The Greg Knapp Experience

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.

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.

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?

The rescue plan that was voted down yesterday was a lot better than it could have been, but not as good as it can be. Here are a couple good stories with new ideas for a plan.

Paulson 2.0 cut the Bolshevik stuff out of the legislation. ACORN subsidies? Gone. Voting shares in U.S. companies? Gone. CEO compensation caps? Mostly gone. In consultation mainly with House Republicans and a few “opinion molders” such as yours truly. The size of the expenditure was also cut. Some deregulatory measures were added, such as giving the SEC the authority to suspend the tremendously destructive mark to market accounting mandate. Score one for Kudlow, Forbes, Wesbury and a few lesser “molders” like Bowyer. We harped on it; Paulson listened.

The rescue plan became a lot more conservative after the Republicans got mad. That’s good. Why not make it even better?

Perhaps the mark to market regulations could be suspended before the taxpayers are forced to move in. Maybe if some of these rules are eliminated, little or no taxpayer dollars will be needed. If Congress doesn’t want to put public dollars into this, it should let private equity put private dollars in.

I had a great call on the show yesterday. She said, why doesn’t the government allow individual citizens to buy into this plan. Many people would love to buy these assets at pennies on the dollar. Great idea. Make it even better by making any investment into this plan 100% tax-free. Let’s make this plan better and get it done.

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.