Remember when Democrats and Republicans stood on the Capitol steps and sang "God Bless America?" For a moment there, the Washington crowd was stunned by the attacks of 9/11 into forgetting their stupid partisan differences and remembering they were Americans. I made a passing reference to that in a column last week.
This NYT story describes a moment last night when the shock and awe of the scope of this mounting financial crisis had a similar effect on members of Congress. It happened in a briefing Ben Bernanke and Henry Paulson gave to congressional leaders:
“When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.
As Senator Christopher J. Dodd,
Democrat of Connecticut and chairman of the Banking, Housing and Urban
Affairs Committee, put it Friday morning on the ABC program “Good
Morning America,” the congressional leaders were told “that we’re
literally maybe days away from a complete meltdown of our financial
system, with all the implications here at home and globally.”Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”
When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in.
“Somber doesn’t begin to justify the words,” he said. “We have never
heard language like this.”“What you heard last evening,” he
added, “is one of those rare moments, certainly rare in my experience
here, is Democrats and Republicans deciding we need to work together
quickly.”
What an amazing time for a spirit of bipartisan cooperation to emerge — if that indeed happens (and if it doesn’t, we’re sunk). Now, on the eve of this too-close-to-call presidential election, the one I worried so much about in another column.
I certainly hope that happens. But you know what? As weird as you may think the fact that 9/11 made me (however briefly) optimistic about the future, here’s something you might find harder to fathom: I don’t feel that way this time. With the terror attacks of 9/11, I had very clear ideas of what I thought should happen next (short version: fully engage the world), and it was my belief that those things would happen that prompted my optimism.
Now, I’m at a loss. I don’t know what it is I want the government to coalesce around. Maybe Bush and Paulson are taking the right steps, but I don’t know. To me, a financial mess of this magnitude is more perplexing than terrorist attacks. Not as immediately horrible, but less understandable. And that leaves me uneasy.
Also, the promise of bipartisanship seems shakier here. There is a history of partisans setting aside differences in response to an external threat. But many politicians cut their teeth demagoging economic issues, and happily drawing sharp ideological distinctions about them.
But I hope the potential described above is realized. As uncertain as I am about the way forward, I would feel much better if we’d drop the party games and face it together. That would help a great deal.
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FYI, here’s Jim Clyburn’s take on that meeting last night:
A promising, nonpartisan sort of tone PART of the way through it, anyway…
And here’s what Lindsey Graham said about today’s announcement from Bush and Paulson:
It’s good to see, Brad, that you are finally beginning to understand this entire deal was too serious to be joking about two or three days ago, like I tried to tell you.
Now, with the bailout, I imagine the Bank of China, or whoever loans us the money to pull the bailout off, will end up holding a massive mortgage on our way of life.
As Charles Krauthammer said today, this cancels Obama’s economic plans or McCain’s economic plans, whoever wins the presidency. There will be no extra tax revenue to spend on anything, not earmarks, not infrastructure, not nationalized health care, not a chicken in every pot, not nobody, not no how.
And I would tell you who I think is to blame for all this, but, instead, I’ll tell you what we have to do to fix it, else it will ruin us for good, sooner rather than later.
Reinstitute the work ethic. Seal the borders. Squelch the idea that every human being born is entitled to a living wage just for being here or showing up here, and make a dollar worth something again.
Illegal immigration is the greatest threat to our economy. Government spending is a close second.
It was Obama’s radical group, ACORN, which used charges of racism to force banks to make risky loans to blacks, both residential and business.
ACORN received shakedown hush money from banks every time they wanted to merge or expand in urban areas.
Obama received over $300,000 in donations from AIG, Fannie Mae and Freddie Mac, and voted to extend the Community Reinvestment Act and eliminate down payments for subprime minority borrowers.
Sub-prime mortgages were created specifically to make risky loans, and avoid charges of racism. In 1992, subprime loans made up 2% of all loans. By 2002, they comprised over 20% of loans.
In 1994, Janet Reno held a press conference and threatened to prosecute any lenders who “exhibited racism”, by such things as:
* asking for proof of income of non-whites
* considering employment history of non-whites
* considering loan repayment history of non-whites
* asking for higher down payments from of non-whites
The first step that Congress should take is to enact a law prohibiting corporations from contributing to political campaigns. Only individuals should be allowed to donate. And the maximum should be set at $1000.
Let’s see them run a country for the people instead of the big donors.
