Right Minded Online

It was exactly two years ago that we learned of Congressman Mark Foley and suggestive text messages he had sent to a congressional page. And Senator George Allen became embroiled in a scandal of his own after making his now-famous offhand “macaca” remark. The media, firmly in the tank for the Democrat Party, latched onto the scandals, turned them into headlines, kept them there for six weeks, and put the GOP on defense. And so, the Democrats won the House because of Mark Foley’s text messages, and won the Senate because of “macaca.”

This year, the press is campaigning for the Democrats and their presidential candidate even more furiously. There is a scandal underfoot that actually does have considerable bearing on the future of the nation, and the media are ignoring it. The financial markets have been rocked by a mortgage crisis and numerous bank failures. At the center of the storm are two federal organizations, Fannie Mae and Freddie Mac. Listening to the media and Democrats, you would think the mortgage crisis is solely the fault of the Bush administration and the capitalist private sector. But the real scandal, the part you won’t hear from the mainstream media (MSM), is that the crisis is the result of Democrat policies and over-regulation by the federal government.

In fact, Glenn Reynolds, who runs Instapundit, which is one of the most-read Internet blogs in the country, posted on September 29 that he had received an e-mail from a journalist at “a major newsroom” conceding that “Off the record, every suspicion you have about MSM being in the tank for O is true. We have a team of 4 people going thru dumpsters in Alaska and 4 in arizona. Not a single one looking into Acorn, Ayers or Freddiemae. Editor refuses to publish anything that would jeopardize election for O, and betting you dollars to donuts same is true at NYT, others. People cheer when CNN or NBC run another Palin-mocking but raising any reasonable inquiry into obama is derided or flat out ignored. The fix is in, and its working.”

Speaker of the House Nancy Pelosi summarized the prevailing wisdom, blaming the mortgage crisis on President Bush and the “right-wing ideology of anything goes, no supervision, no discipline, no regulation.”

Nothing could be further from the truth.

Going back to the Clinton administration, the federal government for years exerted pressure on the private mortgage industry to make high-risk loans — loans to low-income families who could never afford to repay them. The idea was to get them into homes of their own. It was a noble idea. But, like a lot of noble ideas constructed by the left, it proved disastrous when actually applied.

President Clinton’s Attorney General, Janet Reno, began to combat “red-lining” with threats of prosecution. (Red-lining is a practice whereby banks loan money to some communities but not to others, based on economic status.)

According to the Cybercast News Service, “The Clinton-Reno threat of vigorous enforcement pushed banks to make the now-infamous loans that many blame for the current meltdown. One economist told the Cybercast News Service, banks, in order not to get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans in the first place.”

And then the banks could sell the loans off to Fannie Mae (the Federal National Mortgage Association) or Freddie Mac (the Federal Home Loan Mortgage Corporation), who could buy them with little regard for negative financial outcome.

Contrary to the rantings of Nancy Pelosi, President Bush tried to overhaul both Fannie and Freddie back in 2003 by creating a new agency to supervise the two behemoths. The New York Times wrote back then that “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.”

The plan was an acknowledgment by the Bush administration that oversight of Fannie and Freddie — which, at the time, had issued more than $1.5 trillion in outstanding debt — was broken. A report by outside investigators in July, 2003 concluded that Freddie Mac manipulated its accounting to mislead investors.

(Enron’s Ken Lay was prosecuted and convicted for less than this.)

So what happened? Congressional Democrats prevented any type of outside oversight from becoming law. Republicans have tried to reform the system, and Democrats have stood in the way every time. They now have the gall to blame Republicans and the private sector for the financial mess resulting from their own policies. (And these are the people who want to run our healthcare.)

Enter Clinton crony Franklin Raines, who took the helm at Fannie Mae in 1999. By the time he left Fannie six years later under an ethical cloud, he had looted it for nearly $100 million in compensation. Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn large bonuses. (Remember, Democrats are the same ones who rail against large CEO bonuses.)

In the end, Fannie Mae had to pay a record $400 million civil fine, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

(According to the Washington Post on July 16, Franklin Raines has also served as an advisor to Barack Obama on mortgage and housing policy.)

On Friday, Congress passed a taxpayer-funded, pork-laden bailout of the mortgage industry that will cost us some $700 billion. An initial bailout package failed in the House due to overwhelming constituent dissatisfaction. (As is often the case, we, the people, know better than those we elect to Congress.)

One thing is clear. The real roots of the mortgage crisis are being ignored by the media, who are complicit in allowing the Democrat-led Congress to shift the blame from themselves and onto the Bush administration and private sector, while we taxpayers get stuck with the tab of Democrat mismanagement. Ironically, the ones who broke the mortgage industry, the Democrats, now propose to be the ones to “fix” it.