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October 9, 2008
Predictably and irresponsibly, the chairman of the House Oversight and Government Reform Committee, Rep. Henry Waxman, D-Calif., opened hearings on the cause of the current economic crisis by focusing on the designated villain, “Wall Street.”
Less predictably, but not surprisingly, in view of Waxman’s habit of playing to the news media gallery, the committee chairman, in grilling Lehman Brothers former chief executive, focused on the millions of dollars in bonuses which were paid to Lehman executives just before the investment bank went belly up.
Payment of the bonuses was indeed outrageous, and former Lehman chief executive Richard S. Fuld, Jr. had no credible defense.
But ironically, one account of Waxman’s biting criticism of payment of pre-bankruptcy bonuses was carried under a headline which read: “Getting To The Root Of The Meltdown.”
If the perpetually choleric Waxman and his colleagues on oversight committees in the House and the Senate want to get to the true roots of the “meltdown,” they need to start calling witnesses with names like Bill Clinton, Democratic Representative Barney Frank of New York and Democratic Senator Chris Dodd of Connecticut.
It was on Clinton’s and Frank’s and Dodd’s watches that seeds for the current economic “meltdown” started to grow. The facts are there, occasionally reported on an inside newspaper page or mentioned by one of those rarities, a conservative news media commentator but overlooked by the politicians and the majority of news media commentators who want to lay all the blame on “Wall Street.”
Several large Wall Street investment banks did indeed play a role in the economic meltdown. But those investment banks are now paying a heavy price and were at the end of the line of irresponsible behavior—behavior which goes back for years to the time when bureaucrats and politicians decided to turn home ownership into sort of a government-sponsored welfare program—not exactly like food stamps, of course, but philosophically related to such welfare programs.
The object of the politicians and bureaucrats was to make it possible for low-income Americans, obvious bad credit risks on their own, to realize “the American dream” of owning a home—dreams which in this case became an American nightmare.
Consider a September 30, 1999 New York Times story, dredged up from The Times own electronic files by one of the relative handful of Americans who seem to know the truth and want to spread it more widely. That September 30, 1999 story began:
“In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.”
The story reported that government-created Fannie Mae, as the nation’s biggest underwriter of home mortgages, “has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.”
The fact that blame for the mess extends broadly is indicated in this language from the 1999 news report: “In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called sub-prime borrowers. These borrowers, whose income, credit rating and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates.”
Although it took almost 10 years for the prophecy to come true, the1999 New York Times story observed: “In moving, even tentatively into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government risk similar to that of the savings and loan industry in the 1980s.”
So, as long ago as 1999, there was public notice of concern about the every-American-family-in-a-home-they-own government-subsidized welfare program.
The Bush administration—about which the national media can’t find any reason to say anything at all that is positive—in 2003 made note of the hazard and, in the words of a New York Times report, “today recommended the most significant regulatory overhaul in the housing and finance industry since the savings and loan crisis a year ago.”
Under the Bush proposal, the news story reported, “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 proposal immediately ran into opposition from the National Association of Home Builders and Democrats who, in the words of The Times story, “feared that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.”
Rep. Barney Frank, D-Mass., ranking Democrat on the House Financial Services Committee, declared that “these two entities, Fannie Mae and Freddie Mac, are not facing any financial crisis.” Congress, needless to say, did not adopt the tighter regulations that Bush proposed.
Rep. Frank is now chairman of the House Financial Services Committee and talking about the need for greater regulation which, he assures us, the Democratic-controlled Congress will provide.
On the Senate side of the sad story of lack of Congressional responsibility, consider the hearings before the Senate Banking Committee in February, 2004. Senator Christopher Dodd of Connecticut, then ranking Democrat on the committee and now its chairman, addressing the question of whether more regulation of the homeownership welfare program (my description, not his) was necessary, made this astonishing statement: “…this is one of the great success stories of all time. And we don’t want to lose sight of that.”
* * *
Deadline pressure prevents extensive comment on this week’s Obama/McCain debate, but herewith a brief reaction:
To me, about the only new and interesting part of the 90-minute-plus proceedings was the candidates’ agreement that Omaha’s Warren Buffett would be a good choice for Secretary of the Treasury. Neither candidate indicated he would actually offer the job to Buffett—an offer which, I believe, Buffett would graciously reject.
