Hearings On Fannie and Freddie? Wait Until After Election

Democrats wouldn't want to jeopardize their potential gains in elections across the country by holding hearings that might reveal just how tied to the huge scandal at Fannie Mae and Freddie Mac, including blocking Republican efforts to impose regulations and oversight of the two companies whose accounting would never be tolerated by any other company.

They've decided to hold the hearings into the two companies after the election. How nice of them.

Democrats are giving Republicans the hearing they’ve been demanding to dig into the failures of Fannie Mae and Freddie Mac, but it won’t happen until after the election.

House Oversight and Government Reform Chairman Henry Waxman (D-Calif.) Monday announced that he will hold a hearing into the collapse of the mortgage giants on Nov. 20, and plans to call several of the firms’ ex-CEOs, including Fannie Mae's Franklin Raines.

Raines was called on by Obama to share advice and insight. Obama also hired Freddie Mac's Jim Johnson to head up his VP search committee and is an adviser on economic affairs.

Democrats know that the subprime meltdown and toxic paper mess can be attributed to their demands that lenders provide more affordable housing to those who could not afford it under traditional lending rules, so they forced the banks to lend more aggressively - no money down, low introductory interest rates, etc., which sounds great when real estate prices are rising, but the moment the real estate market hits a speed bump, everything goes to hell. Even the New York Times noted that there was trouble to be had by pushing subprime lending in 1999.

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 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."

Democrats and their interest groups like ACORN threatened lawsuits against lenders unless they provided loans to subprime borrowers in minority communities. Sen. Obama was among those who guided that process in his days as a community organizer and attorney prior to entering the Illinois legislature. Obama was involved in lawsuits representing ACORN against banks to force lending to subprime borrowers. These are nothing more than shakedowns of banks to demand affordable housing.

How does that affordable housing look today? We're talking in trillions in assets evaporated in the stock market because the toxic paper that spread the risk around damaged banks and the credit markets. Governments worldwide are spending hundreds of billions of dollars to try and restart the credit markets, buying/nationalizing banks, and we're not even getting into the hundreds of billions of dollars in real estate values lost as the markets cooled.

Democrats clearly do not want hearings held because it might show just how accountable they were - especially people like Chris Dodd and Barney Frank.

Apparently one massive bailout is not enough. Now we're hearing from Fed Chairman Ben Bernanke that he's inclined to support an additional bailout, this time geared towards the public. Great. More money thrown and the symptoms and not addressing the problem, which is the regulations and Congressional mandates to push affordable housing who lacked the capacity to repay. Housing prices became unaffordable in many areas precisely because the free and easy money enabled people to pay more for homes without feeling the pinch at the outset. That, combined with rising taxes and rising interest rates pinched those on the margins. In turn, that began to slow the real estate markets in places that were overbuilt because of the inflated demand - like Florida, Nevada, California, and Arizona. It was those states, and cities like Miami, Tampa, Las Vegas, and Phoenix, that were hit hardest as the prices began to drop.

Those prices are now becoming more affordable to those who can actually afford to buy homes because the prices reflect the corrected market and those subprime borrowers aren't inflating the market artificially.

Frank's solution to all the bailouts? Raise taxes.

Frank is a tax and spend Democrat. He is one of the biggest causes of this mess, and his solution is to tax the rich - problem is that any such scheme will require everyone to be taxed more, and such schemes do not actually improve the economy nearly as much as more favorable tax treatments provide.