How We Got Here – Looking at the Bush2 Record

George Rebane

On these pages I have argued long and hard that the permissive environment in which mortgage lenders made subprime loans was carefully constructed and energetically promoted by the congressional social engineering programs of the Democratic Party augmented by a klatch of RINOs. Yesterday’s announced retirement by Rep Barney Frank (D-MA), one of the prime perpetrators of Depression2, motivated this post of the record pointed to by an RR reader.

Since the 2008 election we have heard the constant and now-famous wail from our President, echoed by Democrats in Congress, that seeks to absolve him and his cohort of any contribution to the present financial mess.

Actually, Mr President, it wasn’t.  The sequence of events presented below was taken from President Bush’s White House website in September 2008, and it is open for refutation by anyone who can show that the public record is in error.  (Source: NiceDeb)

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.  Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

2001
April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

2002
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac.  (OMB Prompt Letter to OFHEO, 5/29/02)
2003
January: Freddie Mac announces it has to restate financial results for the previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.”  As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.  (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03).
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.
September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.
October: Fannie Mae discloses $1.2 billion accounting error.
November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.”  To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.”  (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03).

2004
February: The President’s FY05 Budget againhighlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator:  “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.”  (2005 Budget Analytic Perspectives, pg. 83)
February: CEA Chairman Mankiw cautions Congress to “not take [the financial market's] strength for granted.”  Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.”  (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04).
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system.  Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs:  Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.”  (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04).

2005
April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.”  (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05).

2007
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions.  Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.”  (President George W. Bush, Press Conference, The White House, 8/9/07).
September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years.  Median sale price of existing homes fell six percent from the year before.
December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission.  The GSE reform bill passed by the House earlier this year is a good start.  But the Senate has not acted.  And the United States Senate needs to pass this legislation soon.”  (President George W. Bush, Discusses Housing, The White House, 12/6/07).

2008
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.”  (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08).
March: Bear Stearns announces it will sell itself to JPMorgan Chase.
March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.”  (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08).
April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.”  (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08).
May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

•    “Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.”   (President George W. Bush, Radio Address, 5/3/08).
•    “[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.”  (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08).
•    “Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.”  (President George W. Bush, Radio Address, 5/31/08).

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.”  (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08).
July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

Comments

[Mario Guanero]

Except... the GSE's don't originate loans. And only commercial banks were subject to the guidelines of the CRA. The GSE's stake in subprime was actually moderate, but everything housing related was pulled under by the private industry enterprises like Ameriquest & New Century; those that loosened the underwriting guidelines in an effort to bundle larger pools for securitization to be sold to the market speculators (often labelled as Wall Street), who then leveraged and hedged those underlying junk assets in hopes of pushing the load upstream before the default rates became intolerable.
Focusing on Fannie & Freddie is a C.Y.A. Karl Rove talking point for the ill-informed.
A lack of oversight and regulation in the 'free market' as to the handling of these assets perpetuated their origination; which, at it's core, was the problem.
I don't know about all his views, but on this matter Barry Ritholtz nailed it years ago:
http://www.ritholtz.com/blog/2010/05/rewriting-the-causes-of-the-credit-crisis/

[Russ Steele]

ABC, CBS and NBC have not mentioned Barney’s role in Fannie Mae or Freddie Mac mess, instead they are touted him as “one of the most familiar, powerful and colorful characters on Capitol Hill” (ABC), as “the Congressman who co-authored the overhaul of financial regulations after the crash” (CBS) and all noted his sexual orientation. NBC’s Brian Williams: “Among his legacies – besides his legendary sharp tongue – he was the first Member of Congress to publically acknowledge he was gay back in 1987.”

H/T Media Research Center

[D. King]

The genesis; let's not forget the genesis.

http://www.theatlantic.com/business/archive/2009/06/rethinking-the-cra/20207/

The knights: Defenders of the GSE realm.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

Our intrepid hero Mr. Frank.

http://www.youtube.com/watch?v=iW5qKYfqALE

[George Rebane]

Thanks DaveK for the added refs. Yes, the 1977 Community Reinvestment Act has been cited numerously here in the various anthologies of what led to our current state. The national Left, either through ignorance or perfidy, continue to beat on the private sector as the source of all the country's ills. However, whenever government and commerce collude to produce an ill-gotten result, you can bet the farm that government is the guilty party - they are the only ones with the big guns.

[Greg Goodknight]

Here's the NYT in 1999 in an article announcing a new program at Fanny and Freddie's
http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html?scp=13&sq=subprime+loans&st=nyt

"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton [!!!] Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. ... In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

This predates the Bush Administration. The "Guarnero" sock puppet writes "Except... the GSE's don't originate loans". That's right, they don't. The loan originators issued the loans based on what they knew the GSE's were buying, and then, after the loan was made, sold the iffy paper off like a hot potato.

Republicans were complicit at many stages, but the real estate asset bubble and bursting was driven by the GSE and those on the Dem side of the aisle who pulled them along.

