There are good investments and there are bad investments. In what has to be one of the best investments of all time, Fannie Mae and Freddie Mac have donated over $126,000 to Barack Obama. And boy has it paid off. The Senate recently passed a financial reform act allegedly to rein in derivatives and eliminate “too big to fail” and unending bailouts. In pitching this reform, Barack Obama said
“Never again will taxpayers be on the hook because a financial company is deemed ‘too big to fail.”
And Obama added:
“Every day we don’t act, the same system that led to bailouts remains in place, with the exact same loopholes and the exact same liabilities. And if we don’t change what led to the crisis, we’ll doom ourselves to repeat it.”
The truth is, those words make sense. But in Obamaworld, the reality is always different. Democrats’ version of financial reform makes not a mention of GSE’s. For the last decade, Democrats have consistently blocked reform of Fannie and Freddie. Fannie kept buying up sub-prime mortgages, securitized them and then selling them off as investments. Smart people saw this stupidity and bought something called CDO’s- derivatives which were bets that at some point these high-risk mortgages were going south. One thing that would have been a great help in blunting the damage to GSE’s was to reform them. Chuck Hagel tried to do just that, including the creation of a powerful regulator and to limit the size of portfolios that could be bought by the GSE’s. In 2003, then-Treasury secretary Snow testified that the size of portfolios purchased by GSE’s be limited. Democrats also claimed to want reform of GSE’s. They just didn’t want it to mean anything. Democrats wanted a pit bull regulator – as long as it had no teeth. They resisted limits on portfolio size to assure that there were sufficient resources available so that the GSE’s could continue to buy risky mortgages. In 2004 Barney Frank said
“these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
In 2005 Snow again called for GSE reform and Harry Reid refused, saying
“…we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process.”
Democrats never stopped blocking reform of GSE’s. That tradition continues today. Democrats blocked the proposal to include GSE reform in the current financial reform bill by a 56-43 margin. And Obama’s Treasury has lifted the $400 billion cap on limits to Fannie and freddie, creating the ultimate endless bailout. It’s one heck of a return on the investment they made in Barack Obama.
We have financial reform of a sort- treating the symptoms and not the causes, as usual. The patient has a brain tumor and Dr. Obama and his colleagues are giving the patient aspirin for the pain. I can’t help but laugh when I read someone write that Democrats are serious about financial reform.
It’s a painful amusement:
Experts say the financial regulatory bill approved by the Senate last week, and a similar bill that passed the House, include loopholes and gaps that weaken their impact. Many provisions depend on the effectiveness of regulatory agencies — the same agencies that failed to foresee the last crisis.
Obama promised us that never again would we face unending bailouts for institutions which are too big fail, leaving us on the hook for it. Instead, we are on the hook for unending bailouts for institutions which Democrats have decided are too big to fail. “Never again” has an odd definition in Baracksburg.
You’d think I’d be used to it by now.
DrJohn has been a health care professional for more than 30 years. In addition to clinical practice he has done extensive research and has published widely with over 70 original articles and abstracts in the peer-reviewed literature. DrJohn is well known in his field and has lectured on every continent except for Antarctica. He has been married to the same wonderful lady for over 30 years and has three kids- two sons, both of whom are attorneys and one daughter on her way into the field of education.
DrJohn was brought up with the concept that one can do well if one is prepared to work hard but nothing in life is guaranteed.
Except for liberals being foolish.