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FactCheck.org says that McCain’s regulatory efforts are overblown, but also says that deregulation was not the problem:

The MoveOn.org Political Action ad blames a banking deregulation bill sponsored by former Sen. Phil Gramm, a friend and one-time adviser to McCain’s campaign. It claims the bill “stripped safeguards that would have protected us.”

That claim is bunk. When we contacted MoveOn.org spokesman Trevor Fitzgibbons to ask just what “safeguards” the ad was talking about, he came up with not one single example. The only support offered for the ad’s claim is one line in one newspaper article that reported the bill “is now being blamed” for the crisis, without saying who is doing the blaming or on what grounds.

The bill in question is the Gramm-Leach-Bliley Act….

…The truth is, however, the Gramm-Leach-Bliley Act had little if anything to do with the current crisis. In fact, economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been….

…Observers as diverse as former Clinton Treasury official and current Berkeley economist Brad DeLong and George Mason University’s Tyler Cowen, a libertarian, have praised Gramm-Leach-Bliley has having softened the crisis. The deregulation allowed Bank of America and J.P. Morgan Chase to acquire Merrill Lynch and Bear Stearns. And Goldman Sachs and Morgan Stanley have now converted themselves into unified banks to better ride out the storm. That idea is also endorsed by former President Clinton himself….

In debunking the opposite claim, that Democrats are responsible, FactCheck grants some of the story as true (while other parts are “oversimplified.” No shit.):

It’s true that key Democrats opposed the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have established a single, independent regulatory body with jurisdiction over Fannie and Freddie – a move that the Government Accountability Office had recommended in a 2004 report. Current House Banking Committee chairman Rep. Barney Frank of Massachusetts opposed legislation to reorganize oversight in 2000 (when Clinton was still president), 2003 and 2004, saying of the 2000 legislation that concern about Fannie and Freddie was “overblown.” Just last summer, Senate Banking Committee chairman Chris Dodd called a Bush proposal for an independent agency to regulate the two entities “ill-advised.”

FC’s end note, “The Real Deal,” spreads the blames around, but includes some fluff (blame Real Estate agents? For doing their jobs? Really?), which points to FC’s fault of too often trying to look totally impartial. They even sign off with the kind of contradictory statement a FactCheck.org intern would have caught had a pol done this in an ad or speech:

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding.

Hmm. Earlier in this same piece, FactCheck points a single piece of legislation that “economists on both sides of the political spectrum have suggested… probably made the crisis less severe than it might otherwise have been.”

OK, so maybe if the Democrats hadn’t blocked reform 3 times prior to 2005 we could’ve further “softened” if not avoided the crisis. But no news there.

Oh, and this just in: the decade before FM/FM buggered the rest of us, Barney Frank was literally buggering them:

Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.

So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.

Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank’s relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie….

The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses “helped develop many of Fannie Mae’s affordable housing and home improvement lending programs.”

(Yes, that’s a Fox News story. I wouldn’t have linked it if it weren’t written by Bill Sammon, a reporter who is a well respected veteran of the Washington press corps.)

Tags:   Barney Frank · factcheck.org · Fannie Mae · Freddie Mac · mortgage crisisNo Comments