[bill tozer]

How we got here? Those who say its all Bush's fault are flat wrong. I hate to be disagreeable on this lovely morning, but lets reason together. At first it was all Bush's fault. But a closer examination of the facts show it was the Tea Party that caused Hurricane Irene. Evil private jet owners (not the Tea Party Patriots as widely believed) caused the earthquake/tsunami/nuclear melt down in Japan. The European financial crisis was caused by exorbitant ATM fees here at home. The reason Obama got not one (yes, not one=zero) votes on the all important budget bill was because Black Americans have become complacent and 6th graders across the land did not write letters to their representatives. We have become lazy, fail to recognize genius, and things like trying to put the underwear bomber on trial in NYC and having Barney Frank loan his campaign 220k last year (blasphemy) to fend off a challenger has derailed the Recovery Tour once again. No, its not Bush's fault. It is the fault of those Bubbas clinging to their guns, those grandmas cling to their Bibles, those 6th graders that did not write enough letters, those unpatriotic folk who did not pay enough taxes, its the fault of Fox News.....but the bottom line is its ALL my fault. Yes, dear reader, direct your anger and frustration at the source of our woes. Its me. Its all my fault, and yes, I am that friggin important.

[Mario Guanero]

Facts anyone?

'The origination of subprime loans came primarily from non-bank lenders not covered by the [Community Reinvestment Act, a law pushing the two GSEs to purchase more loans in the secondary markets and thus expand access to housing loans to low-income neighborhoods];

The majority of the underwriting, at least for the first few years of the boom, were by these same non-bank lenders;

When the big banks began chasing subprime, it was due to the profit motive, not any mandate from the President (a Republican) or the Congress (Republican controlled) or the GSEs they oversaw;

Prior to 2005, nearly all of these sub-prime loans were bought by Wall Street—NOT Fannie & Freddie;

In fact, prior to 2005, the GSEs were not permitted to purchase non-conforming mortgages;

The change in FNM/FRE conforming mortgage purchases in 2005 was not due to any legislation or marching orders from the President (a Republican) or the the Congress (Republican controlled). It was the profit motive that led them to this action.'

sock-puppet that.

[Mario Guanero]

oh, and I don't believe in the concept of Fannie & Freddie in the first place.

[D. King]

Hand, cookie jar, I was getting this for you mom!

Can't slime / rewrite your way out of this!

Great link Greg!

[RL Crabb]

I always thought that it was Tozer on the grassy knoll. Thanks for the confirmation of all my fears.

[bill tozer]

Mr. Crabb, the truth may be unpleasant and fearful at times, but the truth is the truth. Yes, it was me who shot JR from the grassy knoll. After that I decided to relocate to the West Coast again, a change of scenery if you will. Unfortunately, some in Texas called it Unlawful Flight to Avoid Prosecution. Its just a bunch of words to describe "keep on truckin." Or, as Dr. Rebane's picture of the day implies, "What, me worry?" I

[Greg Goodknight]

Looks like the sock has a soft spot, and doesn't want to look at all the facts. From writing styles and the fact he's not posting much anymore, I'd wager "Guarnero" is a puppet fashioned from one of Steven Frisch's dirty socks.

The New Deal era GSE Fannie Mae and it's Frankenstein twin, Freddie Mac, have been Democratic sacred cows from their beginnings. Republican majorities during the Bush II years were thin, and since the GSE money flows fed many at the government trough, Bush II didn't have the votes to reform it.

Fannie and Freddie sliced and diced the paper and sold it worldwide. So yes, the bad paper was bought on the exchanges and dispersed worldwide, not just held by the GSE's. And the GSE's weren't the only ones doing this, though they wanted to be.

Financial system oversight legislators Barney Frank (D-MA) and Chris Dodd (D-Countrywide) were carrying water for the GSE excesses for years, far longer than BushII was in office with bare Republican majorities. Indeed, for most the last two years before the crash, it was the Pelosi & Reid show on Capitol hill, with clear majorities, and the crash was on their watch.

[Mikey McD]

Central planning is bad.

[D. King]

Greg said:

"I'd wager "Guarnero" is a puppet fashioned from one of Steven Frisch's dirty socks."

Yeah, I picked up on that the day when he called us "Crackers!" LOL
The writing style is the same.

[Greg Goodknight]

I would prefer that sock name to go away, and did from his first post... one of the better trumpeters in the world over the past 40 years has been one Mario Guarneri. I took a few lessons from him in college (he was the part time Professor of Trumpet at Pomona College while full time in the LA Phil) and no longer could justify traveling into LA to take lessons from the same guy Guarneri (and many if not most of the LA professionals) went to for lessons. Guarneri's most famous film work was probably the trumpet solo in the theme and incidental music for Godfather III.

Given Guarneri has been at the SF Conservatory of Music for many years now, it may even have been the inspiration for the nom de puppet, given Frisch's ties to Frisco.

[D. King]

I'm sure he has others, with ethnic names to disguise his pinkness. :)

http://4.bp.blogspot.com/_CiZ2IWA3LzI/S_g6ElJDFdI/AAAAAAAAI10/g7fkPCxcJ1M/s1600/100522_SockPuppetGang+(2).JPG

[George Rebane]

It does appear that Mario Guarnero is what I call a sackhead who wishes his comment to be single-sourced but anonymous. As long as he presents civil arguments from his progressive perspective, he is welcome. Perhaps one day he will be proud enough of his arguments to take off his sack.
http://rebaneruminations.typepad.com/rebanes_ruminations/2009/11/internet-conversations-sackheads-scattershots.html
http://rebaneruminations.typepad.com/rebanes_ruminations/2010/08/a-sackhead-saga.html

[Greg Goodknight]

"Perhaps one day he will be proud enough of his arguments to take off his sack."

