The Blame Game

Much has been said in recent days about who is to blame for the current financial crisis. While there is certainly plenty of blame to go around between the borrowers who borrowed more than they could pay back and the lenders who lent to them, I would like to shine a little bit of light in the direction of the main culprits - Congress. Take a look at this video taken from a 2004 GSE Subcommittee meeting.



Note that it was the REPUBLICAN chair of the committee that was asking for MORE REGULATION of Fannie and Freddie and it was the DEMOCRATS (including Barney Frank and Maxine Waters) who spoke out against the additional regulations. Rep. Frank is important to this because at the time he had an undisclosed tie to Fannie Mae that would have (under normal circumstances) removed him from being in a position of power on the GSE subcommittee....his "lover" WAS AN EXECUTIVE at Fannie Mae!

The news media have covered the relationship in the past, but there have been no mentions since 2005, according to Nexis and despite the collapse of Fannie Mae. The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his “spouse.” Another Washington Post report said Frank called Moses his “lover” and that the two were “still friends” after the breakup.

So the ranking Democrat on the GSE Subcommittee and the House Banking Committee had an intimate relationship with an executive of an organization that his committees had oversight over....and he remained on the committee....AND the media has blacked it out? And they say that the media is biased toward Conservatives? But wait - these are not the only ties to the ranking Democrats. The top 3 recipients of Fannie Mae and Freddie Mac lobbying money are Democrats - number 3 is Senator Barack Obama the Dems Presidential nominee. In addition, Senator Obama has had three former Fannie Mae executives on his advisory staff - former CEO Franklin Raines (who is under federal investigation for his part in the Fannie/Freddie crisis), former Fannie CFO Tim Howard and another former Fannie CEO Jim Johnson. These three have held positions of influence in the Obama camp including Chief Economic Advisors (Raines and Howard) and the head of the Vice Presidential search Committee (Johnson). THIS is the "change we are looking for"?

As I said before - there is plenty of blame to go around. The misdeeds at Fannie and Freddie (which help Lehman Brothers fail) have been going on for years. Even President Clinton was thwarted on Fannie and Freddie reform back in 1994 - but he also said that Rep. Barney Frank led the anti-regulation charge! That is why I think that this current crop of Democrats (including candidates Bennion Spencer in Utah and Al Franken in MN) need to tread carefully here. They do not want to push the "blame Republicans for lack of oversight meme" or they could end up on the receiving end of this biting ad.