Waxman Digs Into Moody's, S&P With Internal Docs

Reader Comments
Back to blog

It's regrettable that our policy discussions actively avoid history lessons.
Anyone who thinks this is a crisis, an sudden event that happened over the course of two years hasn't looked at the history of financial services, government regulation or public policy. The Tulip Frenzy of 1637, the Mississippi and South Seas Bubbles of 1760, and the many bubble and busts of the industrial revolution were all brought about by ignoring danger inherent in offering credit to those who cannot collarotralize it. Modern investment banks are built upon shifting collateral which leads to rating ephemeral notions of value, not building real collateral or financing products, but derivatives - betting, really - on bets on bets on a small portion of products.
Adam Smith, hero of supply siders and conservatives warned that unregulated capitalism would result in the ruin of capitalism through condensing ownership of funds and funding processes. Smith also believed that labor and invention were inseparable from the monetary and real estate capital that fueled the market.
Resorting to party lines and sound bites misses the point. It wasn't Fannie or Freddie; they were small potatoes. All the investment banks and mortgage brokers and rating agencies knew there was no there there, but there was money to be made by getting people to believe there was something valuable at the bottom of the pile of crud. There wasn't. There isn't. No bailout can fix the recurring problem of greed.

M. Cathering of CA 6:35PM October 27, 2008

Henry Waxman is a dispicable party hack that could care less about the reasons for this world-wide meltdown that was created in large part by GSE Fannie and Freddie, the Democrat party's favorite piggy bank.
Waxman should step down immediately--his committee never had this looming nightmare in their cross-hairs. All the committee was concerning itself with the past 2 years was Climate Change and War Crimes by Bush and Cheney
The real war crime has been committed by the looney libs in the Democrat party. Vote all dims out on Nov 4th--our very survival depends on it

faldo of CA 1:38PM October 24, 2008

So, it's pretty obvious that Waxman and the democrats will go to any length to avoid accepting any responsibility for the financial meltdown. Unfortunately for Henry, the cat is already out of the bag. the democrats have primary ownership of this problem as they were the overseers of the regulators for the past 2 years. 2 Years ago, voters voted for change and the democrats took over. What did 2 years bring?
- The biggest financial failure ever, thanks to Barney Franks, Chris Dodd and others. Check out the ridicule the regulators got in 2005 in the youtube videos from cSpan. Barney Franks, Greg Meeks, Maxine Waters and other democrats RIDICULED the regulators and the republicans for suggesting tightening Fannie Max and Freddie Mac lending standards.
- The most divided congress since the civil war. The hatred expressed by the democrats over anything republican is astounding.
Certainly others share in the failures, such as the leveraged "enhanced yield" products the financial services industry created to boost the returns from the idiotic mortgage products. And not to be forgotten, is the financial accounting standards board for the mark to market rules, which left no leeway in writting the value of the mortgage investments down immediately, rather than spreading out the losses over a reasonable period of time. And not to be forgotten are the rating agencies. Gee wiz Henry, if the best you can come up with is blaming the ratings agencies, your attempt to distance the democrats from any responsibility is a shining failure.
Here's a tip, have someone on your staff find the youtube videos of Barney and his committee ridiculing the regulators and then ask yourself who really is to blame here. It's petty obvious to me. It shoudl be pretty obcious to you.
By the way, when are you going to call Barney before your committee. That will be the show to watch. Seems I heard Barney's boyfriend created many of the Fannie Mae Products which blew up.

Brock of TX 8:00PM October 23, 2008