Thursday, October 29, 2009

Rep. Speier rewrites history

Today, Rep. Jackie Speier (D-CA), a member of the House Financial Services committee, wrote a quite jarring sentence to her constituents:
One year after the nearly-catastrophic meltdown of our financial system, Congress is finally addressing the root causes: deregulation, uncontrolled speculation and lack of oversight from the agencies who were supposed to be minding the store.
What were the Financial Services Committee and its current Chairman, Rep. Barney Frank (D-MA), doing while the crisis brewed? You guessed it: they were advocating lower lending standards, riskier loans, and denying the possibility of financial problems. For example, Rep. Frank and Rep. Anthony Weiner (D-NY) sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers. He claimed that those two agencies "are not facing any kind of financial crisis,'' Rep. Frank claimed Fannie Mae and Feddie Mac were "fundamentally sound financially" (see this video starting at 1:37). Rep. Frank consistently advocated "affordable mortgages" which is a code phrase for giving mortgage loans to those who cannot afford them which happens to be exactly what caused the current crisis.

Rep. Speier's statement that the crisis was caused by lack of regulation and oversight appears to be the opposite of the truth: it was regulation ("affordable mortgages") and oversight (like Rep. Frank's letter to Frannie Mae and Freddie Mac) that were direct causes of the financial crisis.

RELATED: Videos of Rep. Frank's faulty memories on the financial crisis are here. A video primer on the Democrat's Community Reinvestment Act (CRA) is here. There is more on the history of the crisis is here. More details of the CRA, including how Pres. Bush's reforms made it worse, are here.

MORE: The East Bridgewater Savings Bank, through cautious management, not only survived the mortgage meltdown, but is solvent and even profitable. What did the regulators say about that: the FDIC complained that, under the requirements of the CRA, it is not making enough risky loans.

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