Financial Mess: The Blame Game...

This has been the ultimate "who did it" blame game since well I don't know.

The financial mess has fingers pointing from one side of the aisle to the other and well most of us are trying to figure it all out.

While the overall answer maybe, "there is enough blame to go around" it just doesn't satisfy the palate.

...so the search for the answer goes on.

This article helps.

How the Democrats Created the Finalcial Crisis: Kevin Hassett (Bloomberg.com)

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.
But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

...

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

...

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.


Added Links:

Bill: S.190

S.190 Title: A bill to address the regulation of secondary mortgage market enterprises, and for other purposes. Sponsor: Sen Hagel, Chuck [NE] (introduced 1/26/2005) Cosponsors (3) Latest Major Action: 7/28/2005 Senate committee/subcommittee actions. Status: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.
COSPONSORS(3), ALPHABETICAL [followed by Cosponsors withdrawn]: (Sort: by date)
Sen Dole, Elizabeth [NC] - 1/26/2005
Sen McCain, John [AZ] - 5/25/2006
Sen Sununu, John E. [NH] - 1/26/2005


LAST ACTIONS:

This bill never became law. This bill was proposed in a previous session of Congress. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven't passed are cleared from the books.

Last Action:
Jul 28, 2005: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.

Sep 16, 2008 10:43 PM - What Does "Ordered to be reported with an amendment in the nature of a substitute favorably." mean? - Read Answers

Answered by a visitor on Sep 17, 2008 11:03 PM - This was just a way for S.190 to be delayed through amendment. It then died at the conclusion of the 109th Congress when the 110 Session began in January of 2007. Shortly after, a similar bill (S. 1100) was reintroduced with the amendments in the 110th session of Congress where it remains pending.

Answered by a visitor on Sep 18, 2008 8:45 PM - Since this was a general question I've collected the answers and gotten some expert information on the matter and posted a detailed answer on the GovTrack blog: http://www.govtrack.us/blog/2008/09/18/what-does-ordered-to-be-reported-with-an-amendment-in-the-nature-of-a-substitute-favorably-mean/