Whose Fault Is The Bail Out? Not mine

Everyone seems to be asking whose fault it is that we now have to bail out all of these home owners who took on loans they couldn’t afford.  Is it the home owners fault (yeah I think so) or is it the mortage lenders that wrote the loan (yeah they’re terrible people) or the federal regulators that let it happen (they let everything happen) or our elected representatives that wrote the law (the buck should stop here)?

“Back in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”

“What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.  If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.”

“But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.”

“That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”

Yaaa! So we could have prevented this by partisanship prevented a massive bailout that we will either pass onto our kids or take in significantly increased taxes which apparently Joe Biden is already behind.  Come on people it’s time to act Patriotic and pay more taxes.  Seriously?

Of course this kind of news is only going to drive Oil up.  Yesterday alone it set a record jumping $25 in a day! What are our two venerable Presidential candidates proposing to do about the bail out?  It’s being reported that both of them will “skip” the vote.  So your job is to work for the people or at least fain like you’re representing them.  You’re running for President under the biggest microscope you’ve ever seen and you decide, probably through the use of focus groups and consultants, it’s best not to vote.  How is this demonstrating leadership?