Saturday, October 04, 2008

Logic flaw

Barack has made the charge over the last two weeks:
McCain has favored deregulation for 26 years. Look where it has gotten us.

There's a logic flaw:
Repubs oppose over-regulation of private enterprise.
Conversely, Dems opposed regulation of government backed enterprise.

Part of Fannie's and Freddie's abilities to bundle and sell subprime mortgages hinged on perception that U.S. Government would guarantee the value of those subprime mortgages. Without that perception, institutional investors would not have so readily purchased Mortgage Backed Securities(MBS) from Fannie and Freddie. This week, that perception of U.S. Government guarantee turned out to be reality.

Dems were part of the government; Dems did not want to regulate themselves. via Ed Morrissey
Hubbard notes that the Bush administration long supported reform at Fannie Mae and Freddie Mac. He also tells viewers that the House managed to pass Fannie/Freddie reform when Republicans had the majority, but Chris Dodd killed it in the Senate Banking Committee.
From another part of the interview:
Q: When Repubs were in the Senate Majority, why wasn't reform legislation passed then?
A: Senate legislation requires 60 votes to overcome filibuster. Repubs never had the votes.

McCain must draw a distinction between regulation of private vs. government enterprise. McCain also must publicize his record of backing increased regulation for Fannie and Freddie. Barack's claim - echoed by many Dems - amounts to a lie. The truth will set McCain free.


New ad by National Republican Congressional Committee:

Nancy Pelosi is not going to allow any witch hunts!


New info to me: From 1991-1998, Barney Frank's live-in lover was a Fannie Mae executive:
Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.

So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.

Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank's relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

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