hit the fan and splatter all over their vile and corrupt faces. You may also factor in the very real possibility of Congress approving even more that the $1 trillion figure requested so it can bail out homeowners. There will also be more industry bailouts, because now that the government kitty has been tapped, there will be no end to the number of industries holding out their hands for money.
Finally, as if the news could not get any worse, consider that a certain far-left progressive who would be President will tack on an additional 800 billion to 1 trillion dollars to these figures with new government programs.
It is time to act sensibly here and do something about this mess before we totally implode.
What can we do about it? For starters bombard your representatives with angry email. Flood their accounts. Flood their phone banks. If you scare them they will react, because for the most part, they are cowards. Then in early November ask yourself this question before you go to the polls: â€œIf two quasi-government agencies and a bunch or corrupt, rotten and unaccountable politicians got us into this mess, how will the same people and more government get us out?â€ Then vote.
Chad MacINNES is an independent conservative author who originally hails from Massachusetts and is now living in Orlando Florida with his wife and children. He is a former pilot for a large US carrier, a former police officer and a veteran of the US Army where, incidentally, he was cured of his disordered liberalism. He has studied politics and government, international relations, philosophy and theology. His blog may be found at http://freebornman.blogtownhall.com/. Chad is a frequent contributor to landofthefree.net and may be contacted via email at firstname.lastname@example.org.