Don't hold your breath. For example, assuming it was the one and only Frisch, a sock means that he can shed his "moderate" middle of the road skin and go with unvarnished partisan rhetoric.

[bill tozer]

Mr. Goodnight, perhaps you are being too harsh on the sack heads. Remember the Aints fans with sacks on their heads in the Super Dome? Now their sacks are gone and they wildly cheer their Saints. Time heals all wounds. Another good thing about sack heads/sock puppets is they have so many dull personalities they can pose for a family portrait all by their lonesomes. When the Good Lord passed out funny bones, guess he skipped over the sack heads cause they were too anonymous. I shutter to even consider that time won't heal our sack heads, but stranger things have happened.

[Paul Emery]

Huh?

Bush was a big fan of the Freddie and Fannie

The fact is that the President, as a weatherman of upcoming financial crisis , didn't have a clue as to what was going on. No doubt, the worst President ever!!!

I am beginning to think that the main purpose of this blog is to trumpet Republican causes with a mildly conservative bent.

Remember, it was all Republicans in Washington till 2006. If he had any mettle he could have pushed through whatever reforms were needed.

http://archives.hud.gov/remarks/martinez/speeches/presremarks.cfm

Bush in 2002

"There's some people out there that can fall prey to unscrupulous lenders, and we have an obligation to educate and to use our resource base to help people understand how to purchase a home and what -- where the good opportunities might exist for home purchasing.

Finally, we want to make sure the Section 8 homeownership program is fully implemented. This is a program that provides vouchers for first-time home buyers which they can use for down payments and/or mortgage payments. (Applause.)

So this is an ambitious start here at the federal level. And, again, I repeat, you all need to help us every way you can. But the private sector needs to help, too. They need to help, too. Of course, it's in their interest. If you're a realtor, it's in your interest that somebody be interested in buying a home. If you're a homebuilder, it's in your interest that somebody be interested in buying a home.

And so, therefore, I've called -- yesterday, I called upon the private sector to help us and help the home buyers. We need more capital in the private markets for first-time, low-income buyers. And I'm proud to report that Fannie Mae has heard the call and, as I understand, it's about $440 billion over a period of time. They've used their influence to create that much capital available for the type of home buyer we're talking about here. It's in their charter; it now needs to be implemented. Freddie Mac is interested in helping. I appreciate both of those agencies providing the underpinnings of good capital."

[Greg Goodknight]

"And so, therefore, I've called -- yesterday, I called upon the private sector to help us and help the home buyers. We need more capital in the private markets for first-time, low-income buyers. And I'm proud to report that Fannie Mae has heard the call and, as I understand, it's about $440 billion over a period of time."

All that does is inflate the price of starter homes, as it increases the number of possible buyers. Without the credit for first timers, sellers would have to decrease the price they'd be willing to sell at. If they don't sell, it's likely to be among the affordable rental units in that area.

It's easy money that fueled the asset bubble, and it's unclear to me that first time buyers are more worthy than others in similar financial condition. It does cull out those who bought in the past but lost their home, and is probably a form of age discrimination.

Paul, your (and Washington's) blind spots are the unintended side effects of the programs you think are good solutions. A similar price inflation is found in higher education, where ever higher student loan fundings has resulted in ever higher prices for education. They even had to change bankruptcy law to insure a former student can't shed crushing debt they were assured by the college financial aid officers they'd be able to afford. They are indentured servants being bled dry by the Feds.

[Greg Goodknight]

"Huh? Bush was a big fan of the Freddie and Fannie[.] The fact is that the President, as a weatherman of upcoming financial crisis , didn't have a clue as to what was going on. No doubt, the worst President ever!!!" Also Sprach Paul Emery.

To the contrary, forgive me the lazy choice of Wikipedia for an opposing factoid:
"In 2003, the Bush Administration attempted to create an agency to oversee Fannie Mae and Freddie Mac. The bill never made progress in Congress, facing sharp opposition by Democrats."

http://en.wikipedia.org/wiki/Economic_policy_of_the_George_W._Bush_administration#Fannie_Mae_and_Freddie_Mac

[Paul Emery]

But the Repubs had control of it all in 2003. You're saying that the President with both houses in his camp was too weak to overcome minority opposition. No, my guess is the party was on and he let it ride till it burst.

[Paul Emery]

Here's more from the same wiki page that you chose not to include

"Throughout the crisis, Bush seemed to defer to Paulson and Federal Reserve Chairman Ben Bernanke. He kept a low public profile on the issue with his most significant role being a public television address where he announced that a bailout was necessary otherwise the United States "could experience a long and painful recession."

[Greg Goodknight]

That was the NY Times, Paul, not me. Here's a quote from the story (footnote link by wikip) cited by two of the Dems who sank the 2003 effort:

" ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said."

Yes, Paul, R's had bare majorities in the House and the Senate at the time, but far from the number needed to assure cloture in the Senate, or to assure passage in the House when the Dem's wanted to stop something.

