It’s about time.

“Whatever the question, whatever the issues, there’s always a back story with Senator Obama . . . Our current economic crisis is a good case in point. The crisis started in our housing market in the form of subprime loans that were pushed on people who could not afford them.

“Bad mortgages were being backed by Fannie Mae and Freddie Mac, and it was only a matter of time before a contagion of unsustainable debt began to spread,” McCain said during an event in Albuquerque, NM.

“This corruption was encouraged by Democrats in Congress, and abetted by Senator Obama.”

McCain said he raised the alarm and called for tighter borrowing rules on Fannie Mae and Freddie Mac two years ago, which could have helped stem the crisis.

By comparison, he said, Obama was “silent” while congressional Democrats fought efforts to rein in the mortgage giants.

“As recently as September of last year, [Obama] said that subprime loans had been, quote, ‘a good idea.’ Well, Senator Obama, that ‘good idea’ has now plunged this country into the worst financial crisis since the Great Depression,” McCain said.

McCain needs to hit this hard at the debate tonight. This is more important to the American people than Obama’s connections to a domestic terrorist or a racist, anti-American preacher. All of those things are important, but the economy dominates everything right now. In addition to those attacks, McCain must give a bold agenda tonight. By bold, I don’t mean spending a lot of money. I mean big changes that can get people excited. Things like totally reforming the tax code, giving a payroll tax cut to the middle class, suspending capital gains taxes for two years to bring new capital into America. Be bold, John.

Gee, I sure am glad we pass that bailout bill Friday. Otherwise, the market would be going down sharply. Whoops. Well, you can’t blame the bailout bill. It’s going to take a while for the money to start flowing. We are already hearing that this $700 billion may not be enough.

Despite widespread unease over the use of taxpayer money to salve Wall Street’s wounds, it also seems virtually certain that lawmakers will in coming months confront anew demands for even greater government activism. Critics say the new federal legislation just won’t do enough to resolve the banks’ chief problem: a crippling shortage of capital.

I was never a big fan of this plan, and today’s reaction is worrisome. I’m afraid that we are sliding down the slippery slope to more government intervention and more socialism. Time will tell.

Los Angeles Times Staff Writers

October 3, 2008

SACRAMENTO — California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

(more…)

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Yes, but it’s kind of strange to have one of the arsonists put out the fire.

There is plenty of blame to go around and many in Washington and on Wall Street who deserve it,” he said. “There will be time to punish those who set this fire, but now is the moment for us to come together and put the fire out.

“To the Democrats and Republicans who opposed this plan yesterday, I say step up to the plate, do what’s right for the country.”

After this bill is passed, McCain needs to lay out exactly how much of this blame should landed at Obama’s feet. “Community organizers” he trained helped push for these loans that led us to this problem with Fannie Mae and Freddie Mac. The people deserve to know the truth about this.

Posted by Greg

Do you think most Americans understnad this? McCain-Palin need to make sure they do.

Pay phone on

Posted by Greg

Obama keeps blaming the Bush policies and deregulation on the problems with our economy. This makes absolutely no sense. There has been no deregulation of the banks during Bush’s eight years. The latest deregulation of banks was passed into law by President Clinton. It didn’t lead to this crisis, in fact, it helped mitigate the crisis. The Community Reinvestment Act pushing subprime loans for people who couldn’t afford them, ACORN,  Fannie Mae and Freddie Mac, and the Democrats pushing for even more subprime loans are the main culprits in this. Obama is in it up to his armpits.

Barack Obama wasn’t just the second-largest recipient of Fannie Mae and Freddie Mac political contributions. He was also the senator from ACORN, the activist leader for risky “affirmative action” loans.

Obama, who once represented ACORN in a lawsuit against the state of Illinois, was hired by the group to train its community organizers and staff in the methods and tactics of the late Saul Alinsky. ACORN would stage in-your-face protests in bank lobbies, drive-through lanes and even at bank managers’ homes to get them to issue risky loans in the inner city or face charges of racism.

Sarah Palin needs to hit on this in the vice presidential debate Thursday night. She needs to lay out the history of this crisis and how Obama, ACORN, the Democrats, and Fannie Mae and Freddie Mac are at the heart of it. She needs to lay out how John McCain helped write a law in 2005 that would regulate Fannie Mae and Freddie Mac and seriously helped avoid this crisis. The Democrats fought it. Why isn’t the McCain camp focusing on this?

Pelosi just could not resist blaming everything on Bush and the Republicans. This is just revisionist history. The Bush tax cuts had absolutely nothing to do with the housing and banking crisis. In fact, after the Bush tax cuts were fully phased in in 2003, we had an increase in tax receipts to the treasury. We also had growth in our economy from these tax cuts. They are certainly not to blame for the deficit. Bush and the Republicans SHOULD be blamed for spending too much. However, this also has nothing to do with the current housing and banking crisis we are in.

Most of the blame goes to Fannie Mae and Freddie Mac and the Community Reinvestment Act. Those problems have the Democrats fingerprints all over them. That’s probably why Nancy Pelosi felt she had to give this speech. She was trying to blame the Republicans during this presidential cycle.

The facts are the CRA under Jimmy Carter forced banks to give loans to poor people, and especially poor minorities, who really couldn’t afford them. The law was strengthened under Clinton and the pressure on banks to give subprime loans to people who didn’t really qualify for them increased. The Democrats encouraged Fannie Mae and Freddie Mac to buy up these loans. Fannie Mae and Freddie Mac made these loans looks safe since they were government-sponsored entitys. This led other investor banks to buy the loans from Fannie Mae and Freddie Mac. Many people saw this crisis coming and tried to do something about it. Bush and McCain are two of those people. The Democrats fought any regulation of Fannie Mae and Freddie Mac.  If you don’t believe me see the videos posted lower on my blog. You can look it up. This is a simplified explanation of the problem, but much more accurate than Pelosi’s rant.

So, what now?

The House of Representatives rejected by a vote of 228-205 a Wall Street bailout bill that would have authorized the Treasury Department to spend up to $700 billion to purchase broken mortgage-backed bonds from banks with the goal of jump-starting stalled capital markets.

Defeated by skeptics from both parties who questioned the need for it and whether it would work, the bailout plan was proposed by the Bush administration on Sept. 20.

This plan was poorly framed and sold by Bush, Paulson, and Democratic leaders. I’m still not sure if this was a great deal, but it certainly wasn’t explained and sold well. The markets will be down for a while, but this may be the best outcome. Let the free market work. Let it play out. Have a true accounting of the problem and start building the real economy again. Find the true bottom of the housing market and move forward.

Hat tip to a listener who e-mailed me this video. You might want to send it to your liberal friends who are trying to blame the Bush tax cuts for this problem.

This YouTube post has now gone viral. It does a good job of explaining the beginnings of the subprime mortgage crisis going all the way back to Jimmy Carter. I’ve been talking about the Community Reinvestment Act on the show. It basically said that lenders were being discriminatory in giving home loans. Banks were told they had to give more home loans to poor mind wordy borrowers or they would be penalized.  (Further studies later showed that there was no discrimination in the home loans. The earlier studies were flawed with bad data.)  It wasn’t too bad until the mid-90s. Then the Democrats and Bill Clinton put together a new push for more subprime mortgages for people who really couldn’t afford the loans. The Democrats also pushed for Fannie Mae and Freddie Mac to support these loans. Fannie and Freddie would buy a bunch of this bad debt and package it and resell it to investors. It’s not the whole problem, but it sure tells a big part of the story. Oh, by the way, Bush and McCain tried to rein in these problems in 2002 and 2005. That’s not spin, that’s the truth. Google it, Rosie.