After much arm twisting and second guessing, the House of Representatives passed the Senate version of the $700 BILLION dollar bailout of Fannie Mae and Freddie Mac. It should be noted that, once signed, this legislation will cost $50 Billion MORE than the total amount paid to all Social Security recipients this year. This bill will cost over $100 Billion dollars MORE than has been spent on the 5 years of the Iraq War. If fact, it will cost $150 Billion dollars MORE than ALL non-military discretionary spending in the 2008 federal budget.
When something this colossal is passed this quickly and with such limited debate it is often difficult to get accurate information. In this case, a number of myths have been promoted by the supporters of this bailout and echoed by the Mainstream Media.
MYTH #1: Democratic Speaker of the House, Nancy Pelosi, claims the economic policies of President George W. Bush's caused the current financial crisis.
NO, it was the Clinton Administration's aggressive expansion of the powers of the Community Reinvestment Act which forced banks to make loans to high risk borrowers in low income neighborhoods. President Bush tried multiple times to rein in Fannie Mae and Freddie Mac but all new attempts at regulation for these fiscal black holes were foiled by the democrats.
MYTH #2: Barack Obama claims John McCain's support for deregulation caused this problem.
No. Senator John McCain was one of four co-sponsors of bill S. 190 Federal Housing Enterprise Regulatory Reform Act of 2005 which sought to tighten the regulations on Fannie Mae and Freddie Mac while there was still time to save the financial collapse were experiencing today. Then, Freshman Senator Barack Obama -- along with nearly every other democrat on Capitol Hill -- opposed adding more oversight to Fannie Mae and Freddie Mac. The Washington Post noted “he (Senator McCain) pushed for stronger regulation of Fannie Mae and Freddie Mac -- While Mr. Obama was notably silent.”
MYTH #3: The Republicans in the House stopped the original bailout bill from passing.
No. Unlike the Senate where a bill can be filibustered, in the House all you need is a majority. The Democrats have enough seats in the US House of Representative that they can pass whatever bill they want without a single Republican vote. Ninety-five democrats -- including 5 Committee Chairmen -- voted against the bill. This means over 40% of the DEMOCRATS didn’t support their own bill. If only 12 of the 95 nay votes on the Democratic side had gone with Pelosi, the bill would have passed.
When the Senate version of the bill – which passed 74-25 – came to the House, this time it passed 263 – 171. In this vote an additional 32 Democrats and 26 Republicans voted for the bailout.
First Vote Second Vote
Democrats 140-95 172-62
Republicans 65-133 91-108
MYTH #4: This meltdown was caused by greedy Republicans looking for Special Interest campaign contributions.
No. Exactly the opposite is true. According to “OpenSecrets.org”, a non-profit that tracks political donations, the Democrats who have shielded Fannie Mae and Freddie Mac from additional regulation have been the largest recipients of cash from the PACs created by the two now bankrupt companies. In all fairness, a number of Republicans had their snouts deep in the trough as well but generally they also supported tighter oversight. One of the most troubling items in the article titled: “Fannie Mae and Freddie Mac Invest in Democrats” concerned Senator Obama. Despite being in office less than 4 years, the Illinois Senator was #3 on the list of top cumulative recipients for the past 20 years. Which raises the question of why did a freshman senator with no seniority, who is not even on the Banking Committee, receive so much money?
MYTH #5: Fannie Mae and Freddie Mac are dominated by Republican Fat Cats.
No. It is dominated by Fat Cat Democrats. James A. Johnson, who was the head of Fannie Mae from 1991 -1998, ran Walter Mondale’s 1984 presidential campaign. Johnson served on the Barack Obama VP search committee until it became public he had gotten a sweetheart mortgage from Countrywide Financial Corp. Johnson was replaced by Franklin Raines who was CEO from 1999 through the end of 2005. Raines served as President Clinton’s Director of the U.S. Office of Management and Budget. Raines was involved in accounting scandals that pocketed him millions of dollars he later had to repay.
MUST SEE VIDEOS