[George Rebane]

I'm amused. How does PaulE's 139pm indict Bush in any sense of the word? In 2002 the country was coming out of a recession, 9/11 had just occurred, there was no housing bubble, and the longstanding national policy to get some poorer people into their homes was still in place. What else would one have wanted the President to say at that time and place when it came to boosting housing as one of the many sectors that then needed a boost? How does one stretch credulity so far as to use this statement as the goad and starting gun for subprime loans??!!

[bill tozer]

Paul, Fannie Mae has its HomePath program for first time buyers right now. 3.5% down. All you need is a job, which is the sticking point for many would be borrowers. I remember when the minorities with the help of Acorn were protesting banks and bankers' home cause they were not lending to people with...er...less than stellar credit. HUD started an investigation of "racial discrimination" for mortgage writers to put the squeeze on. Ok, the banks threw up their hands and lent to those who did not qualify for the traditional home loan. Then, when the defaults started to roll in, Acorn and their conspirators went back to the banks and bankers' home to protest throwing people out of their homes. The FHA has today a program for 1st time programs with 3.5% down as well, but you need a job (imagine that) and they make sure the home ain't a trash heap. One thing you might consider is that many of us gray beards have raised our families and are trying to get out of our 3-4 bedroom homes to downsize. But, simple demographics say there are less people with young families who are going to snatch up the McMansions and few with the wherewithal to do so. So, we are all stuck in the same boat, even if Johnnie moves back home with his pregnant bride. Which is happening. Kinda like living back on the farm with 3 generations under the same roof. Simply loaning to po folk ain't the whole solution as the market will be flooded with homes as soon as folks feel they can get a decent price for their homes, which they have keep off the market. Here is a boring non-informative blurb from today's news:http://money.msn.com/home-loans/news.aspx?feed=AP&date=20111129&id=14568780

[Paul Emery]

Here's some conclusions from William Black, the famous fraud investigator that busted Keating in the S&L days.

http://econintersect.com/wordpress/?p=11024

I suggest a quick read of the link

....During the key period 2005-2007 when the epidemic of mortgage fraud driven by the accounting control frauds hyper-inflated the bubble and set the stage for the Great Recession the President’s Council of Economic Advisors were oblivious to the developing fraud epidemics, bubble, and the grave financial crisis they made inevitable absent urgent intervention by the regulators and prosecutors. President Bush’s economists in this era were blind to the factors that were making the financial environment so criminogenic (e.g., deregulation, desupervision, and de facto decriminalization plus grotesquely perverse executive and professional compensation). They typically did not make any relevant policy advice and when they did it was the worst possible advice warning of the grave dangers of regulations designed to reduce adverse selection. They were so blind that they did not even find it worthy of reporting that there were over a million “liar’s” loans being made annually.....

[George Rebane]

PaulE 301pm - How does this opinion commentary tie with the public record of 2005 and 2007 cited above?

[Greg Goodknight]

"Here's more from the same wiki page that you chose not to include"

Because it was long afterwards in 2008, and Bush was both a lame duck and sitting with a veto happy Reid & Pelosi Congress.

Really, Paul, you're just throwing it into the fan and hoping something sticks. For the record, I really dislike playing Bush's advocate, something I only do when someone is just reciting the usual BS that passes for accepted fact in progressive Democrat circles. You (in the plural, anonymous sense) *are* the reason I stopped being a Democrat.

[Greg Goodknight]

By the by, anyone wishing to see the extent of William Black's bipartisanship can read his blogs at The Huffington Post:

http://www.huffingtonpost.com/william-k-black

[Paul Emery]

George

It illustrates the lack of veracity in Bush's administration to deal with what was a predictable crisis.

There is a difference in the credibility of William Black,

http://en.wikipedia.org/wiki/William_K._Black

who is also a fierce Obama critic and the web site you cite http://nicedeb.wordpress.com/

That you support those conclusions without questions shows what a Bush apologetic you are. The fact is Bush was asleep at the wheel and never made reform a priority and by Sept 2008 he was either ignorant of the dangerous direction or he was looking foor the fnish lind waiing to get out of there. We elect a President to help inform us of dangers in the road and nowhere did Bush show any real fervor in bugling that message.

Just looking at one of NiceDebs conclusions makes me question her whole premise that Bush was actively trying to stop an inevitable crash.

Fron NiceDeb
February: CEA Chairman Mankiw cautions Congress to “not take [the financial market's] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04).

Not included in this summary is another quote from .Manikew, Bush's cheif economic advisor through 2005

" More vital than choosing a President with the right tax plan is electing a President with the political courage to change course when events demand it."

This summarizes the great failure of Bush. He simply didn't have a clue and exerted little political will to find one.

[Steve Frisch]

"I'd wager "Guarnero" is a puppet fashioned from one of Steven Frisch's dirty socks."

Posted by: Greg Goodknight | 29 November 2011 at 10:50 AM

Jeez Greg, how paranoid can you get? I get really sick of denying that I ever use another name. I NEVER use another name. George, go check the IP addresses. I bet you will find that it is not form any of those I have ever posted from.

For the last time, I am quite capable of calling you guys "crackers" all on my own; but I think a perusal of the site would show I have never used that term.

Perhaps there are other people out there why think you are all crackers?

[Greg Goodknight]

Frisch is back in classic, namecalling form.