Step two should be to abolish the IRS and implement a flat tax. And limit government spending to the amount collected from the prior year. NO DEFICIT SPENDING.
What in the world would all these corporate finance people do if they couldn’t spend their time trying to game the system to either take advantage of or avoid the tax system? Maybe they would get back to focusing on building businesses that actually do something.
Keep voting for all the incumbents. Why hold them accountable?
Why is it that Sen. Graham has spent more time talking about this issue in the press and on tv than Pres. Bush? Where is the leadership? Do we need to a pile of rubble and a blowhorn for him to take a hint and say something other than “Oops, my bad” ???
Jees…you’d think that someone with a MBA from Harvard would be better at financing than this.
What’s ironic is that since Reagan, the GOP has pushed and pushed for more de-regulation of the banking and investing markets. It is this de-regulation that is a major factor in this economic crisis that threatens every person and not just the rich or the white. The end result out of this will be more government oversight and less control by business, totally opposite of what the GOP conservative goals were when they started.
Privatizing Social Security into the public markets doesn’t sound so hot now does it.
I bet the Gipper is flipping over in his grave.
Bernanke and Paulson may have gotten some folks’ attention, but let’s see what senators Schumer and Dodd and the rest of the miscreants end up doing after the elections; the aforementioned dynamic duo have a history of shenanigans with the financial markets. As Lee has pointed out, Dodd is the all-time champion recipient of political contributions from the late and great Fannie and Fred; it would be naïve to think that those GSEs just liked his looks.
Schumer is a New York- and New York City-booster to whom shame and humility are foreign concepts; nine out of ten used car salesman along Two Notch Road find him slimy. While he may have only hastened the eventual demise of IndyMac, I guess he saw the light when he later called on Freddie and Fannie to freeze foreclosures.
Yet last year Schumer and NYC Mayor Bloomberg were worried that foreigners would cut into the lucrative subprime market:
Whoa! I thought they were worried about the impact of Sarbanes-Oxley. Silly me!
It may well be that this short-lived crisis will engender a sense of responsibility in the elected class. Perhaps they will commit to cleaning this mess up and building the framework that will handle the looming Social Security crisis which will begin in less than a decade. Maybe a lot is really riding on this election and the good sense of the American people.
What exciting times we live in!
Lee, you’re all wrong again. Do you by chance run AIG?
First. Janet Reno’s investigation show that lenders were violating the civil rights of people based on race and not financial status. Married Black couples who were making over six digits in combined income were being denied a standard mortage based on their race and not on their credit worthiness. The practice is illegal, no matter what the rednecks tell you.
The real hero of the financial collape is none other than Sen. Phil Gramm,(R) the chief architect and advisor to John McCain on all thing economic.
“Gramm’s most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. “Nobody in either chamber had any knowledge of what was going on or what was in it,” says a congressional aide familiar with the bill’s history.
It’s not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act’s inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus “protect financial institutions from overregulation” and “position our financial services industries to be world leaders into the new century.”
It didn’t quite work out that way. For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron’s energy futures contracts from government oversight. Wendy later joined the Houston-based company’s board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)
But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It’s like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm’s bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.
In essence, Wall Street’s biggest players (which, thanks to Gramm’s earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. “Tens of trillions of dollars of transactions were done in the dark,” says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. “No one had a picture of where the risks were flowing.” Betting on the risk of any given transaction became more important—and more lucrative—than the transactions themselves, Partnoy notes: “So there was more betting on the riskiest subprime mortgages than there were actual mortgages.” Banks and hedge funds, notes Michael Greenberger, who directed the cftc’s division of trading and markets in the late 1990s, “were betting the subprimes would pay off and they would not need the capital to support their bets.”
-motherjones-
So Bush happily signed it into law and the rest is history. Those jumps in numbers from 1992 to 2002 you mention are not linear or acurately portray the point you try to make, The numbers barely moved between 1992 & 2000 (under Clinton) but skyrocketed in 2000 to 2002 (Under Bush) (Gee, I wonder why?)
I seriously doubt that had Gore won the election, he would have been so naive or cavalier in signing anything like this into action…after all his is a big Liberal who likes government control and would never sign that away…or at least that what Rush says.
wtf –
Why That’s Fantastic! At a minimum that doddering old fool Bush allowed his Treasury Secretary to confer with the Federal Reserve chief, develop a response with central banks worldwide, brief Congressional leaders, and announce the deal, no? Bush is not the average chimp.
