Democrats and the Housing Crisis

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After working in the commercial banking business for most of my career, I've observed that securitization of loans was only a vehicle to spread the problem. Yes as their was a conflict of interest between greedy rating companies, like Standard and Poors and the brokerage houses that bundled the loans into securities and sold them to investors, etc. The systemic problem of the real estate crisis originated with the corruption of Fannie Mae who originated over $1.5 trillion dollars of sub-prime loan--over one half of then should have never be purchased by the mortgage giant. The break down of the system had a political component as well as a financial component. The O.C.C. the agency that examines banks and the S.E.C the agency the regulates the financial markets failed as they did during the 1980's (The Savings and Loan Crisis) and the 1990's (The Dot Com debacle). The regulators failed again in during this most recent crisis to enforce rules, but instead sided with risky lending and investment policies--the repeal of the GlassStegal Act and repealing the "uptick" rule on short trading. As non-institutional lenders like Merrill Lynch. Leman Bros., and Bear Stearns decided to become lenders, a certain lack of experience in lending did exacerbate the problem. Many financial experts started waiving red flags that if lending and securities regulations were not corrected, a financial meltdown could occur. Key Democrats look the other way and disagree--Barney Frank (D) Mass-Chairman House Banking Committee, Christopher Dodd (D)Con., Chuck Shumer, (D) N.Y and Barack Obama (D)Il. These members came out publicly and endorsed Fannie Mae, stating the company was on sound footing. It was the Democratic leadership in their respective committees that squashed any meaningful attempt to restructure Fannie Mae. They came out openly and criticized those who were trying to warned the government and the public at large. Later it was discovered Fannie Mae had "cooked the books" and mislead thousands of investors including the so-called greedy brokerage houses and banks who purchased Fannie Mae securities for safety and to improve their balance sheets. What a surprise when they found out their securities were practically worthless. The mindless greed of the market did assist in the crisis were presently in, but it also took the enablers of government regulators and selected congressman and senators to help perpetrate the fraud. Of course any attempts to place the blame in its proper place is considered partisan if an opposing party loyalist happens to be in disagreement. Final note -- To their credit, President Bush and Senator John McCain (D)AZ did lead the charge by supporting a resolution to restructure Fannie Mae. The Democrats subsequently killed the bill in committee. President Bush's responsibility is not holding SEC Chairman Christopher Cox accountable on the securities side for not monitoring the investment markets closely enough -- Wise up.

Bill Dombrosky - Go Aztecs of FL 3:57PM December 31, 2008

Credit Default swaps conatining instruments other than the toxic mortgages pushed for by Dems are doing just fine. Get real. Dems caused the whole thing, and now you cowards can't cowboy up (not surprising, at all) and take your blame.

Joe of IL 4:11PM December 30, 2008

Barney Frank, Chris Dodd, Maxine Waters/ look it up they all demanded housing for the poor with lax scrutiny/ Dodd got a sweetheart of a deal on a loan, and does Rangel hablan espanol?

royguercio of NY 10:33AM December 23, 2008

they should take these two out and tie them down and cane their nakd bottoms in front of the Lincoln Memorial and broadcast it on PBS

of 2:22PM December 22, 2008

So I am to believe that a housing crisis with a loss value of a few hundred billion, is the sole cause of a global economic meltdown with a loss value potential in the tens of trillions. So if we scale that back for purposes of perspective, your saying that two gse's holding (the equivalent of) $200 can bring down a crowd of privately owned banks holding $50,000.
I think the economic collapse has more to do with shortsightedness and irresponsibility than partisan politics.

Christopher Nelson of NV 2:14PM December 22, 2008

When American People have more "TRUST" in their politicians than they do in the "free" press.
We have a two party political system and are moving towards a two sides of the aisle press.
We can change the term Journalism Schools into Cheerleading Schools.
It’s amazing that they sit in their big offices and private jets wondering why the readership is down, clueless!

Larry of CA 11:45AM December 22, 2008

The housing and credit crisis was not created by Democrats demanding loans for low-income people to buy houses and cars.
It was created ENTIRELY by Wall Street securitization of loans into bonds WHERE THE REAL LENDERS (BOND BUYERS) DID NOT AND COULD NOT ASSESS THE RISKS ASSOCIATED WITH THE PARTICULAR BORROWERS. The rating agencies were in collusion and put investment grade ratings on what should have been junk. Merrill peddled them to everyone as "safe" investments. Some investment banks leveraged 40 to 1.
Democrats caused it, they say. Pure B.S.

Muser of 10:11AM December 22, 2008

YOU MEAN THE NY SLIMES LEFT OUT INFO THAT IS DAMAGING TO DEMOCRATS!!!!

ROY GUERCIO of NY 9:54AM December 22, 2008

Unfortunately, we will never see a quality article detailing the political dealings of Fannie and Freddie and how tainted a number of Democrats are by those dealings. If the NY Times could be intellectually honest and not act as a propaganda machine for a leftwing political agenda, we might actually get a story worth reading versus a politically motivated smear campaign trying unfairly to attach the housing crisis to the Bush Administration.

of NY 9:31AM December 22, 2008