Monday, September 22, 2008

Democrats responsible for the Financial Crisis

Bloomberg has a collumn today, written by Kevin Hassett, explaining why the Democrats are responsible for the current financial crisis:

Alan Greenspan warned Congress about the coming financial crisis in 2005:
... If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''
Republicans tried to act:
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.

But Democrats opposed the reform bill:

But the bill didn't become law...... Democrats opposed it on a party-line vote in the committee..... Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

If only the Senate Democrats hadn't obstructed the Republicans in reforming Fannie Mae and Freddie Mac, we wouldn't have the serious financial crisis that we are in today.

No comments: