Blame the Democrats for the Crisis

This is an interesting opinion article on Bloomberg putting the blame for the financial crisis on the shoulders of the Democrats. They had a desire to relax regulation and permit the government to distort the market in order to push social efforts. Now many people have homes they can’t afford and we have a financial system that is coming down.

Republicans have favored financial regulation where it was necessary, as in the case of Fannie Mae and Freddie Mac, while the Democrats have opposed it. In 2005, the Senate Banking Committee, then under Republican control, adopted a tough regulatory bill for Fannie and Freddie over the unanimous opposition of committee Democrats. The opposition of the Democrats when the bill reached the full Senate made its enactment impossible.

Barack Obama did nothing; John McCain endorsed the bill in a speech on the Senate floor.

Bloomberg.com: Opinion.

WSJ: Blame Fannie Mae and Congress For the Credit Mess

Great Opinion article at the WSJ

Blame Fannie Mae and Congress For the Credit Mess – WSJ.com.

If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.