Submitted by: Elaine Karsner

Congress pushed the system to the brink

SOMEDAY CONGRESS will run out of taxpayer-backed IOUs, but one thing that will never be in short supply in Washington is hypocrisy.

The crisis on Wall Street last week brought out the worst in our national politicians. At a time when the nation needed bipartisan leadership, Democrats in Congress and their presidential standard-bearer, Sen. Barack Obama, erupted in denunciations of Wall Street, the Bush administration and the Republicans’ “free market” philosophy.

Even Sen. John McCain, the Republican presidential nominee, tried to put some of the blame for the financial meltdown on administration officials.

Sen. McCain knows better than perhaps anyone in Washington that Congress bears much of the responsibility for the home mortgage fiasco that triggered the collapse of the mortgage giants, Fannie Mae and Freddie Mac, and Lehman Brothers and AIG.

The Arizona senator was one of the few members of Congress who spoke out against the irresponsible practices of Fannie and Freddie before they became front-page news. Fannie and Freddie continued to back loans for unqualified borrowers long after Sen. McCain said these mortgages posed huge risks for “the housing market, the overall financial system and the economy as a whole.”

The prevailing view in Congress was that lending rules should be relaxed so that even the most marginal mortgage applicants could secure financing for home purchases.

Democrats on Capitol Hill loved Fannie and Freddie, and Fannie and Freddie loved them, too. Interestingly, Sen. Obama was one of the leading recipients of campaign contributions from these government-sponsored institutions.

Now he’s railing about the excesses of the free market and an alleged lack of government oversight of big financial institutions. One of his attack lines is that Sen. McCain and his GOP buddies helped bring on the current crisis by supporting the Gramm-Leach-Bliley bill that repealed the law separating commercial banks from investment banks.

An editorial in The Washington Post put Sen. Obama’s hypocritical charges in context. The Post noted that many Democrats, including two of Sen. Obama’s top economic advisers, Lawrence Summers and Robert Rubin, supported the financial deregulation bill. The bill was approved on a 90-8 vote, and President Clinton signed it.

Let’s hope the presidential candidates tone down the partisan rhetoric while congressional leaders and Bush administration officials try to work out a massive bailout of the financial system.

The nation’s economic future depends in large part on the ability of leaders from both parties to agree on a taxpayer-funded rescue plan.

Once they’ve crafted the bailout, Democrats and Republicans should have a very spirited debate about how the financial system came so close to the brink.

We’re sure that few Republicans and very few Democrats will admit that Congress gave the system a big shove toward the abyss. History, however, will take a much harsher view of the politicians’ tinkering with the so-called free market.

Lee ADDS: I have said this before but say it again as if any Libwerals doubt this fiasco lying at the feet of Bill Clinton there is ample PROOF of his actions!

There is a basic teaching in credit lending. It is referred to as the ‘ 3C rule.’ There is Character, Capacity and Collateral.

Character is the Good Credit Report required to get a loan. Capacity is the capability to repay. Most often referred to as income to debt ratio. Then there is Collateral. The real value of the item to be financed.

What Congress did was to erase both the Character and Capacity requirement then had the values of the homes inflated and thereby knocked Collateral in thwe head!

We are now to pay for their MONUMENTAL FOUL UP!