From Peter J. Wallison's Wall Street Journal article: "Obama Voted 'Present' on Mortgage Reform"
In each of the first two presidential debates, Barack Obama claimed that "Republican deregulation" is responsible for the financial crisis. Most viewers probably accepted this idea, especially because Republicans generally do favor deregulation.
But one essential fact was missing from the senator's narrative: While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector. . . .
If Sen. Obama were truly looking for a kind of deregulation that might be responsible for the current financial crisis, he need only look back to 1998, when the Clinton administration ruled that Fannie Mae and Freddie Mac could satisfy their affordable housing obligations by purchasing subprime mortgages. This ultimately made it possible for Fannie and Freddie to add a trillion dollars in junk loans to their balance sheets. This led to their own collapse, and to the development of a market in these mortgages that is the source of the financial crisis we are wrestling with today.
Finally, on the matter of deregulation and the financial crisis, Sen. Obama should consider his own complicity in the failure of Congress to adopt legislation that might have prevented the subprime meltdown.
In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward.
See also:
- McCain Letter Demanded 2006 Action on Fannie and Freddie
- Ms. Information: Democrats continue to cover up their relationship with Fannie Mae, and the media plays along, Stephen Holden (Wall Street Journal )
- Most Pundits Are Wrong About the Bubble, Charles Calomiris (Wall Street Journal)
- Another 'Deregulation' Myth (Wall Street Journal)
- Would the Last Honest Reporter Please Turn on the Lights?, Orson Scott Card
This video sums up the situation nicely and demonstrates that Obama is lying when he blames the current financial crisis on Bush and the Republicans:
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