In Sept. of 2003, Bush and the Republican Congress recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade earlier.
Under the plan 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 had the authority to set one of the two capital-reserve requirements for the companies. It would have exercised authority over any new lines of business. And it would have determined whether the two are adequately managing the risks of their ballooning portfolios.
Barney Frank, who is not the chairman of the banking committee responsible for oversight of Fannie Mae and Freddie Mac, and who was the senior Democrat on that committee in 2003, was seriously AGAINST regulating Fannie Mae and Freddie Mac.
Why? Because, according to him, Fannie Mae and Freddie Mac "are not facing any kind of financial crisis."
But even he had to have seen the 2002 report on Fannie Mae and Freddie Mac which led many to demand action be taken.
Frank succeeded in having the proposal made by Bush blocked. Nothing, as we know now, was ever done.
What was really behind Frank's opposition to the proposal? Frank knew that for several years Fannie Mae and Freddie Mac had been appropriating about half its loans to low income families. Frank knew that regulating Fannie Mae and Freddie Mac would disrupt that.
At the same time Frank was quoted as saying these companies were not in financial trouble, he was quoted as saying, "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
"Affordable housing" meaning homes for low income families.
A New York Times article from Sept. 1999 states that Fannie Mae had been under increasing pressure from the Clinton administration to expand mortgage loans among low- and moderate-income people and that the corporation loosened its lending requirements to comply.
An ominous paragraph of the article reads, "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 1980s."
Frank, in the House and libs in the Senate, were able to defeat Republican overtures towards regulation of Fannie Mae and Freddie Mac in 2002 and then again in 2003, in no small part, by making it into a racism issue.
Your opinions about this information will interesting but will not change the facts. I dare you, now, to blame Bush, the Republicans or McCain for this Crisis. This could have been averted with Democratic support of regulatory legislation in 2002 and 2003. They did NOT give the support of the Bush proposal in 2002 nor the McCain legislation in 2003. But rather played the race card and blocked them.