Posted by
Tom Snyder on Saturday, October 18, 2008 12:00:00 AM
By Dr. Tom Snyder, Editor
Sen. John McCain last week blamed Sen. Barack Obama
and his Democratic “cronies” in Congress for lighting the match that started
the economic collapse in America, including the current stock market crash, the
current credit crunch and the failure of America’s banking system.
McCain pointed out in his second debate with Obama that Obama and Democrats like Sen. Chris Dodd (D-Mass.) and Rep. Barney
Frank (D-NY) blocked attempts by he and other Republicans to reform Fannie Mae
and Freddie Mac, the two largest mortgage institutions in the country.
Backed by the government, Fannie Mae and Freddie Mac
are “government sponsored enterprises” or GSE’s.
McCain noted that Dodd and Frank, who currently head
the banking and finance committees in the Senate and the House of
Representatives, helped stop Republican reforms in 2005. They have also been
accused of stopping reforms pushed by Republican President George W. Bush and
his administration in 2003.
McCain also noted that Obama got the second highest
amount of campaign donations from Fannie Mae and Freddie Mac “in history” (Sen.
Dodd got the highest).
This week, Republican Sen. Jon Kyl of Arizona attacked
Democrat Sen. Chuck Schumer of New York as another influential Democrat who
stopped Republican reforms of Fannie Mae and Freddie Mac.
Republicans like McCain and Kyl have complained that
the Democrats supported irresponsible fiscal policies at Fannie Mae and Freddie
Mac of giving cheap mortgage loans to poor people who couldn’t pay them and
then selling the bad mortgage loans as securities to other financial
institutions to pad Fannie Mae and Freddie Mac’s income. Fannie Mae and Freddie
Mac’s policies also encouraged other, private, financial institutions of doing
the same thing.
McCain said Tuesday that Fannie Mae and Freddie Mac
lit the fuse that caused the current massive financial crisis, banking failures
and credit crunch, affecting small businesses that need to borrow money
periodically to pay their employees before sales revenue arrives.
Obama responded that he warned about the problem in a
letter, but Frank accused the Republicans of being racist because many of the
loans went to poor blacks and Hispanics, including illegal immigrants.
In 2003, Democrat Rep. Maxine Waters of California
said the system at Fannie Mae and Freddie Mac “wasn’t broke.”
President Bill Clinton recently admitted that the
Democrats resisted Republican efforts to tighten the federal government’s
oversight of Fannie Mae and Freddie Mac.
Fannie Mae was created by Democrat President Franklin
Delano Roosevelt in 1938 as part of his socialist “New Deal” programs and later
expanded by Democrat President Lyndon B. Johnson in the late 1960s, Democrat
President Jimmy Carter in the late 1970s and President Bill Clinton in 1999.
Freddie Mac was created in 1970 under Republican
President Richard Nixon to stop Fannie Mae from its monopoly of the housing
market, but expanded by President Carter in the late 1970s and President
Clinton in 1999.
- Sources: Baltimore Sun 08/22/08, Amity Shlaes of Bloomberg.com 09/10/08, New York Times 09/30/99, History News Network 12/08/03, AudacityofHypocrisy.com 09/18/08, and http://www.youtube.com/watch?v=3p1Wc2NFa3w 09/27/08.