Monday, October 20, 2008

Who's Responsible For the Financial Crisis?

If you’re a right wing pundit, you’ll still be bleating that the market meltdown was the result of Wall Street pulling it’s money out of stocks in fear of an impending Obama Presidency.

Actually, what now surfaces as reported by Yahoo, is a GOP construction that is so stinky I wouldn’t touch it with a barge pole. Freddie Mac and Fannie Mae allegedly paid DCI, a Republican Consulting firm more than $2 million in order to scuttle legislation that would have led to regulation of the mortgage markets and would, in retrospect, have prevented much of the housing and therefore, credit crisis.

Ironically, the bill that DCI was targeting was written by Chuck Hagel R-Nebraska. The Bill was preceded by a letter written by Chuck Hagel and 25 other senators; here is an excerpt:

"If effective regulatory reform legislation ... is not enacted this year, 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,"

Talk about foresight. To be fair to the Republicans, when the bill was sent to the Senate Banking, Housing and Urban Affairs Committee, all Republican members of the committee voted for it, whilst the Democrats opposed it. That was back in 2005 and that was when FM and FM started using DCI’s services to target Republicans to oppose such legislation.

DCI's chief executive by the way is Doug Goodyear. John McCain's campaign later hired him to manage the GOP convention in September.

Why this is funny is because one of the illogical lies that McCain has been spreading about Obama is that the latter had taken advice from the heads of FM & FM. What McCain fails to tell his supporters is that McCain's campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie Mac since 2000. In December, Freddie Mac contributed $250,000 to last month's GOP convention.

In the end, the efforts to kill the bill were successful as nine of the targeted Republicans opposed it. Again to be fair, had the Democratic Senators backed it unanimously, it would have passed.

The amazing upshot of all this is that Freddie Mac CEO Richard and Daniel Mudd, President and Chief Executive Officer of Fannie Mae Syron pocketed nearly $19.8 million and $12.21 million in compensation last year respectively, whilst people lost their homes because of the deregulated market.

These are the people who pulled this scheme out of their butts out of sheer greed. The result of their actions are tens of thousands of destitute families across America – the very ones that the GOP is terrified Obama might want to try to help should he become President.

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