If you’ve been watching CNBC, you’ve probably seen those ads slamming Sen. Dodd and Rep. Barney Frank for falling asleep at the wheel, leading to the implosion of Fannie and Freddie. John McCain has also tried (unsuccessfuly) to score points against Obama with it. We suspect his problem is that even if all the complaints were true, it’s too complicated for most voters to appreciate. Better to just stick to that “fat cats” and “greed” rhetoric.
Nevertheless, the idea that it’s just Democrats to blame, seems ahistorical.
AP: Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.
In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI’s chief executive is Doug Goodyear, whom John McCain’s campaign later hired to manage the GOP convention in September.
Freddie Mac’s payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel’s bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.
In the midst of DCI’s yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.
Now you may wonder whether there’s some motive for this story to be published now, and it’s convenient that Sen. Hagel is the good guy in this story, since he’s now the media’s favourite Republican Senator (that used to be McCain of course). It seems safe to assume that politicians of all stripes lacked the will to do anything about the two entities before it was too late. Beyond that, it’s doubtful that even the critics of Fannie and Freddy actually appreciated the extent of the issue.
Reason’s Nick Gillespie has a warning on how this turns out next:
Look past the partisan stuff and read about how lobbying works in DC and I think all but the most hardened ideologue will agree that the Fannie Mae/Freddie Mac story perfectly exemplifies why the government should not be in the business of backing particular entities (yeah, yeah, implicitly!).
And yet here we are, with the government backing major financial institutions once again. As the pathetic AIG story plays out, it’s obvious that the government has little stomach to discipline the firms it’s propping up.