Via Jack Of All Trades blog, by Master Of None.
From the N.Y. Times Sept 2003:
“The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under 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. ”
But, Democrats didn’t see the need:
‘’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. Representative Melvin L. Watt, Democrat of North Carolina, agreed. ‘’ ”
Anyone who asked for regulation that kept banks from lending to people who couldn't afford houses were accused (by Democrats -- look up the history of the "Community Reinvestment Act") of racism. As if a computer and a credit history could tell skin color or country of origin. Thus, these bad bets infected other good loans through "bundling" in an effort to limit risk.
This crisis has been brewing since the Carter administration, and was propelled by loosening reigns during the Clinton years.
The Democrats, for the most part ARE to blame for this mess.
BUT, why would anybody believe The President when he crys wolf? He has been wrong on practically everything else.
One last note, from poster "Paul" at Reason Mag.Blog:
"The only 'credit crunch' that exists- and even that is being generous to the 'credit crunchers' is interbank lending. Anyone with decent credit can still get a loan, just like you could yesterday, a month ago, two years ago. Banks are still lending-- and some bank managers have gone to the media saying as much. However, they have been drowned out by the din of "credit crunch!". In fact, I'm thinking that the words "Credit Crunch!" can now finally replace "9-11!".
There has been a slow-down in interbank lending-- tightening of terms, shortening of timelines, etc. This, however is probably a necessary correction, and allows the market to adjust to new lending mechanisms. The fact that the market is acting cautiously is precisely why the market is working like a well-oiled clock."
"... We should all look especially askance at the hurry-up offense coming out of the White House, the Congress, and the media. Bush is desperate for a legacy that doesn't involve quagmires and broken bodies; Congress is trying to give voters some goodies; both McCain and Obama want to show that they can lead, dammit, and please all the people all the time. And the press is desperate for copy and for change."
And so, we "mortgage" the future. Or, in reality, which DC doesn't deal in, we flush it....