Posted by
Always To The Right on Wednesday, October 15, 2008 6:20:42 PM
For years, liberals in Congress pushed government-sponsored mortgage
giants Fannie Mae and Freddie Mac to achieve their policy ends even as
they avoided fixing the organizations' abuses. Now that the financial
markets are unsteady, they want to pin the blame not on these
government-sponsored enterprises but on free enterprise.
The Left is looking to spin the economic crisis to their own advantage, Heritage Foundation expert Ernest Istook argues on Human Events Online.
They know "that whoever shapes public understanding of what caused
today's economic crisis can shape America's politics -- and its future
-- for a great many years to come. Thus, they're pushing the notion
that too little government regulation was at fault.'
In fact, lack of regulation is only part of the story. It wasn't too
little regulation of private financial firms that's to blame—if
anything, laws like the Community Reinvestment Act went too far, Istook says—but too little regulation of government-sponsored companies like Fannie Mae and Freddie Mac.
Despite early and prescient warnings from experts including Heritage's Ron Utt, liberals collaborated with Fannie and Freddie to avoid taking responsibility for their failure. Heritage president Ed Feulner explains how they achieved this:
Fannie and Freddie evaded attempts to regulate them. A big reason is that they cultivated powerful friends in Congress, such as Sen. Christopher Dodd,
D-Conn. As chair of the Senate banking committee, he pocketed more than
$165,000 in campaign contributions from people associated with Fannie
Mae and Freddie Mac.
Over in the House, the GSEs also enjoyed vocal support. "These two
entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," Rep. Barney Frank, now head of the House Banking Committee,
said in 2003. "The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of affordable housing."
Today, these same liberals who for so long resisted doing anything
about Fannie and Freddie are now crying out for a Congressional
investigation. "Clearly, these gentlemen cannot credibly lead an
investigation into the collapse of the very companies they championed,"
Feulner argues.
To get at the real root of the financial crisis, Feulner proposes a
"Financial Crisis Commission," independent of the Congress. And what
might this commission find? Feulner says that "a fair and complete
investigation seems likely to confirm that wisdom by revealing that
many of today's problems were triggered by our elected officials -- not
by a failure of the free market."