And maybe the problem is too much regulation, not in the form of one big dagger like a Smoot-Hawley, but a lot of little purposeful pinpricks like mark-to-market accounting rules, the Community Reinvestment Act’s subprime lending mandates to ensure equal opportunity (note the date of this report – Winter 2000), and other well-intentioned requirements that in isolation caused only minor harm in a theoretical sense but served as potent fuel when a fire started.
Mix in a little of the cover that many members of Congress gave Fannie and Feddie in return for contributions and who knows what else, and you have a perfect storm of sorts.
Hey Guys!
Vote for the Republicans again! Go ahead and vote for the religious extremists and the social conservatives and all their hypocritical political cant. If you vote for them, then you deserve what you get! You voted for George and you got the war in Iraq and an economic meltdown! Hope you’re happy!!
The sub prime hustle by the melanin shake down mafia redlining low credit risk strong arm racial bullying started the ball rolling,
and since government bailouts were cooking in the wings, all greedy people jumped on board and rigged the game to get all they could before daddy checked on things.
Now fingers do be pointing, but social engineering home ownership to bad credit risks is bad business and divisive ethnic politics.
Vote black: guarantee incompetency.
Vote white: slow poison sell out.
>Vote black: guarantee incompetency.
>Vote white: slow poison sell out.
Gosh! No Jews in the mix?
what reno said at the press conference is that the same standard of documentation and proof should be applied to all potential borrowers-that any standards should be applied across the board and it had not been. what a shocking concept!! the illegal immigrants are hired by american employers and they hardly received the sub-prime mortgages which were pushed on consumers like crack with money being made by originators, brokers, buiders, real estate brokers and attorneys, banks, wall street, ec. it was even lauded on hgtv programs about home buyers-i watched some with my wife where people were buying homes by taking out a second for a down payments, arm’s, interest only loans,etc. whose commercials sponsored those programs-mortgage lenders, home improvement companies, realtors, etc. the irrational exuberance of the tec stock bubble was dwarfed by the collective self-congratulation of look how many people are now part of the american dream. following bush’s lead they were encouraged to spend money they did not have based on an incredibly unrealistic future. the only think lacking was the chairman of countrywide landing on an aircraft carrier declaring victory over all barriers to home ownership.
Flip-flop McCain has performed yet another flip.
Through last week, McCain was for less regulation.
Yesterday, he now favors more government regulation in the financial markets.
In a public statement, September 18, 2008, SEC Chairman Christopher Cox said:
and listed actions that the SEC is taking to stabilize trading in the financial markets.
Go to the link and read the rest of the statement before jumping to conclusions and visit the SEC’s website (for those that know how to read and don’t get the news read to them from Rush Limbaugh).
Ticker Shock
Wall Street Collapse
Why not force the oil companies to bail out the financial “geniuses” that got us into this mess. The oil guys have plenty of money. Let the greedy bail out the greedy.
You socialists actually mean, “Why not FORCE the oil companies to bail out the financial companies.”
Here’s why not:
1. It’s not the oil companies’ fault that liberal politicians created easy money for junk loans to unqualified minority home buyers.
2. The oil companies don’t make enough total profits to bail out even one of these bankrupt mortgage banks.
3. The oil companies only make about 8% profit, lower than most other large corporations, even with oil and gas prices being up, because they are having to pay high prices for the crude oil they use to make high-priced gasoline and diesel.
Thoughtful Thomas Friedman critics may find this timely book — The World Is Curved — compelling. The author, David Smick, is a consulting financial market strategist who knows enough about the inner workings of high finance, world trade, industrial policy, and risk.
It’s his insight into risk — having skin in the game — that makes the tumult of the past few weeks seem inevitable, because it was. Here’s how a recent review puts it:
The book’s got blurbs by Larry Summers, George Soros. George P. Shultz, Alan Greenspan, Bill Bradley, and more. The website is here. Several chapters are on-line.
Methinks the guy is onto something.
>Vote black: guarantee incompetency.
>Vote white: slow poison sell out.
Gosh! No Jews in the mix?
———
Jews are the smartest whites. Survivors,
they let the do gooders flagellate with race pimps. Great sport.
I was much too polite in the above. Friedman is an arrogant twit whose solution is to keep the poor folks, like those in Africa and India, poor, and welcome the Chinese as the next superpower.