It isn't paranoid to notice a sock puppet has arrived. This one wrote fairly well, so you were a candidate, Steve. I note your apparent heartfelt denial.

[Todd Juvinall]

George, did Obama tell everyone that if he was elected he would fix all the Bush created problems? You know, it seems to me he did. PaulE will never complain as diligently as he does against a Prez who has been gone for almost 4 years and who promised to lower the oceans and put pot in every garage. LOL!

Greg, you have it right. Guano!

[George Rebane]

Re SteveF 453pm - "McD says it all. As D.King pointed out Islam is certainly not a race, but George and his friends treat it as one, and give it the same respect that southern slaveowners did slaves.

Sad day in America. Adieu crackers.

Posted by: Steven Frisch | 11 September 2010 at 07:41 PM"

[Paul Emery]

Todd

It was George who posted this goodie Bush piece that I responded to. Instead of acknowledging that Bush was a disaster as a President all the Repub loyalists on this blog still try to find something redemptive about his eight disastrous years.

I give Obama very low marks as an effective leader. He re-hired the same economic crew that Bush brought in to fix the problems they created.

However, let me ask you this Todd. Which USA would you rather live in: 2000 after eight years of Clinton or 2008 after eight years of Bush.

I don't see much difference between either party. After all is said and done they both perform their functions of ensuring the status of the ruling class by acting as collection agency's for special interest money.

[Todd Juvinall]

PaulE, you crack me up. Your Bush hatred permeates. I personally did well during the Bush presidency. The country ,until September of 2008 did too. Your pal Barney and your pal Chris Dodd, as well as Harry and Nancy, all powerful in Congress were the beginning of the end to our economy. There were issues I had with Bush but having listened to the daily mantra of hate from the media and the democrats, you toughened the spine of many republicans because we were not going to join you bashing our guy, even though we had differences. That is also my personal position. I listened to your pal Dan Blather lie through his teeth and yet you defended him. It is more important to your psyche to hate Buss than to admit the country was doing pretty good economically under his watch. He had 9/11 and afterwards we had no attacks until your bud Obama took over. So, PaulE, you are pissing in the wind with your Bush bashing and yes, after 8 years of your ilk bashing him and us R's on a daily basis I must say, I really don't care about your "analysis" of him.

[Steve Frisch]

Hey, I stand corrected George! Thank you. Greg was right and I was wrong.

Still, not me posting as Mr. Guanero.

[Paul Emery]

Then why do you bother to respond? If you think we were in better shape in 2008 than in 2000 more power to you.
Dan Blather Huh? What are you talking about? I don't get the joke.

Let's see, Bush doubled the deficit, had the lowest job growth of any modern president, and got us into two unfunded wars that we're still involved in. What other good things did he do for our country.

Really Todd you're really stretching on this one.

[Todd Juvinall]

Let me see, Bush had a deficit of 150 billion in his last year and Obama has run on 10 times larger each year. Yep, you are right PaulE.

[Paul Emery]

Todd

Bush left Obama with the legacy of TARP, his creation, along with all the bills that came due on Obama's watch as wel as the funding for his tragic war in Iraq that was supposed to pay for itself within a year.

Have I ever defended Obama's financial policy? In fact look hard for any kudo's in his direction from me. You are such a Republican you can't see anything beyond partisan propaganda. I profoundly dislike both parties and consider them to be mainly vessels for corruption and deceit.

Bush inherited a healthy economy and made it worse, Obama inherited an unhealthy economy and maintained the illness. That's how I see it.

[bill tozer]

"Which USA would you rather live in: 2000 after eight years of Clinton or 2008 after eight years of Bush." Hmmmm. That is a hard call, depending on what the definition of "is" is. Don't know, but considering quality of life issues and other factors, I will have to go with the ladder. When Clinton was in office, my biggest fear was one of our daughters would want to take a job as a White House intern. After 8 years of Bush, those fears evaporated into thin air. So, I had less worries under Bush. Things started picking up for me in 2001 and its been a good ten year run. Interesting question posed by the poster.

[Greg Goodknight]

Clinton's first two years were a disaster. His last six were mostly due to adult supervision begun by the first elected Republican Speaker since I started eating solid food.

Bush inherited a stock market crash from Clinton's last year and a recession which started before Bush took office. The economy was just beginning to recover when 9/11 hit.

You'd think Bush was bad enough without inventing more of him; besides that, if the Democratic Party hadn't nominated the two worst major party Presidential candidates of my lifetime (not to mention my parent's lifetime), there never would have been a Bush II

[Paul Emery]

Greg

Yes indeed, the Clinton-Ginrich years were interesting indeed. I like the idea of a divided legislature that somehow finds a way to gt together and compromise. What we have today is just the opposite. The political stakes in compromise are fatal to many on both sides and neither party will ever have the total control they require so it's nothing but endless deadlock. The approval rating of Congress is 9% and falling. I don't know how much longer the American public will put up with this.

Greg, where is the "adult supervision" going to come from this time? I like that description.

Thankfully, since neither party will EVER have a super majority we'll be in for some interesting times. Certainly it's time for third, fourth and more parties to break up the Republicrat monopoly and get the country going again. I say let's vote for any one but Republicans and Democrats and see what happens. That's entirely under our control and could change the country in one election cycle.

