Obama's "Backscratches" From Fannie and Freddie

As all of you have no doubt heard, the "ripple effect" from the subprime mortgage crisis has sent our nation into financial turmoil. The turmoil extends well beyond the victims of predatory lending (many of whom are poor and/or minority) who lost their homes to foreclosure once it became apparent that they were given mortgages they couldn't afford. On a much grander scale, though, countless bonds and securities had been issued that were "guaranteed" by these subprime mortgages. As long as these mortgages didn't default, everything would be just fine.


You don't need to be a financial wizard to know that attempting to issue bonds and securities without something to "guarantee" them is a futile waste of time. In this case, the problem was that the "guarantee" was guaranteed to fail. Nonetheless, we have seen once again that the love of the almighty dollar, along with the insatiable desire for instant gratification, often inhibits otherwise reasonable people from thinking in a sensible and forward-looking manner.


Once "shit hit the fan" and monthly payments on these mortgages began slyrocketing when the subprime period ended, mounds and mounds of them began to default. The "guarantee" was no longer, and you know the rest of the sad story. All of these bonds and securities became virtually worthless, and the Treasury is now proposing a nearly $700 billion emergency "bailout" This is an absolutely HORRIBLE proposal that has no place in a free market economy, but I'll go more into that in another blog.


So now, of course, the finger pointing has commenced. Barack Obama, as you'd expect, blames "Bush-McCain" economic policies as the cause of this crisis. He's once again attempting to dupe Americans into believing that the two are "joined at the hip." I find it quite odd, however, that Obama fails to articulate precisely which of these policies he thinks got us into this mess. Typical Obama- lots of grandstanding, but nothing to back it up.


Perhaps this is because deep down, Barack Obama knows that it is Democrats such as himself who were the catalysts for this disaster, as they consistently thwarted any efforts to reform Fannie Mae and Freddie Mac, the two "giants" of the secondary mortgage market. These Democrats, including Obama, quickly downplayed prophecies of "impending doom" when warned numerous times that millions of Americans were being generously bequeathed with mortgages they couldn't afford.


Why would someone like Obama want to "bulldoze" such desperately needed reforms of Fannie and Freddie? Well, perhaps one reason why is because Obama received over $125,000 in donations for his Senate campaign from them. In fact, only Chris Dodd, the Democratic senator from Connecticut and head of the senate baking committee, received more in campaign donations from Fannie and Freddie. Furthermore, two former CEOs of these companies are advisors to Obama's presidential campaign.


Renowned socialist financier George Soros has dubbed our current financial disaster as a "crisis of capitalism" due to a lack of strict government regulation of the markets (well of course, being a socialist, he'd blame just about any problem on this). However, perhaps Mr. Soros is correct, only the blame properly rests with a different type of capitalism than he's thinking of. Perhaps it's the "crony capitalism" within the Democratic party, which led prominent Democrats in our Congress to impede any credible attempts to fix both Fannie Mae and Freddie Mac.


So how in the world did we get to this point? Stay tuned for my next blog . . .