Smick indirectly highlight’s the superficiality of Friedman approach with reality, somewhat brutal at times, that will scare the living daylights out of you. Those who thought his warnings too dire a few months ago have to admit that he saw the credit crunch coming, explained how it would (and now did) happen, and warned what else was in store. Our teetering financial sector is a harbinger for what could happen to the US economy in general unless we become reality based.
>Jews are the
>smartest whites.
>Survivors
They are not Whites. They are Khazars,
an Asiaic race. Yes, they are survivors,
but so are cockroaches.
Open question. Is that the ultimate destiny
of life on this planet?
Clinton cronies at the heart of mortage scandal:
Janet Reno and Jamie Gorelick went public with threats to prosecute banks who did make enough loans to racial minorities, regardless of income, credit history, or employement.
The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie and took home $26 million. Big Democrat Jim Johnson, recently on Obama’s VP search committee, has hauled in millions from his Fannie Mae CEO job.
Boards of Fannie Mae and Freddie Mac
————————————–
Fannie Mae
James A. Johnson, former chairman and CEO: Aide to Vice President Walter Mondale; recently led Sen. Barack Obama’s vice-presidential search team.
Jamie Gorelick, former vice chairwoman: Deputy attorney general under President Bill Clinton; former Defense Department general counsel; member of 9/11 Commission. She is the one who would not let the FBI talk to Army Intelligence and learn about the hijacker cells.
Franklin D. Raines, former chairman and CEO: Budget director under Clinton. Now advisor to Barack Obama
Thomas E. Donilon, former executive vice president: Former assistant secretary of state under Clinton; senior adviser to Michael Dukakis’ presidential campaign; national campaign coordinator for Walter Mondale’s presidential campaign; congressional liaison for President Jimmy Carter.
Robert B. Zoellick, former executive vice president: Former deputy secretary of state and U.S.
Trade Representative under President George W. Bush; currently president of the World Bank .
Louis J. Freeh, board member: Director of the FBI under Clinton;
Federal judge Stephen Friedman, former board member: Assistant to Bush for economic policy
Michele Davis, former senior vice president: Deputy assistant to Bush; currently assistant secretary of the Treasury.
Wayne Berman, outside lobbyist: Assistant Secretary of Commerce under President George H.W. Bush; senior adviser in Bush-Cheney presidential transition; currently a fundraiser for Sen. John McCain’s presidential campaign.
Steve Ricchetti, outside lobbyist: Deputy chief-of-staff to Clinton
Kirsten Chadwick, outside lobbyist: Special assistant to President George W. Bush for legislative affairs; currently a fundraiser for McCain’s campaign.
________________________________________
Freddie Mac
Richard F. Syron, chairman and CEO: Deputy assistant secretary of the Treasury
Ralph F. Boyd Jr., executive vice president: Assistant attorney general for civil rights
Dennis DeConcini, former board member: U.S. senator from Arizona
Robert R. Glauber, board member: Undersecretary of the Treasury under President George H.W. Bush
David J. Gribbin III, former board member: Aide to Vice President Dick Cheney; assistant secretary of defense under President George H.W. Bush
Harold Ickes, former board member: Adviser to President Clinton and Sen. Hillary Clinton; member of the Democratic National Committee. ( mastermind of Hillary’s failed socialized medicine scheme. His parents were Stalinists)
Rep. Rahm Emanuel, former board member: Senior adviser to President Clinton; former chairman of the Democratic Congressional Campaign Committee and chairman of the House Democratic Caucus.
Susan Hirschmann, outside lobbyist: Chief-of-staff to former House Majority Whip Tom DeLay of Texas
Michael J. Bates, outside lobbyist: Campaign official for President Reagan, presidential
candidate Bob Dole, President Bush.
Martin Paone, outside lobbyist: Secretary of the Senate
J. Patrick Cave, outside lobbyist: Acting Assistant Secretary and Deputy Assistant Secretary of the Treasury
Susan Molinari, outside lobbyist: U.S. Congresswoman from New York
Lee,
You missed one. Rick Davis.
Loan Titans Paid McCain Adviser Nearly $2 Million
Ralph, I listed board members of Freddie and Fannie, who were political cronies being paid over $1,000,000 A MONTH and more, like Louis Freeh ($50,0000,000) and Jamie Gorelick ($26,000,000).
Of course there are lots of lobbyists paid by these mortgage giants. Obama has 30 of them running his campaign. I posted that list months agon.