The Quiet Conservative October 7, 2008
History Repeats Itself
First, the History Part:
One of the most egregious examples of the failure of the press was in the wake of 9/11. Jamie
Gorelick was placed on the 9/11 Commission. This body was empowered to find the root causes of
the worst terrorist attack on our country in it's two hundred year history. In her prior position as
assistant US Attorney General she had helped ensure the intelligence services were limited in their
abilities to share intelligence information with the infamous "wall memo." The goal by the
Administration wasn't to make America vulnerable, it was to prevent the investigation of Chinese
money being funneled by John Huang and Charlie Trie to the Democratic Party and the Clintons.
In the smoking wake of the fallen towers and damaged Pentagon, the race was on to build the cover
up. Tom Daschle made sure Jamie Gorelick was appointed to the commission. While in an honest
investigation she would be testifying before the committee, instead she was on it directing the path of
the investigation. Meanwhile a different type of cover up was also in progress. Sandy Berger, the
Clinton National Security Advisor, was busy stealing documents from the National Archive that could
have shown light on what the Clinton Administration did, or did not know or do, about the threat of
Muslim extremists. Both cover up efforts were to sanitize and insulate the DNC and the Clintons
from any responsibility for 9/11.
The national press was indifferent to the machinations, as to root out the true story would damage
their 'team.' Little follow up was done on the involvement of communist Chinese who were
funneling money to the DNC in return for restricted technology transfers and access to the White
House. The suspect Chinese fled to the mainland of China and the story died. The press proved its
lack of integrity and impartiality.
Meanwhile, Jamie Gorelick was rewarded with appointment to the Vice Chairman post at Fannie
Mae with Franklin Raines as CEO. There the two reaped millions in bonuses while Fannie Mae
overstated their earning to the tune of nine or ten billion dollars, in an accounting scandal that is just
now sinking the world economy.
Now the Present Part:
With the first bail out vote coming before the House Nancy Pelosi gave a speech blaming the
deregulation of the markets, lack of government oversight on behalf of the Republican
Administration, and the failed policies of President Bush. At the same time she heaped praise on
Barney Frank, the head of the banking committee with the following: “I must recognize the
outstanding leadership provided by Chairman Barney Frank, whose enormous intellectual
and strategic abilities have never before been so urgently needed, or so widely admired." The
speech was ill timed and ill conceived. Trying to make political hay for her party just before the
speech backfired. The bill was voted down. Quickly Barney Frank and Pelosi blamed the lack of
twelve Republicans for not voting for the bailout while ignoring the fact that ninety of their own
party voted against the bill.
The Senate returned a few days later and packing the pork on the bill, sailed it through and back to
the House. This time the bill passed. Nancy again took to the podium with a speech again praising
Barney Frank: "Under the leadership of our chairman, Barney Frank, as I called him on the
floor, a maestro, we were able to make improvements, working in a bipartisan way, making
improvements in the legislation, and then make more improvements in the legislation before
it came back to the floor today."
"The eye now is to the future. To shine the bright light of accountability on what is
happening in our financial markets so that it doesn't happen again. That accountability will
tell us how we got to this place and ferret out the abuses. That accountability will honor our
trust to the American people.
"Mr. Frank will be holding hearings on where we go from here, because we are about the
future. Mr. Waxman's hearings will be instructed as to how we got here -- that we know how
to avoid this in the future. It will be about accountability, it will be about regulation,
regulatory reform, which is essential. It will be about building an economy with a focus on the
middle class, where many more Americans will participate in the economic security of our
country."
Consider the following time line and explanation of the crisis from a post on the web site Free
Republic. The person posting under the pseudonym of "surfer" provided the following summary on
October 4th. He detailed the event in historical context:
"The rise and fall of our housing market and how did it happen?
Ok, we have heard a lot of talk back and forth on what caused the problems that led to the
economic meltdown this year. We have heard that it is both party's fault and that the Democrats
share the blame equally with others. Additionally people want you to believe that Glass-Steagal is the
main cause here.
What I am going to try to do is provide the core facts of this scenario all the way back to 1938 when
Fannie was created.
Before we start with the creation of Fannie Mae a couple of points need to be made.
MBS's are at the center of the problems with the sub-prime market. Mortgage backed securities have
been created to combine risky loans into traunches which then as a bundle are sold as an investment
instrument to various financial institutions.
It should be noted from a historic standpoint that between Civil War and WWII in this country there
were six failures of mortgage security schemes within this country. Economists of all shapes and sizes
if they just reviewed history and learned from it would have known we would have problems with
this. MBS's as a financial instrument alone are not the cause - they need an enabler.
The enabler for this meltdown is Fannie/Freddie and several Democrats hell bent on protecting this
scheme for their political gain.
After reviewing the facts you can decide on who is at fault and to what degree.
1938 Roosevelt (D) created the New Deal which Fannie Mae was created to provide an opportunity
of credit in a financial market where the "housing" market didn't exist.
NOTE: Many Great Depression Historians based on review of the cause and effects now conclude
with some level of certainty that the "New Deal" only prolonged the most serious effects of the Great
Depression.
