Republicans Wanted to Regulate Freddie & Fannie, Democrats Didn’t See a Problem
In the first Presidential debate, Barack Obama used the line more than once that this credit crisis we’re in stems from policies that “shredded” regulations, and that assumed that regulation is “always bad”. But that characterization is simply not true, and in the cases of Freddie and Fannie, which are government sponsored enterprises (GSE), government oversight is especially required.
First of all, GSEs are a non-free-market concept, contrary to Rep. Barney Frank’s assertion that this credit crunch is a failure of the free market. It is a government program to target certain sectors with cheap loans. Overall, it has been fairly successful, but it is not a free market issue. This is government stepping in to deal with a situation it wants to see changed.
The second issue is that when Democrats pushed Freddie and Fannie to create what became known as the subprime mortgage market. That was the subject of the previous video I posted on this subject. It became the late-20th-century version of “a chicken in every pot” promise. Everyone gets a home! Well, not really. Everyone gets a mortgage, including some who couldn’t afford it. But Freddie and Fannie took this mandate and went wild. It was essentially a big-government solution being administered by a big-government program; again, not a failure of the free market.
During this time, Republicans realized that more regulation of these types of loans and the securities backed by them was required, but Democrats did not believe there was a problem. Those were their words; not a problem.
Roll the tape, and listen to their words.
So Obama’s sweeping contention that Republican consider regulation “always bad” is demonstrably false. Less regulation is a hallmark of conservatism, true, but where it’s required, especially in a government program, it should be done. But Democrats, when faced with tightening the purse strings on a constituency that they claim for themselves, will see no evil. Being for the little guy does not mean setting them up for failure. It’s partisan politics, pure and simple.
And by the way, where’s the MSM on this? Quiet as a mouse. FactCheck.org’s checking of debate facts is silent on this issue. The objectivity on this issue is pointing out some glaring blind spots.
Update: Roger Kimball gives the roots of this crisis a closer look, with suitable linkage. Short and sweet, but informative.
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