Opinion
Democrats receive accusations for America’s economic struggle
October 2, 2008
The irony of the economic struggle with Fannie Mae and Freddie Mac (F&F) is not lost on me. Fannie Mae was formulated by Franklin D. Roosevelt in the New Deal to help pull the United States out of the Great Depression. Now Fannie and her brother are the cause of the greatest economic disaster since, well, the Great Depression! This disaster is coming to the forefront during the most heated and polarizing election in recent memory.
I am most interested in the constant finger pointing by both the Democrat and Republican parties. Obviously they can’t both be correct. I hear many arguments over whether this problem was over regulation or deregulation of F&F. Conservatives tend to deregulate, and liberals tend to regulate. Surely our problems with F&F are caused by deregulation, right? Bush is president. Therefore, Bush messed up the economy, right? If F&F were better regulated, the plethora of bad loans would not have been approved, or packaged together to be sold and outsourced, right? Wrong.
Unfortunately, the actual catalyst for today’s crisis was the Community Reinvestment Act (CRA) which was enacted by a Democratic majority during Carter’s presidency. The CRA allowed for federally backed loans intended to boost the number of homeowners, and push loans forward that would have otherwise been rejected by any legitimate financial institution. This bill was enacted because an imbalanced number of loans were rejected, specifically African American applicants. The CRA called for the intentional oversight of information that would show whether or not an individual or family could actually make payments on their mortgage. Essentially, F&F were forced to approve loans they would have otherwise turned down according to regulation (not deregulation) written into law by Democrats.
There were several attempts to stop this nightmare. The most notable attempt was a senate bill co-authored by John McCain, tongue-twistingly entitled the Federal Housing Enterprise Regulatory Reform Act of 2005(S. 190). S. 190 was filibustered by the then Democratic minority, which meant that S. 190 needed 60 percent of the votes to pass. Unsurprisingly, the Democrats voted along party lines, which successfully killed this bill. This is absolute proof that today’s crisis is undeniably the fault of the Democrats.
Fortunately for Barack Obama, most American voters have attention spans that are precisely equivalent to the duration of a single news brief.
It’s the economy, stupid. I have offered verifiable facts on this matter. Right now it could be our student loans, credit cards or home mortgages at stake. Barney Frank, chairman of the House Financial Services Committee, is now famously quoted for saying in 2003, “These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis.” Not long after the bailout failed, Nancy Pelosi said, “$700 billion. A staggering number…but only a part of the cost of the failed Bush economic policies to our country.” I am most offended by the fact that this information was so readily available to me, and still these Democrats have the gall to lie right to my face.
Muriel Montgomery is a student at UW-River Falls.