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U.S. News and Commentary



Friday
Sep212012

Treasury Sec. Geithner’s confession upends Pelosi’s Bush-bashing presser

This video features a young Barack Obama and others confirming banks were forced to make risky loans that came to be called “Ninja Loans”—no income, no job, no assets required. (Video: YouTube)

Rep. Nancy Pelosi (D-Calif.) held a presser on Thursday, blaming President George W. Bush for the troubled U.S. economy. Pelosi told media Republicans want to return the country to policies that caused the “trouble in the first place,” and President Barack Obama wants to take the economy “forward.”

Pelosi actually could have blamed President Franklin D. Roosevelt, but what’s interesting in the present is that her Bush-bashing presser is upended by  a confession from Obama’s Treasury Secretary Tim Geithner when he testified before Congress.

For your amusement, some facts that fly in the face of Pelosi’s purely political statements:

  • The first spark in the meltdown came when Sen. Chuck Schumer (D-N.Y.)sent a letter implying IndyMac was vulnerable. Pelosi, above all, should know the impact that letter had. Jerry Bowyer, an economist writing for CNBC, said, “Not surprisingly, the director of the Office of Thrift Supervision concluded that the collapse of the bank immediately following the Senator’s comments was not a coincidence. Director Reich concluded that Senator Schumer had ‘given the bank a heart attack’. IndyMac’s failure was the second largest bank failure in U.S. history.
  • Numerous experts proved the economic meltdown was a direct result of “progressive” government lending policy that began with President Franklin D. Roosevelt in the 1930s when he created Fannie Mae in 1938. The GSE started with $1 billion but Time reported needs increased so drastically, President Lyndon B. Johnson took the debt portfolio off the government balance sheet in 1968. Roosevelt and Johnson were both Democrats.
  • Among books documenting government’s role in the meltdown and widespread corruption are Reckless Endangerment (Gretchen Morgenson) and Throw Them All Out (Peter Schweizer).
  • In March, 2011, Geithner finally admitted the government’s role when he testified before Congress:  “For decades, the government supported incentives for housing that distorted the market, created significant moral hazard and ultimately left taxpayers responsible for much of the risk incurred…”
  • Precedent for taxpayer bailouts—you could simply call it looting—was actually established by President Bill Clinton’s bailout that prevented “a global economic meltdown.” That’s the meltdown you probably don’t remember, the one where shortly before he left office, Clinton bailed out the Long Term Capital Management hedge fund. Time magazine praised Clinton’s team, including Larry Summers who also served as Obama’s economic adviser, for saving the world economy. A federal official told Morgenson the bailout was a “watershed moment,” and it sent the message the Fed was “in bailout mode.”
  • A Democrat wrote the amendment that enabled taxpayer funded government bailouts when Clinton was president. Sen. Chris Dodd (D-Conn.) slipped an amendment into a bill that put taxpayers on the hook. Morgenson recounts how a research officer at the Federal Reserve Bank of Cleveland tried to call attention to the “obscure” amendment, but no one listened.
  • Republicans did try to reform the GSEs. Democrats shut them down and many moments in the process were documented in videos posted online. However, it’s obvious YouTube is helping Dems out by removing some of the more controversial videos showing Democrat congressmen insisting Fannie Mae and Freddie Mac were sound.

When Obama ran for the presidency in 2008, his brand was touted as the answer to our economic woes. The economy was the main plank in his campaign messaging.

Pelosi can’t admit the truth. That puts every taxpayer in a very bad position for the future, especially if Obama is reelected in November. You can't solve a problem if you delude yourself about what caused the problem.

To avoid looking even more ignorant in the future, Pelosi might want to chat up fellow Democrat Geithner.

In addition, Obama can assign some blame to himself because he was right in the thick of ACORN’s aggressive assault on lenders, as evidenced by video embedded above. You might want to save a copy for personal use; such videos have a tendency to disappear.

Meanwhile, taxpayers should be aware of Dodd-Frank’s fatal flaw. The bill left us taxpayers on the hook for the unbooked debt of the GSEs.

First politicos looted the banks. Then they looted us. Then they blamed anyone but themselves.

That’s how “progressivism” and redistribution work.

Next time you hear a Democrat blame Bush for all the economic crisis, you'll hear another Democrat telling a familiar lie media refuse to address.

(Commentary by Kay B. Day/Sept. 21, 2012)

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