There seems to be a lot of selective memories out on the campaign trail today. Senators Obama (he of the $126,000 in campaign contributions from Fannie and Freddie) and McCain (he who stood by when "subrime mortgages" were in vogue), want us to believe that the current financial crisis in the mortgage and financial industry is solely the result of capitalism gone wild. All we need, they suggest, is more regulation, more Washington supervision, more government intervention.
Who are these guys kidding?
Washingon created this mess and now they expect us to believe they can help us out of it. Let's examine some important facts.
Fannie and Freddie were initially created to help provide affordable housing to lower income Americans; Fannie has been around since FDR and the New Deal. Over the years they became bloated, politically motivated organizations which spent most of their time and money lobbying Congress and earmarking special projects in select congressional districts to ensure their continued existence, all while failing to keep their own houses in order.
Out of wack CEO salaries? How about the fact that James Johnson and Jamie Gorelick (two Democratic political operatives with close ties to Congress) took away almost $130 Million in salaries and benefits while working at organizations designed to bring housing solutions to the poor? Can someone explain to me how that was justified? Barack? John? And while Congress and the presidential candidates rake the mortgage industry over the coals for "lax internal quality controls" just who was overseeing Fannie and Freddie?
The whole mortgage mess and financial industry collapse is less about the failure of capitalism and more about the threat to free markets and sound business decisions from government pressure and intervention. After all, before Congress and the Fed clamored for "relaxed" lending standards to "encourage home ownership" for those with poor credit and inner city "burdens," banks generally made good credit decisions on their own.
Pressured for political reasons to offer loans to those who could not afford them, in sub prime mortgage products foolishly thought to bring economic parity through socialistic "feel good" entitlements, banks fell for the lie hook, line and sinker or risked the consequences.
So now that Congress and the political experts who thought they could outsmart Wall Street failed miserably what do we find? Shameless lectures and finger pointing about greed and poor judgment in the private sector.
Our politicians in Washington, especially those who received financial benefit from the very institutions and programs they once touted, should take a good, long look in the mirror. That reflection they see is the cause of this mess, and any concept that the same people can now provide us with an answer is nothing short of "hubris." Charlie Gibson, are you listening?