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Columnist Dominic Lawson argues in today's edition of The Independent that the lion's share of responsibility for the current financial crisis in the US falls at the feet not of the Bush Administration or Wall Street, but rather with Democratic leaders in Congress for failing to increase regulatory control of Fannie Mae and Freddie Mac. He writes:

"What is the proximate cause of the collapse of confidence in the world's banks? Millions of improvident loans to American housebuyers. Which organisations were on their own responsible for guaranteeing half of this $12 trillion market? Freddie Mac and Fannie Mae, the so-called Government Sponsored Enterprises which last month were formally nationalised to prevent their immediate and catastrophic collapse. Now, who do you think were among the leading figures blocking all the earlier attempts by President Bush – and other Republicans – to bring these lending behemoths under greater regulatory control? Step forward, Barney Frank and Chris Dodd."

QUESTION: Where do you think the blame lies for the crisis? And do you think the responsible party will suffer at the polls on November 4th?

Comments

( Comment )
(no subject) - nebulosity - Oct. 3rd, 2008 04:04 pm (UTC)
randy_68 wrote:
Oct. 8th, 2008 12:42 am (UTC)
Actually the administration tried 17 times in the past 7 years in some form or another and was rebuffed by the Democrats almost at every turn (read: Frank, Dodd, and cohorts.)

McCain tried in 2005 with 5 other GOP'ers and again was rebuffed by Barney Frank and company.

http://www.usnews.com/blogs/barone/2008/10/06/democrats-were-wrong-on-fannie-mae-and-freddie-mac.html

And yes, it's the US News but the author stays primarily on target and factual.

Barney Frank and crew should be tossed out for negligence and obstruction. Also go to youtube and search democrats and Fannie Mae.
jeffxandra wrote:
Oct. 3rd, 2008 04:14 pm (UTC)
The fault lies with the mortgage brokers themselves and the deregulation that allowed them to do it.

Neither Freddie nor Fannie forced mortgage brokers to ignore or not even bother to check credit history or income qualifications. Neither Freddie nor Fannie created "no money down" mortgages and ridiculous Option-ARMs. Neither Freedie nor Fannie encouraged corrupt appraisals to inflate the value of homes. Neither Freddie nor Fannie forced banks to do Piggy Back Loans or anything else.

You can fault Clinton for signing the Gramm bill into law, absolutely. But it has been a consistent Republican pattern since (at least) the Reagan administration of "all regulation is bad." That concept of deregulation is what caused this crisis, not Freddie, not Fannie. Assertions to the contrary are laughable in the extreme.
tyskkvinna wrote:
Oct. 3rd, 2008 04:15 pm (UTC)
I don't think the blame lies on any single person or party. It's been a bad combination of circumstances, bad decisions, awkward balances of power and people looking out only for themselves.

There are Democrats at fault, Republicans at fault.

So let's stop pointing fingers at whose fault it was and fix the problem.
mejane_83 wrote:
Oct. 3rd, 2008 04:24 pm (UTC)
Agreed.
batbuds wrote:
Oct. 3rd, 2008 05:01 pm (UTC)
Thank you for setting party interests and bias aside... this is the truth... but it is not only government... the banks that practice shady accounting and lending practices, and the individuals that through greed, pride, or whatever; overextended themselves purposely all need to take an equal share of the blame.
tyskkvinna wrote:
Oct. 3rd, 2008 05:10 pm (UTC)
It's definitely not solely a government cause.
mightyafrodite wrote:
Oct. 3rd, 2008 07:01 pm (UTC)
Well said.
brennakimi wrote:
Oct. 7th, 2008 02:06 pm (UTC)
quite.
grace_om wrote:
Oct. 3rd, 2008 04:40 pm (UTC)
There is plenty of blame to go around, and that kind of partisan finger-pointing accomplishes NOTHING.

I do hope there will be proper investigations. Accountability, I want some. At the very least, there must be a careful, non-partisan examination of the policies that resulted in this mess to avoid repeating the same mistakes!
s1ide wrote:
Oct. 3rd, 2008 04:55 pm (UTC)
Personally I put the blame on a lot of people, greedy corporations, property appraisers, banks, home buyers, the education system, government, and the way the typical American handles their financials.

I agree to some point that we should stop pointing fingers but I also think it's essential to know the main causes of why we are in this mess in the first place so we can fix it, then the smaller attributing causes so we can prevent it from happening again.
letitshine wrote:
Oct. 3rd, 2008 06:04 pm (UTC)
The motive was greed. The policy was artificially depressed interest rates by THE FEDERAL RESERVE BANK.

