5th Anniversary: Democrats Caused Wall Street Debacle

Since the media is commemorating the fifth anniversary of the start of the financial crisis, this is a re-post on why it all happened and why we still haven't recovered.

This was originally posted in October 2008. Just a stroll Down Memory Lane for those yo-yos who blame George W. Bush:


The Democrats are up to their eyeballs with responsibility for the current crisis on Wall Street over Fannie Mae and Freddie Mac. Barack Obama was the no. 2 recipient of campaign donations from Fannie Mae (Sen. Christopher Dodd was no. 1).

Two former CEOs of Fannie Mae are now on Obama's staff as economic advisors: Franklin Raines and Jim Johnson. Those two raked in millions of dollars for themselves.

Another noted Democrat was involved (from Michael Reagan's article, link below):

Jamie Gorelick, an official in Clinton’s Justice Department — the woman who built the “wall” that prevented the FBI from targeting terrorists before 9/11 — worked for Fannie Mae and took home $26 million.

Gorelick should be familiar to us from the 9/11 Commission Report as she was the one responsible for keeping the CIA from sharing terrorist data with the FBI before 9/11 thanks to her wall.

The Wall Street Journal has a compendium of articles warning of the debacle and the involvement of Democrats: Wall Street Journal Compendium

The Obama campaign is currently trying to blame Republicans for this crisis, but that won't fly as the real facts are now coming out. In fact, McCain warned of a possible crisis (source: Michael Reagan):

Obama brazenly blames John McCain and the GOP for the current Wall Street mess when it’s clear none of it was due to Republican policies. The truth of the matter is that it was McCain and three GOP colleagues who sought to reform the government’s lending policies three long years ago after the Bush administration had failed two years earlier. On May 25, 2006, McCain spoke on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005, and warned against the debacle we are now facing if it failed to pass.

He told the Senate that a report by the Office of Federal Housing Enterprise Oversight charged that “Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives.”

McCain warned, “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”

McCain predicted the entire collapse we now are suffering through. He stressed the falsification of financial records to benefit executives, including Obama advisers Franklin Raines and Jim Johnson.

Jonah Goldberg at National Review Online writes:

The current financial crisis stems in large part from the fact that people who shouldn’t have been buying a home, or who bought more home than they could afford, now can’t pay their bills. Their bad mortgages are mixed up with the good mortgages. And thanks in part to new accounting rules set up after Enron, the bad mortgages have contaminated the whole pile, reducing the value of even stable mortgages.

Of course, there are other important factors at work here, having to do with changing technology among other things. And even if the bad mortgages weren’t in the system, we’d still have the hangover from the end of the housing boom. But the financial system could have handled that with the usual corrections. The biggest dose of poison entered the financial bloodstream through Washington. And some people warned us. In 2005, Fannie Mae revealed it overstated earnings by $10.6 billion and that it didn’t really know what was going on. The Bush administration pushed for reforms, but those efforts were rebuffed by Congress, with Democrats Barney Frank and Christopher Dodd taking point, because Fannie and Freddie have spent millions in campaign contributions.

In 2005, McCain sponsored legislation to thwart what he later called “the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole.”

Obama, the Senate’s second-greatest recipient of donations from Fannie and Freddie after Dodd, did nothing.

Meanwhile, Raines, the head of a government-supported institution, made $52 million of his $90 million compensation package thanks in part to fraudulent earnings statements.

Hopefully, people will remember this when they go to the polls in November.

To see Michael Reagan's full article:
Michael Reagan: Democrats Own Wall Street Debacle

To see Jonah Goldberg's full article: Wall Street Fat Cats Aren't At Fault This Time

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Since the above was posted, a YouTube video surfaced showing Barney Frank and Maxine Waters attacking "whistleblowers" who were sounding the warning over Fannie and Freddie with Waters injecting the "race card." Just do a search at YouTube for Barney Frank and Maxine Waters along with Fannie and Freddie and you'll find it.