Otherwise, to my personal taste, I thought the debate was a great waste of time, including mine. The answers generally reflected viewpoints which have been articulated over and over in the tediously long presidential campaign. The answers also were usually too long, frequently not really responsive to the question.
Moderator Tom Brokaw, NBC’s senior political commentator, didn’t help matters as he repeatedly injected his own questions into a debate which was supposed to feature questions from the audience. I tended to agree with one commentator who said that the debate was something of a draw, which was of no help to McCain who is trailing substantially in the polls.
More time was available to try to set the record straight in regard to another nationally televised political debate, this one of special interest to us because it was held in Omaha.
I’m referring, of course, to the debate between Democratic vice presidential candidate Lloyd Bentsen of Texas and Republican Dan Quayle of Indiana at the Omaha Civic Auditorium in 1988.
A news story on the 20th anniversary of that debate told part of the story—the much-publicized part which gave Senator Bentsen credit for a memorable “zinger” in rebuttal to Senator Quayle’s statement--defending himself against charges that he lacked experience—that his experience on Capitol Hill compared favorably with that of the late John Kennedy when Kennedy ran successfully for president in 1960.
Staff members grooming Bentsen for the debate were aware that Quayle had, along his campaign trail, made the comparison between Kennedy and himself in terms of Capitol Hill experience. Quayle had served eight years in the Senate, as did Kennedy. Quayle served two terms in the House, Kennedy had served three terms.
Bentsen and his staff saw an opportunity to “zing” Quayle if in the course of the debate, Quayle brought up this factual comparison of Congressional experience. So it wasn’t an impromptu flash of wit. It was a carefully calculated zinger—and unfair—when Bentsen famously declared: “Senator, I served with Jack Kennedy. I knew Jack Kennedy. Jack Kennedy was a friend of mine. Senator, you’re no Jack Kennedy.”
A World-Herald account of the debate said this drew gasps from the crowd in the Civic Auditorium. Quayle retorted, “That was really uncalled for, Senator.” President Ronald Reagan called it a “cheap shot.”
The “zinger” didn’t help the Dukakis/Bentsen Democratic ticket. The governor of Massachusetts and the senator from Texas carried only 10 of the 50 states against the George H. W. Bush/Quayle Republican ticket. The Dukakis/Bentsen ticket lost Bentsen’s home state of Texas by 684,081 votes. The Bush/Quayle ticket carried Quayle’s home state of Indiana by a 60/40 margin.
* * *
Jottings from a columnist’s notebook:
- - The Obama presidential campaign continues to assure that race is a factor in play when voters go to the polls November 4. For example:
The Obama campaign, which has sent 15 paid staff members into Omaha in hope of winning a single electoral vote in the Second Congressional District, has opened a second campaign office in Omaha. I informed a friend of that fact and gave him one guess as to the location of the second campaign office.
“North Omaha” was his prompt reply.
The reply was, of course, correct. I hardly need point out that the great majority of Omaha blacks live in North Omaha.
- - Even for The New York Times, the vitriolic Frank Rich, nastiest of The Times stable of liberal columnists, is allowed to go to astonishing extremes in expressing his hatred of John McCain. For example (there are a lot of other examples which could be cited):
A recent Rich column—The Times gave him his usual half or more of a page of space—included this criticism of McCain’s effort to help resolve the nation’s economic crisis:
“He may be the first presidential candidate in our history to risk wrecking the country even before being voted into the Oval Office.”
- - I don’t know how it is that Marian’s and my names end up on so many lists of people being solicited for contributions to worthy causes. I suspect there is some trafficking in mailing lists; i.e., philanthropic groups exchanging donor or prospective donor lists or even selling such lists to others.
Whatever the case, one of the more surprising solicitations came the other day, asking me to become a “Partner in Mission” for the Washington National Cathedral. (As I dictate this, a suspicion crossed my mind: Could I have wound up on the Washington National Cathedral list because I contribute modestly to the Washington-based Smithsonian Institution?)
I declined the partnership offer.
- - If there are any television ads in worse taste than those currently promoting the male sexual stimulant Viagra, I haven’t yet encountered them.
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