Repost: Democrats Caused Wall Street Debacle

This was originally posted in October 2008. Just a stroll Down Memory Lane for some trolls:


The Democrats are up to their eyeballs with responsiblity 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.

Rahm Emanuel In Freddie Mac During Scandal

Chief of Staff desigate Rahm Emanuel was on the Board of Directors of Freddie Mac when the firm was hit by a scandal, it has been revealed.

According to ABCNews.com:

President-elect Barack Obama's newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot "red flags," according to government reports reviewed by ABCNews.com.

President-elect Barack Obama's newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot "red flags," according to government reports reviewed by ABCNews.com. According to a complaint later filed by the Securities and Exchange Commission, Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002.

Emanuel was not named in the SEC complaint but the entire board was later accused by the Office of Federal Housing Enterprise Oversight (OFHEO) of having "failed in its duty to follow up on matters brought to its attention."

In a statement to ABCNews.com, a spokesperson said Emanuel served on the board for "13 months-a relatively short period of time."

Emanuel was appointed to the Board by Bill Clinton and served there until he resigned in May 2001 to run for Congress.

The Associated Press notes:

Clinton appointed Emanuel to mortgage giant Freddie Mac's board, a post that paid him at least $292,774 in director's fees, according to a financial disclosure report Emanuel filed in 2002 when he ran for Congress. Emanuel served on the board when Freddie Mac misstated its earnings by $5 billion for 2000-2002. When the problem was uncovered in 2003, three top Freddie Mac executives were forced out.

And the Wall Street Journal writes:

Mr. Obama's choice of Mr. Emanuel to lead his White House staff through the economic crisis symbolizes the awkward balancing act that Democrats will face as they reshape the financial industry that they have also cultivated for political support.

Mr. Emanuel earned $16.2 million in a two-year stint working in Chicago for investment-banking firm Wasserstein Perella & Co. He also served on the board of Freddie Mac, the mortgage giant that was nationalized this year in the financial crisis.

It is interesting that Barack Obama seems to surround himself with Freddie Mac and Fannie Mae alumns. While Emanuel has not been charged with any wrongdoing, it certainly stinks that people associated (i.e., Jim Johnson, Jaime Gorelick, Frainklin Raines) with the failed two mortgage firms were a part of his campaign or now being selected to be a part of his administration.

It also underscores that the financial meltdown can be laid at the feet of the Democrats.

Rep. Artur Davis: "We Were Wrong!"

Rep. Artur Davis, Democrat-Birmingham, Alabama, who was in the video from 2004 of Democrats fighting Republican efforts to fix Fannie Mae issued a statement of apology today admitting, "We Were Wrong!" Davis wasn't as vocal or obnoxious as Rep. Maxine Waters.

“Like a lot of my Democratic colleagues, I was too slow to appreciate the recklessness of Fannie Mae and Freddie Mac. I defended their efforts to encourage affordable homeownership, when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit that when it comes to Fannie and Freddie, we were wrong. By the way, I wish my Republican colleagues would admit that they missed the early warning signs that Wall Street deregulation was overheating the securities market and promoting dangerously lax lending practices. When it comes to the debacle in our capital markets, there is much blame to go around for both sides.”

In the video, Davis said, "The concern that I have is you're making very specific, what you have correctly acknowledged, broad and categorical judgments about the management of this institution, about the willfulness of practices that may or may not be in controversy. You've imputed various motives to the people running the organization. You went to the board and put a 48-hour ultimatum on them without having any specific regulatory authority to put that kind of ultimatum on 'em. Uh, that sounds like some kind of an invisible line has been crossed."

Thus far, Davis is the only Democrat who accepted responsibility in this mess. Kudos to him. I disagree that Republicans missed the warning signs and deregulation had nothing to do with the debacle. He also voted yesterday for the bailout bill.

Bailout Fails In House Vote!

Taxpayers scored a big victory today when the House failed to pass the bailout bill by a vote of 228 to 205.

Speaker Nancy Pelosi immediately blamed Republicans for the bill's failure. During the debate before the vote, Democrats badmouthed the GOP over the crisis (despite the fact that this crisis is Democrat-made) and Pelosi gave a scathing speech at the end of the debate against Republicans. How do they expect Republicans to support them if they are being badmouthed? She definitely dissed too many people.

Minority leader John Boehner said that the bailout would have passed, but "had it not been for this partisan speech the Speaker gave on the floor of the House." He lamented that just before the vote came up, "... the Speaker had to give a Partisan voice that poisoned our caucus." Looks like Pelosi's mouth took her to a place that her feet couldn't get her out of.

Apparently, Pelosi was also unable to strongarm enough Democrats to pass the bailout as 40% voted against it. Over 90 of them voted against the bailout. No doubt worried about their re-election.

On a side note: Rush Limbaugh today played audio from a C-SPAN video (on YouTube) of Democrats fighting against Republican efforts in 2004 to reform Fannie Mae. The Democrats (led by Rep. Maxine Waters) played the race card and called GOP efforts a "political lynching of Franklin Raines." Check it out! Video here!

UPDATE: YouTube pulled the video (small wonder, their parent company is an Obama supporter) but another site has it and I edited the link above accordingly.