[Larry Wirth]

Looking for the "sock puppet"? Take advice from Sir Arthur Conan Doyle and look for the dog that "didn't bark". A couple of candidates spring to mind...

Mario Batcrap is an obvious lefty, so who has been missing while producng the puppet show? Hmmmm...

[Larry Wirth]

Ben? Doug? Bhuler?... Ben? Bhuler?... Bhuler? Ho Ho HO!
We can be sure it's not Bhuler.

[Steve Wynn]

I find it rather interesting that Woodsy, aka George complains about people using a second name when he's the posterboy for this. Maybe Mr. Goodknight should think about this too?

[George Rebane]

SteveW 919am - if the 'George' you refer to is me, could you please clarify??

[Mario Guanero]

Thanks for confirming my beliefs.
Not a factual statement in rebuttal amongst the detritus of this thread.
All personal attack & conspiracy crap.
And... all wrong btw.

Goodknight is the only one to initially attempt a response/defense - which was weak, and lacked any hard number/facts, but at least he started on point (only to go personal in what seems to be typical RR fashion).

And D. King - I never called all of you 'crackers', just appealing to Rebane's affinity for pejoratives (raghead, liberals, etc.) - but I can see how a member of this e-centipede would perceive inclusion.

Juvinall, you'd do well to keep your distance, particularly of your 'success' during the Bush years, as disclosure of your transgressions reflective of this discussion is just a mouse click away (from legal sources, mind you). Someone pointed me to your little blog rant regarding my earlier address to you - and not only are you misguided in oh so many ways as to the definition of slander, but seem to tread the legal lines yourself with your ignorant, libelous tone. Unlike many it seems, I can back up all my positions with hard facts.

Forgive me for actually attempting to engage... now on with your reindeer games.

[D. King]

"And D. King - I never called all of you 'crackers', just appealing to Rebane's affinity for pejoratives (raghead, liberals, etc.) - but I can see how a member of this e-centipede would perceive inclusion."

Well, at least we’re not in the energy infrastructure destroying, global warming, socialist adoring, "it's Bush's fault", conga line!

http://www.youtube.com/watch?v=7Go7M9yjUyU

[Todd Juvinall]

Guano, hmmm, yeah, you have what facts? Please enlighten us oh phony named one. What a hoot! Don't you know a person using a phony name can't claim slander or libel? Besides, you seem to be the angry liberal here. We all get along fine.

[Greg Goodknight]

Paul, imagine the discussions we could have if Reality was the starting point and not the end game after wave after wave of the myths Progressives knowingly tell each other come crashing onto the rocks.

In the '90's Gingrich tamed the federal budget, if for a time. For his reward he got perhaps the most relentlessly negative press of any public figure in the US. Ever. Hounded out of the Congress for what the House counse said was Income Tax law violations, and it took a couple years for the IRS to say, no, there was no violation. Gingrich was cutting close to the line, but didn't stray over.

I see Guano is back. Sorry guy, but your 'facts' don't hold up, like your partisan spew of "Focusing on Fannie & Freddie is a C.Y.A. Karl Rove talking point for the ill-informed". No one believes that. You're sounding more and more like the FUE channeling Thornton. Here's a fact... just prior to the meltdown, the GSE twins had about 91% of the mortgage backed securities market.
http://financialservices.house.gov/UploadedFiles/052511sifma.pdf

They're not in the loan origination business, but their business partners, like mortgage banks, are.

[George Rebane]

Administrivia: I did delete the little personal mudball exchange between ToddJ and the 'Steve Wynn' that the latter started. But ToddJ appears to be right about Steve Wynn being a sock puppet (aka sackhead). He never did answer my 941am.

[Steve Wynn]

Sorry Woodsy, I was a bit busy and (I know it'sd hard for you to believe) don't hang on every word that you and Toddy post. I get enough humor in my day without being at your beck and call.

If you want to use Todd Juvinall as your basis for accuracy I'm really surprised as someone with 2 degrees and being a former director I thought you were smarter than that?

But then again, maybe I'm wrong?

[Paul Emery]

Greg

I didn't have a bad thing to say about the Newt. The contract with America was a brilliant political move and very effective.

Yes, Gingrich tamed and balanced the budget then watched Bush destroy it with tax cuts and unfunded wars. That was the time to pass a balanced budget amendment (2000) but the Repubs dropped the ball and waited till the Dems were in control to make it an issue after allowing the deficit to double under Bush 2. My guess is that they didn't want to balance the budget because they would prefer to run up the national credit card so support defense contractors and international adventures . Pretty smart actually. They get what they want and don't take responsibility or make it an issue till the Dems are in control.
Greg, can you show me any examples where the Bush team really made a balanced budget amendment a priority?

[Todd Juvinall]

Greg, the sock puppet SteveW is calling you Woodsy. What a hoot.

[Todd Juvinall]

Isn't it interesting that we place our names here and the sock puppets of our local lefty crowd are too scared to do the same. They always go personal, never addressing the post.

[Steve Wynn]

Maybe you should speak with Greg Goodnight (as there is no such person) and you and your fellow puppeteers can go out and play with each other?

Todd, you certainly are not the sharpest knife in the drawer, so let's try to not give anyone advice as your record is not one that I would be proud of!

