The Utter Failure of Democrats to Regulate a government Agency

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Timshel

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http://query.nytimes.com/gst/fullpa...&scp=3&sq= 2003 fannie freddie labaton&st=cse

New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
Published: September 11, 2003

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

...

'These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
 
These were not unrestrained free market companies. They were under the control of Congress. And Dems in Congress fought against better regulation of them in support of encouraging them to make bad loans for political purposes.
 
Good reason to refinance your home away from F&F to the real free market. I have no intention of investing in F&F, now that I know who they are, and what they are.
 
RStringfield said:
These were not unrestrained free market companies. They were under the control of Congress. And Dems in Congress fought against better regulation of them in support of encouraging them to make bad loans for political purposes.
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Don't get too paritisan here--it was 1992 when Bush demanded that he wanted 5.5 million more home owners by the year 2010. Bush is more of a Dem than a republican IMO though. No real consertative would have forced that IMO.
 
'These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
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This is the person that uscit should have been telling about the pending economic crisis.
 
I don't know what happened to the proposal. You can look for the record on that it if you like. But the point is clear that a top Dem and others opposed it for political purposes. The Dems wanted to encourage loans to bad risks.
 
RStringfield said:
I don't know what happened to the proposal. You can look for the record on that it if you like. But the point is clear that a top Dem and others opposed it for political purposes. The Dems wanted to encourage loans to bad risks.
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Wasn't the former Assistant AG from Clinton still running the company at that time? (Another good one... In the 90s, a Mondale aide was doing it).
 
RStringfield said:
I don't know what happened to the proposal. You can look for the record on that it if you like. But the point is clear that a top Dem and others opposed it for political purposes. The Dems wanted to encourage loans to bad risks.
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First of all, at the time the article was written this wasn't even in bill form yet. It was a proposal that was being kicked around. It was suggested in the article that Rep. Oxley would create a bill based on the hearing. So, let's start there.

Was any legislation proposed to that effect?
 
I don't much care about the partisan blame game. The title was due to Dems whining about this the result of unrestrained free market capitalism. Rather it is a failure of government regulation which is driven by politics rather than sound business practices. And Dems always argue that it's not the regulation but the regulators. That is, elect them and everything will be peachy. But they were advocating something different when this mess was building.
 
Dungheap said:
First of all, at the time the article was written this wasn't even in bill form yet. It was a proposal that was being kicked around. It was suggested in the article that Rep. Oxley would create a bill based on the hearing. So, let's start there.

Was any legislation proposed to that effect?
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No, because we heard how great these companies were doing from the highest ranking D on the committee. It appears as if they decided that regulation was not the direction they wanted to go.
 
theMAJORITY said:
Don't get too paritisan here--it was 1992 when Bush demanded that he wanted 5.5 million more home owners by the year 2010. Bush is more of a Dem than a republican IMO though. No real consertative would have forced that IMO.
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That was a part of it, but it began in the late 1980's when there was a change to the Home Mortgage Disclosure Act that forced banks to gather race data on all applications.

After that was done.... the "studies" followed. The "studies" showed 'widespread discrimination' by lenders given that minorities were rejected at higer rates. Of course this had nothing to do with minorities also living in higher rates of poverty (the real culprit).

This in turn led to the beginning of the dismantling of Glass Steagall in 1992 under Bush. Then the big push by the politicians (both parties) in 1995 with the "Fair" lending act.

Finally came the 1999 GLB bill that finalized the destruction of Glass Steagall and the insanely low rates by the Fed in the 2001-2004 time frame. Lenders and borrowers then took advantage of the situation. As did the investment firms we see going under one after the other today.

Bottom line is.... the politicians brought this upon us.... all in the name of "fair" lending.
 
Dungheap said:
First of all, at the time the article was written this wasn't even in bill form yet. It was a proposal that was being kicked around. It was suggested in the article that Rep. Oxley would create a bill based on the hearing. So, let's start there.

Was any legislation proposed to that effect?
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Yeah, that's why I said proposal and not bill. I don't know if it ever made it to bill form. Go look it up if it interests you. It does not interest me. The point again, is that the top Dem on the committee were advocating a continuation of the risky loans.
 
RStringfield said:
Yeah, that's why I said proposal and not bill. I don't know if it ever made it to bill form. Go look it up if it interests you. It does not interest me. The point again, is that the top Dem on the committee were advocating a continuation of the risky loans.
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Oh, I see. So even though the Republicans were in power in both houses of Congress and the White House, it is Barney Frank's fault that Fannie Mae and Freddie Mac weren't more closely regulated in 2003 because he did not like the proposal being floated by the White House. Is that it?

And, by the way, Barney Frank introduced his own legislation in March of 2007 shortly after the Democrats took control of the House that provided for additional oversight of Fannie Mae and Freddie Mac, just not within the Treasury Department.
 
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