Now, the Dems did support government influence of loans to people with less than perfect credit and "minorities." However, the republicans also supported deregulation. My observations is that, when a government makes special requirements on business, it should then make regulations towards ensure their success.

However, I disagree with both sides. I feel a free market should not be regulated nor required to meet certain demands by government. In my observation, this may not have been as big of an issue had neither side been so short sighted in their demands. That said, the fact remains that NONE of this would have been made possible without the fed artificially depressing interest rates.
redvodka wrote:
Oct. 3rd, 2008 07:48 pm (UTC)
Dem and Rep both at fault
There are enough blame to go around in this crisis. Democrats did make a mistake in not endorsing Republican attempts to regulate the lending behemoths. But at the same time, Republicans can be faulted for endorsing Wall street as well and being so lenient to their risky behaviour. At the same time, can you really fault these lending institutions for risky investments? Taking risks is ingrained in all forms of life, even when we are born as babies. Taking our first baby steps towards walking normally is a risk. Homeowners, buying the homes they cannot really afford but because of investment returns is a risk. Are they all greedy? Not really. I think the lesson learned here is that we should still take risky moves, But do your homework first and not rush into things! Look at Warren buffet, he invests based on research, research and research.
millenium_king wrote:
Oct. 3rd, 2008 08:06 pm (UTC)
This entire thing is almost entirely a Democrat fiasco. Fannie May and Freddie Mac were the lynchpins to the collapse and they collapsed, not because of under-regulation, but because of over-regulation. The Community Development act passed in the Carter administration was expanded in the Clinton administration. This act forced banks to give loans to the "underprivleged" - but had the effect of giving loans to people who could not pay them back. Worse yet, it created an environment where unscrupulous lenders could prey on the poor by giving them government sanctioned, and very dangerous, sub-prime loans. In fact, the Community Development Act punished banks that didn't!

Secondly, Franklin Raines was White House Budget Director under Clinton. He pushed for all the laws that forced Fannie and Freddie to make bad loans. Then after the Clinton administration he became CEO of Fannie Mae! Eventually he walked away with $100 million and a cloud of ethical suspicion. Now he's Obama's economic advisor!

Finally, the Democrats are so hell bent to bail Fannie and Freddie because they are MASSIVE contributors to Democrat campaigns - with Barack Obama as the #2 recipient! Both of these organizations are Democrat piggbanks - they just want them filled back up!
randy_68 wrote:
Oct. 8th, 2008 12:48 am (UTC)
Ahh.. Someone who did the research.. Nice summation!
zumayabooks wrote:
Oct. 3rd, 2008 09:28 pm (UTC)
There's no question where the blame lies
In 2004, the Securities and Exchange Commission abdicated its oversight responsibilities and allowed large investment companies to spend down their required capital reserves by rescinding the rule that prohibited it. And allowed the companies to police themselves.

I believe the operative phrase is "letting the inmates run the asylum."

That's not to say the previous administration didn't make fumbles as well, but the current situation is the direct result of that decision--and an prime example of what happens when a free-market ideologue is placed in charge of a regulatory agency established for the purpose of preventing this kind of mess and given carte blanche.
greenpartyfan wrote:
Oct. 4th, 2008 06:58 pm (UTC)
It was both the Democrats and Republican's fault
Actually, if you look up the facts, and if you manage to find them, I have to agree with Millenium_king.

Finally, the Democrats are so hell bent to bail Fannie and Freddie because they are MASSIVE contributors to Democrat campaigns - with Barack Obama as the #2 recipient! Both of these organizations are Democrat piggbanks - they just want them filled back up!"

I would also like to say that just if both organizations made plans to exclude 3rd party voices from supposedly "Open" debates, I have no problem believing that Joe Biden could lie any further. It's obvious both only wants to cover up their issue and won't talk about the nitty gritty details of lost lives.
millenium_king wrote:
Oct. 6th, 2008 03:04 pm (UTC)
Re: It was both the Democrats and Republican's fault
Agree. Especially about Biden being a liar.
cnst wrote:
Oct. 5th, 2008 12:18 am (UTC)
> And do you think the responsible party will suffer at the polls on November 4th?

Nope, it doesn't look like it will so far. Unless more people vote independent. Ralph Nader, for example, still only gets about 7 or 8 percent at most. Unless he's allowed to debate with the parties who are responsible for the crisis, he's unlikely to get much more votes. See this, for example: The OBAMA GIRL and RALPH NADER Show!
sandylyons wrote:
Oct. 8th, 2008 03:38 am (UTC)
When big companies have no oversight, greed and coruption are allowed to run rampant...human traits both and not subject to partisan politics.
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