[George Rebane]

ToddJ - I think that SteveW's 234pm was directed at me since he accused me of also being 'Woodsy' in his 919am "... Woodsy, aka George ...". However, I will let him clear this up, else he's among the dear departed on this blog. In any case, since he has trouble counting - I have three degrees - that may explain why most of the stuff here may be out of his reach. (But I am intrigued about 'Woodsy'; anyone know where this alleged sackhead posts?)

[Todd Juvinall]

SteveW, you are a sock puppet and have no guts to place your name here as we do. Greg is a real person since I have met him in person and he is not Woodsy (I know Woodsy personally). There are no puppeteers here except you and guano so we just laugh at you. Regarding being proud of something. Hmmm. Let me see. SteveW, sock puppet, coward, Todd Juvinall, twice elected by the people of the county. Golly, I actually exist. You are a troll and are using a very successful man's name from Las Vegas. What a hoot.

[Todd Juvinall]

Woodsy posts at my blog but has been away for a couple of months. I saw him at Friar Tuck's when I was there for dinner. Woodsy doesn't use his real name because the sock puppets like this SteveW character were trying to find him and go after his work.

[Steve Frisch]

Funny, you guys don't seem to have any compunctions about coming after me at work. Don't you think this is a bit of a double standard, Mr. Juvinall?

[Todd Juvinall]

You call what you do work? Amazing.

[Steve Frisch]

Hypocrite...thy name is Todd.

[Paul Emery]

This is really getting silly. I need to call my friends and ask them to tune in.

Back somewhat to the original topic of the this post-Bush's performance as Pres. Can anyone answer my question as to why the Repubs didn't pursue a balanced budget amendment in 2000 when the budget was indeed balanced and the deficit was indeed being paid down?

[Todd Juvinall]

Any time Frisch arrives the childish behavior of a liberal is exposed.

[Paul Emery]

How about my question Todd? It's totally relevant to the topic of this post.

[George Rebane]

PaulE 459pm - think back to 2000 when the markets crashed and the dotcom bubble burst. Everyone with a 3-digit IQ knew that 1) the balanced budget was a flash in the pan, and 2) with the country facing a recession, such an amendment would have a snow ball's chance in hell. Nobody was willing spend political capital pushing a DOA loser.

[Todd Juvinall]

PaulE, I think they didn't have the 2/3rds number.

[Walt]

So we have THREE Steve's now..Interesting.... So is this the one that dreamed up George's multiple personalities in The Union's thread?
But George might pick up a few more readers out of the deal.
This guy is new on the block, and had no clue what he's getting into.Wasn't it you ( Steve3) that whined about "adult talk" on George's page, and was happy The Union had a "baby sitter" and hiding behind "Guest"?

[Paul Emery]

But the Repubs ran the show? Whys is it a good idea today and not then?

[George Rebane]

PaulE 550pm - Because today the country is on its ass economically, has had its credit rating downgraded, and will crash and burn if the can gets kicked down the road some more. There is no more slack in the system, we're running on empty. (I know this is a view totally foreign to the Left.)

[Todd Juvinall]

PaulE what about 2/3rds don't you understand?

Walt, welcome back. The three Steve's, sounds like a bad Amigo movie. LOL!

[Greg Goodknight]

Paul Emery has met me. Not sure why Wynn thinks I don't exist. Pelline has met my kid. Coito ergo sum.

Wynn must be a figment of a deranged imagination.

By the way, Wynn, I don't know of any "Greg Goodnight" in town either. But I am.

[bill tozer]

Guano @10:00am: "just appealing to Rebane's affinity for pejoratives (raghead, liberals, etc.) Well, bat guano, you are 100% spot on. Calling anyone a liberal is indeed a pejorative. Look at all the liberal saps running away from that title and ducking under the more palatable term "progressive". Yep, any liberal knows that being called a liberal is the kiss of death after the scandalous way liberals have behaved, and worse, they way they think. Liberal is an insulting pejorative and is the lowest name you could ever ever call someone slithering out of the primordial ooze

[George Rebane]

C'mon BillT, cut the marshmallows, tell us what you really think ;-)

[bill tozer]

I think it is high time we stop criticizing Steve Wynn. I, for one, actually like what he has to say: http://www.youtube.com/watch?v=FATx3ijm_xg&feature=related

[bill tozer]

We should not dis Steve Wynn, we should listen to him http://www.youtube.com/watch?v=VdrxfFFeMbc

[bill tozer]

Steve Wynn was a big Obama supporter and donor. Now he is watching the carnage. There is hope even for a life long Dem like Mr. Wynn. He is a true patriot. http://www.moneynews.com/StreetTalk/Wynn-Obama-dishonest-economy/2011/10/21/id/415290

[bill tozer]

Stevie, you saved the best for last. Thank you Steve Wynn for your courage http://www.youtube.com/watch?v=iu-P_lK-NeU&feature=related

[Paul Emery]

George, Todd

Actually even hard core Conservatives have a hard time with the idea of a Balanced Budged Amendment. That's probably why it's never seriously considered and is only used as a dividing point in political garbage talk. Count on it never happening

Norman Ornstein, of the conservative American Enterprise Institute, regards the measure as a bad idea.

http://www.washingtonpost.com/opinions/why-a-balanced-budget-amendment-is-too-risky/2011/07/18/gIQAn3PhMI_story.html

"That this amendment has been endorsed by all 47 Republicans in the Senate, and that a dozen Republicans have pledged not to increase the debt limit without the amendment, are sad commentaries on our politics. But the effects should this amendment be adopted would be frightening."
“I am not against balanced budgets,” he wrote on the subject. “But a constitutional requirement to balance the federal budget is a virtual guarantee that we will have economic catastrophes that will make the Great Depression look like a picnic.”

