Seeing Through the Bailout Fog

The bailout bill went down in flames yesterday and that, in my humble opinion, is a very good thing. The President and the Congress have been rushing this taxpayer-funded bailout of the financial industry through and with as much power as it would grant Secretary Paulson, the American people were well on their way to getting seriously screwed again.

While Nancy Pelosi and company tried to hang this failure around the necks of Republican lawmakers yesterday, she fails to explain why she failed to get 95 members of her own Party to vote for it. All she needed was 12 votes and she couldn't deliver. Barney Fwank, Finance Committee Chair (and in many ways responsible for covering up the Fannie Freddie mess in 2004) , neglected to mention that most of his own Democratic finance committee voted against it as well.

It's a little hard to take the moralizing of Senator Chris Dodd, the number one recipient of Fannie/Freddie donations in the last nine years, and Barney Fwank, who said in a 2004 hearing that there was no safety and soundness issues with Fannie/Freddie, as they condemn Republicans for not voting in a bipartisan fashion because they "got their feelings hurt" by Nancy Pelosi's pre-vote speech.

First of all, those who opposed it were getting deluged by outraged constituents who are not happy with the continuing government bailout of Wall Street, which looks to them like reward for bad behavior. They don't want to get stuck with the bill and they're letting their feelings be known. Second of all, Pelosi's speech was indeed incendiary as she attempted to lay the entire financial crisis at the feet of Republican policies over the last 8 years.

This is an outrageous position considering that even former President Clinton recognizes the Democrats resistance to oversight of Fannie and Freddie initiated by President Bush and the Republican leaders in 2003, 2004, and 2005. These calls to change were stifled by the likes of Barney Fwank, Maxine Waters, Gregory Meeks, and others who gained personally from the unregulated activities of Fannie and Freddie.

These scoundrels wanted heavy regulation of the banking industry, using groups like ACORN (who Barack Obama did his community organizing for) to intimidate them with threats of racism unless they loaned money to low-income, risky borrowers. Then Fannie and Freddie would buy these loans, bundle them, and resell them. The problem was, while the banks were being regulated, Fannie and Freddie were a Government Service Entity and therefore not subject to regulation. They could do whatever they wanted.

So former CEO's Frank Raines and Jim Johnson (who work with the Obama campaign) walked away with millions in personal bonuses (which they would donate to the Democratic Party) while Fannie and Freddie were being undermined and the American people were kept from knowing that a huge crisis was coming.

Why did Pelosi and the Democrats want this bill to be a bi-partisan effort? Because if it fails, they want the Republicans going down with them. And they're mad about it. Political. Plain and simple.

Hopefully, this will lead to a much better bill this week. One in which the taxpayer wouldn't fund a bailout, but rather a work out.

Take a look at what the Democrats were saying to protect Fannie and Freddie from oversight back in 2004.