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Peter Wallison: Prognosticator
Topic Started: Dec 21 2008, 10:52 AM (126 Views)
Dwayne
Profanity deleted by Hoss
In making the case that the current problems in the financial world can be laid almost entirely at the feet of democrats, I cited an 1999 New York Times article about how Fannie Mae was easing credit requirements to encourage home ownership amongst minorities and the poor.

In that article, Peter Wallison of the American Enterprise Institute said the following, ''From the perspective of many people, including me, this is another thrift industry growing up around us." He followed that with, "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

In 1999, Peter Wallison correctly predicted exactly what would happen, yet he's still not the go-to-guy by the media when they want answers to the history and causes of this crisis. I think it has everything to do with politics and the political loyalties of journalists. Anything that casts aspersions on democrats and their pet political projects in general must be downplayed and swept under the carpet. That's why we're just now learning that Barack Obama is, in fact, a 'Chicago politician' and with that may come all that phrase implies.

Sorry, but I digressed.

Peter Wallison got this right even before the system had a chance to really get started. I really encourage everyone to read the 1999 NYT article.

Anyways, the only reason I bring this up is because I've come across two items by Peter Wallison, which if you really wish to be informed on this subject, must be watched or listened to.

The first is a 25 minute speech Mr. Wallison gave at Reason's 40th anniversary on November 14th and 15th of 2008: http://reason.tv/video/show/626.html

The other is a September 14th, 2008 interview of Peter Wallison on C-Span: http://www.q-and-a.org/Program/?ProgramID=1197


Sarcasm alert... This man obviously is a prophetic, an erudite and an astute observer of government and economics, so I can't understand why he wasn't tapped to head team Obama's economic team.

Me thinks I know that answer, but maybe someone has a better one.
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STC
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Commodore
^^^

Umm... weren't the Republicans in power from 2000-2008?

Or were they a bit impotent in that time period? ;)
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Franko
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STC
Dec 21 2008, 07:11 PM
^^^

Umm... weren't the Republicans in power from 2000-2008?

Or were they a bit impotent in that time period? ;)


In our British/Canadian parliamentry systems that would certainly be a strong case, but in the US structure things work a little differently.

Plus I guess that some of these policies were operating under the momentum of the Clinton years; but although I don't completely exonerate the republicans and the Bush administration from these problems, there have been several democrats that have admitted that their party and it's policies contributed greatly to this "over-extension".

However, the financial markets weren't exactly ringing alarm bells while all this was going on, so there have been a lot of parties involved on this joyride over the last few years.

I'm certain Dwayne and maybe Dan will elaborate more on this; economics isn't my strong forte.

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Dwayne
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Franko
Dec 22 2008, 12:57 AM
STC
Dec 21 2008, 07:11 PM
^^^

Umm... weren't the Republicans in power from 2000-2008?

Or were they a bit impotent in that time period? ;)


In our British/Canadian parliamentry systems that would certainly be a strong case, but in the US structure things work a little differently.

Plus I guess that some of these policies were operating under the momentum of the Clinton years; but although I don't completely exonerate the republicans and the Bush administration from these problems, there have been several democrats that have admitted that their party and it's policies contributed greatly to this "over-extension".

However, the financial markets weren't exactly ringing alarm bells while all this was going on, so there have been a lot of parties involved on this joyride over the last few years.

I'm certain Dwayne and maybe Dan will elaborate more on this; economics isn't my strong forte.

Well, the gist of STC's comments aren't economics, but policy and who brought it about.

The NYT article and all others are very clear. These programs were an effort to increase the number of poor and minority homeowners. While you can find republicans that were guilted into supporting these initiatives, the actual initiative was started by democrats.
Edited by Dwayne, Dec 22 2008, 08:02 AM.
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RTW
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STC
Dec 21 2008, 07:11 PM
Umm... weren't the Republicans in power from 2000-2008?

Or were they a bit impotent in that time period?
:no:

*sigh*

Having you been purposely avoiding learning about this issue or is your "innocent" question a bit of fishing on your part?


Timeline of crisis
http://www.youtube.com/watch?v=LPSDnGMzIdo&NR
(Note who raised red flags in both 2001 and 2003)

2004 Hearings on Fannie Mae
http://www.youtube.com/watch?v=_MGT_cSi7Rs&

BANK AFFIRMATIVE ACTION
http://www.youtube.com/watch?v=ivmL-lXNy64
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Dwayne
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^^^ Considering the number of Obama supporters who had no clue the democrats have been running congress for the past two years, it would not surprise me one bit that a person from another nation wouldn't know that either.

And then the way the media distorts the roles and responsibilities of the US government, it's no surprise that someone like STC wouldn't have a clue that it's possible for the US legislative branch to be run by a different party than the US executive branch.
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Dwayne
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Just to further reiterate the point, here's a FoxNews article telling about the White House push back against a hit piece the NYT ran over the weekend...
Quote:
 
White House Fires Back at Times Over Housing Meltdown Story
The New York Times, in a lengthy weekend article, places much of the blame for the sub-prime mortgage mess and Wall Street collapse on the Bush administration.

The White House is pushing back hard against a New York Times article that essentially blamed President Bush for the sub-prime mortgage mess and the Wall Street collapse by linking those crises to a policy goal he stated more than six years ago.

That goal?

"We want more people owning their own home," as Bush said in December 2003.

But a 5,000-word article in the Times on Sunday, under the headline, "White House Philosophy Stoked Mortgage Bonfire," said Bush was also encouraging a "hands-off approach" to regulation that encouraged "lax" standards on behalf of lenders.

"He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent -- and with the business interests of some of his biggest donors," the article said.

"That's about as myopic as you can get," White House spokesman Tony Fratto said in response.
White House counselor Ed Gillespie lashed out at the Times for its interpretation of Bush's housing policies.

"They've had to mortgage their building in Manhattan to help make ends meet, and they've been reduced to junk-bond status. I don't know if the New York Times' shoddy reporting is the result of being in junk-bond status, or if their junk-bond status is what's resulting in their shoddy reporting," Gillespie said.

In fact, the Times' article ignored a wealth of its own reporting, dating back to the era of Bill Clinton, whom the article mentioned only once, in passing.

For example, in September 1999, the Times noted that, "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stockholders to maintain its phenomenal growth in profits."

The 1999 piece went even further:

"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times," the Times noted presciently. "But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

Likewise, the Times made no mention over the weekend of President Clinton's aggressive deregulation of the financial services industry, which empowered banks, brokerage firms and insurance companies to engage in some of the very practices -- such as credit default swaps -- that contributed most to the current fiscal crisis.

While the Times mentioned that mortgage bankers and brokers donated almost $850,000 to President Bush's 2004 re-election campaign, the newspaper omitted the fact that the top three recipients of campaign contributions from Fannie Mae and its sister organization Freddie Mac over the last two decades were all Democrats.

Connecticut Sen. Chris Dodd, head of the Senate Committee on Banking, Housing and Urban Affairs; President-elect Barack Obama; and Bush's 2004 opponent John Kerry all benefited from Fannie and Freddie.

Asked to respond to the White House criticism, Times Executive Editor Bill Keller said Sunday's article "was based on on-the-record interviews with dozens of current and former (Bush administration) officials."

"It is part of an ongoing series that examines in-depth the accountability of numerous players in the economic meltdown, including Congress, rating agencies, brokerage houses and the Fed," Keller said.

http://www.foxnews.com/politics/2008/12/22/white-house-fires-times-housing-meltdown-story/

This FoxNews talks about how in 1999 the NYT had reported on what Peter Wallison had said.
Edited by Dwayne, Dec 23 2008, 08:52 AM.
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