Tuesday, September 30, 2008

WE Told You The Dems Hold Most of The Blame

Look in the archives links to the left, and you'll see about half a dozen articles on how the Dems set up this whole failure.

Again, Fannie Mae and Freddie Mac are organizations that were started by the government, spun off privately, and have always existed with an implicit guarantee that we the tax payers would always back them up if they failed. Well, they failed.

Fannie and Freddie provided all of the capital necessary to make all of these loans. Then they criminally lied to cover up their terrible accounting methods, they went after anyone who was a critic and represented a danger to their power, and then embarked on a gambit to increase the number of loans, by about $400 BILLION, that they gave to under-qualified borrowers, in the name of "affordable housing". Let's hear Nancy Pelosi address that part!

They failed because they had billions in income to buy the votes of Republicans and Democrats to keep them alive while they lied about their bad habits and bad balance sheets. But it was the Democrats who killed the efforts of oversight and disallowing Fannie and Freddie to buy all of these terrible loans and forcing them to increase their capital base. An example of that: if your home was worth $200,000,  do you think it would be safe to take out a $10 million loan against it? That's what Frank Raines is asking for when he states in the video below that Fannie Mae really only needed about 2% capitalization against all those trillions of "riskless" mortgages that they owned.

More at The Pantheon Journal.

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