A lot of people have forgotten that the DOW did not return to its pre-Great Depression levels until
1954 - think about that - if that were today it would mean we wouldn't be above 10,000 until 2035.
1968 Johnson (D) along with a Democratic controlled congress created one of the largest expansions
of government called the "Great Society" which included spinning off Fannie Mae as a quasi-private
organization. Even though it was now to be considered private it was always understood that the
government would back it - translation: Fannie could take higher risks than any other private
company because of the government backing.
1970 Nixon (R) Freddie Mac was created to compete with Fannie Mae
1977 Carter (D) created the CRA (Community Reinvestment Act) which provided for strong
oversight. Well that oversight was to force banks to extend credit to low income people regardless of
risk.
During the 80's and 90's Fannie and Freddie continued to grow but a very interesting event
occurred which was the beginning of the launch of bad people that Fannie and Freddie would hold.
A Thrift in Illinois wanted to merge with another bank. ACORN through legal means challenged the
merger on the basis that the Thrift was not providing easy enough access for low income based
loans. The Thrift countered in the lawsuit that it wasn't prudent business practice and the loans
would jeopardize the bank. ACORN prevailed through the courts to force banks in Illinois to allow
these low income loans to be made available regardless of how reckless it was in support of CRA.
You can only guess who was the attorney in Chicago who worked directly with ACORN to make
this happen. DING DING DING you guessed it - Barack Obama (D) himself.
This was actually a landmark victory for CRA because it literally opened up every Thrift in the
country to legal trouble if it didn't adopt the reckless provisions of CRA. Sub-prime lending was born
and one its parents is Obama.
During the 1990's Clinton (D) really blew the support for CRA wide open and lowered the bar even
more for more reckless loan giving. During the last few months of his administration they literally
mandated Fannie and Freddie were to increase the mix of high risk and reckless loans to the level of
50%. Yep that's right - 50% of their loans had to be crap.
Two of the biggest defenders for Freddie and Fannie for many years have been Frank (D) and
Schumer (D).
4/2001 Bush (R) during the budget request for the following year raised the first alarm about
Freddie and Fannie that there was potential trouble there. Dot.com has just busted and then 9/11 all
eyes unfortunately were elsewhere.
During 2002 WSJ Editorial page started writing stories warning of the impending disaster of Freddie
and Fannie. Each time the editorial staff attempted to interview the key people either in Freddie or
Fannie or close organizations like CountryWide they were told to butt out and in some cases were
threatened. One of editorials even stated that Freddie and Fannie was going to be our next Enron.
2003 Bush (R) called for significant oversight on Freddie and Fannie. John Snow even made a
speech directly on the floor calling for strengthening of the oversight of GSE's particularly Freddie
and Fannie. Barney Frank (D) led the charge to kill any oversight on Freddie and Fannie and using
his now becoming famous lines - nothing is wrong with Freddie and Fannie.
2004 Freddie and Fannie were caught cooking their books which mean they were making things look
a lot rosier than they really were which in turn allowed picaroons like Reins (strong D supporter) the
ability to pocket 10's of millions of dollars in bonuses.
2/2004 Greenspan even called for oversight of Freddie and Fannie.
4/2005 Schumer (D) took major steps to block any new oversight on Freddie and Fannie - once
again stating everything is great in the housing market - why does anyone want to legislate something
that is working so well?
4/2005 Bush (R) pushed for more oversight on Freddie and Fannie - you can see the famous
YouTube clips now of all the Democrats (D) blowing off ALL calls for any oversight of Freddie and
Fannie.
The Senate Banking committee answered the call of President Bush (R) to adopt much stronger
legislation which many view in hindsight that if this legislation had passed on the Senate floor it would
have stopped the meltdown of this year. The Senate Banking committee voted on party lines to
adopt the legislations ALL Democrats (D) on the committee voted against the new legislation and all
Republicans (R) on the committee voted for it.
When it went to the Senate floor the Democrats (D) successfully blocked a vote on it. - The
legislation died.
2006 Another Republican bill co-sponsored by McCain (R) hit the floor with McCain specifically
warning all members that Freddie and Fannie posed a significant threat to our financial markets and
ultimately the taxpayer. He clearly warned them of the impending disaster.
The Democratic (D) controlled killed the legislation. The bill voted down party lines. Democrats (D)
against, Republican (R) for.
By the time 2008 came around Freddie and Fannie held over $4 trillion dollars worth of mortgage
paper.
In July 2008 Barney Frank (D) told everyone that Freddie and Fannie were fine and going forward
everything was going to be great."
With Chris Dodd in the Senate and Barney Frank in the House pushing socialist lending policies in
lieu of sound banking practices, the music eventually stopped. In this game of musical chairs it was
the taxpayer who was left without a seat.
Having the world economy teeter on the brink of collapse right before the election isn't a good
thing politically. So Barney Frank will head the investigation into how the Republicans caused the
disaster. The same way Jamie Gorelick helped steer the blame away from the Democrats after 9/11.
With the press in full compliance the polls have shown the majority of Americans are uninformed or
misinformed on the actual course of events. Senator Obama has even seen a boost in the polls.
There is every likelihood that Americans are about to see history repeat itself with the exoneration
of the people responsible for the crisis, because the people responsible are running the investigation!