I found a few interesting quotes regarding the financial crisis. Let’s take a look at what people (that is, Democrats) are saying Now, versus what they were saying Then.
The fundamental issue is we have got to put an end to this situation in which there is no sensible regulation, and irresponsible individuals in the private market, or unwise individuals in the private market can incur the kind of risks that put us in a threatening situation.
Barney Frank (D-MA), September, 2008
These two entities Fannie Mae and Freddie Mac, are not facing any kind of financial crisis. The more people exaggerate these problems…the more pressure there is on these companies, the less we will see in terms of affordable housing.
Barney Frank, (D-MA) Sept 11, 2003
source: New York Times
What was Frank responding to? From the same NYT article:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
That is, Bush was pushing for oversight in the increasingly risky portfolio (i.e. mortgages to people who couldn’t afford them). The legislation, introduced by Senator Chuck Hagel (R-NE) was blocked by the Democrats in Congress. Barney Frank at the time was the ranking Democrat on the Financial Services Committee.
Harry Reid, on the same legislation:
The legislation from the Senate Banking Committee passed today on a party-line vote by the Republican majority, includes measures that could cripple the ability of Fannie Mae and Freddie Mac to carry out their mission of expanding home ownership. While I favor approving oversight by our federal housing regulators, to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process.
Harry Reid (D-NV), Senate Minority Leader
Press Release, July 28, 2005
(also quoted here and here)
The Republicans saw it coming, and Democrats blocked their efforts to avert disaster. (Of course, by “expanding home ownership”, he means giving out mortgages to as many people as you possibly can — give out zero down, interest-only mortgages so people can “own” a house.)
That same bill reappeared as S-190, the Federal Housing Enterprise Regulatory Reform Act of 2005, sponsored by Sen. Charles Hagel [R-NE], and co-sponsored by Senators Elizabeth Dole [R-NC], John Sununu [R-NH], and (wait for it…) John McCain [R-AZ].
8 years of de-regulatory zeal by the Bush Administration, an attitude of “The market can do no wrong” have led us down the short path to economic recession. From the unregulated mortgage brokers, to the opaque credit default swaps market, to aggressive Short Sellers who were driving down the price of even healthy financial institutions based on innuendo, this Administration has failed to take the steps necessary to protect both Main Street and Wall Street.
Chuck Schumer (D-NY), September 2008
With the benefit of hindsight, the Sarbanes-Oxley Act of 2002, which imposed a new regulatory framework on all public companies doing business in the U.S., also needs to be re-examined. Since its passage, auditing expenses for companies doing business in the U.S. have grown far beyond anything Congress had anticipated. Of course, we must not in any way diminish our ability to detect corporate fraud and protect investors. But there appears to be a worrisome trend of corporate leaders focusing inordinate time on compliance minutiae rather than innovative strategies for growth, for fear of facing personal financial penalties from overzealous regulators.
Chuck Schumer (D-NY) and Michael Bloomberg (Mayor of New York)
“To Save New York, Learn From London“, Wall Street Journal, November 1, 2006
In their infinite wisdom, they were arguing to reduce the regulations passed after the fall of Enron.
They’re liars. All of them.
But remember: it’s all Bush’s fault.
[cribbed from Smallest Minority]
[Significant Update Sept 27: Added source links in quotes; added additional excerpt from NYT, and rewrote some text.]