[Todd Juvinall]

PaulE, I actually think a balanced budget amendment is unworkable. California has one and look at how creative the politicians are in working around it and still overspending. I am also against term limits becasue as we see, California's term limits have backfired and we are worse off. At least even that old goat Willie Brown worked within the income. Anything we the people do to put the fix on the politicians will never work. The only thing that keeps the damage limited by them is to create gridlock and/or never put them in session.

I think Steve Wynn the mogul is a great guy, thanks Bill for the links. The local Steve Wynn, the sock puppet coward, has to be a liberal. They are so nasty.

[George Rebane]

PaulE - I agree with ToddJ that the naked balanced budget amendment is unworkable. To make a workable one requires a lot of contingencies for allowable debt. Even though I think that these could be wordsmithed, the politics required for getting such an amendment passed is beyond my ken.

[Paul Emery]

George, Todd

I also don't believe in term limits. How long I chose to support someone in office is my business. Personally I think two terms is max for any office (sorry Nate) but it should be my choice.

I think a balanced budget is possible if we tax ourselves to pay for last years spending. A simple across the board increase will do. That way we will never accumulate debt for more than one year. If we go over budget then we pay the next year. Is that too simple? That way we pay for wars as we fight them and we feel it in our pocketbook. The greatest way to stop wars is to pay as you go and have a draft (no one excluded} That way everyone feels the pinch.
We would have left Iraq years ago if we paid to fight.

So what happens to the 47 Repubs that have pledged to make no deals without a balanced budget amendment? They need an exit plan for sure.

[George Rebane]

PaulE - I'm not so convinced about opposing term limits. The notion of citizen politicians who serve for a while and then get back to the real world is still attractive to me, although I do understand the hanky-panky with all that.

Re the balanced budget. I think we danced that dance not too long ago. If I recall, my counter was that this year's fed budget cannot be larger than the revenues collected last year (with, of course, all the emergency contingencies thrown in).

[Paul Emery]

That will work George but what happens when you have an unfunded war or an economic downturn that yields less tax revenue. What happens when the economy does not grow but fixed expenses either stay the same or increase. Does the capitalist model you see as the funder of the government have to rely on constant growth? We know that there are recessions as a natural cycle of business so when we have one doesn't that lead to deficit and debt?

[George Rebane]

PaulE - as I mentioned, "unfunded wars" and "economic downturns" would be among the emergency contingencies I mentioned. The former we would not have any more - we get in a fight, we fund the fight. In economic downturns ("natural business cycles") we tighten our belts and spend less; the government also has to adapt as does the private sector. Keynesian papering over a recession/depression has not worked; it only makes it harder to dig out than letting the markets clear. In any event, we must always remember that the current method does not work.

[Paul Emery]

George

Thanks for your clarity on this. Let me indulge you in this perhaps not so hypothetical question. What happens if the markets are controlled by interests, foreign of domestic that are not the best interests of our country?

[D. King]

Good question Paul, kind of reminds me of the hydro-electric dam being blown up.

[George Rebane]

PaulE 1135am - What happens then is exactly what is happening now. To the extent that they can such interests do exert their influence on the markets. The solution is sunshine and transparency, not purposive control, especially by governments. The last thing you want is to destroy the working of the price mechanism of open markets, even if the price mechanism is a bit flawed already and takes a while to communicate 'truth'. Control of markets has always been the objective of all who trade in them, whether by means honorable or devious.

[Paul Emery]

Fascinating topic George. The next question I have is what do you believe is the appropriate roll of government in creating regulations and acting as a traffic cop so to speak. Obviously we need some regulations, without going into details what do you think they need to be? This I think is a huge question and very relevant today.

[George Rebane]

PaulE - agreed. My starting point of government's duty in markets is to enforce the general notion of 'truth' in all market communications, and to be the arbiter of contract conflicts. A good starting point for expanding the discussion here is this short pdf 'The End of Market Failure'.
http://www.cato.org/pubs/regulation/regv23n2/zerbe.pdf

[Paul Emery]

Thanks George I'll read it

[David Smith]

I find it interesting that Steve Wynn is quoted in the Union today..... Oh well, so much for not exisiting in the county.

[Todd Juvinall]

Steve Wynn is a sock puppet and was in the Union because he/she placed it there. He was not interviewed by the Union. It is an old ploy to gain legitimacy for a sock puppet. It is also a ploy to use a real common name like David Smith. Or John Jones. I think you are one as well.

[Steve Wynn]

Shhhhh Toddy, it's time for your medications as you seem to have some real problems with reality. Maybe you should call the reporter who called me about the windstorm, and ask him, before you continue your insanity?

[RL Crabb]

Another sign of rabid dingbatism: paranoid delusions.

[Todd Juvinall]

Shh, Steve Wynn the sock puppet. She didn't call you, you submitted. It is OK, Crabb has called your malady.