6 Comments so far ↓

• Dan Philpott // Sep 19, 2008 at 1:45 pm

  I would think a more appropriate image would be a homeowner crawling inside the fridge, ala Indiana Jones, and subsequent visuals.

• movie buff // Sep 19, 2008 at 3:26 pm

  it’s hard to object to the government’s mass bailouts as similar debt-producing methods were put into action to bring the U.S. out of the Depression… our economy has been supported and driven by debt ever since

• Jason // Sep 19, 2008 at 4:52 pm

  Somehow, that house being a KB Home makes this picture all the more appropriate.

• Phoenix Woman // Sep 20, 2008 at 5:36 pm

  Moviebuff, this crisis has come about precisely because of the conservative push for removing any and all meaningful oversight from the financial system, destroying all the safeguards FDR had put in place in the wake of the Great Depression:

  http://firedoglake.com/2008/09/15/shades-of-herbert-hoover/

• Admiral Fail // Sep 22, 2008 at 9:30 am

  Phoenix Woman – its easy to lob blame after the fact. Everyone’s doing it…its the coolest! This, unfortunately, makes a better point.

  Sept. 22 (Bloomberg) — The financial crisis of the past
  year has provided a number of surprising twists and turns, and
  from Bear Stearns Cos. to American International Group Inc.,
  ambiguity has been a big part of the story.
  Why did Bear Stearns fail, and how does that relate to AIG?
  It all seems so complex.
  But really, it isn’t. Enough cards on this table have been
  turned over that the story is now clear. The economic history
  books will describe this episode in simple and understandable
  terms: Fannie Mae and Freddie Mac exploded, and many bystanders
  were injured in the blast, some fatally.
  Fannie and Freddie did this by becoming a key enabler of the
  mortgage crisis. They fueled Wall Street’s efforts to securitize
  subprime loans by becoming the primary customer of all AAA-rated
  subprime-mortgage pools. In addition, they held an enormous
  portfolio of mortgages themselves.
  In the times that Fannie and Freddie couldn’t make the
  market, they became the market. Over the years, it added up to an
  enormous obligation. As of last June, Fannie alone owned or
  guaranteed more than $388 billion in high-risk mortgage
  investments. Their large presence created an environment within
  which even mortgage-backed securities assembled by others could
  find a ready home.
  The problem was that the trillions of dollars in play were
  only low-risk investments if real estate prices continued to
  rise. Once they began to fall, the entire house of cards came
  down with them.

  Turning Point

  Take away Fannie and Freddie, or regulate them more wisely,
  and it’s hard to imagine how these highly liquid markets would
  ever have emerged. This whole mess would never have happened.
  It is easy to identify the historical turning point that
  marked the beginning of the end.
  Back in 2005, Fannie and Freddie were, after years of
  dominating Washington, on the ropes. They were enmeshed in
  accounting scandals that led to turnover at the top. At one
  telling moment in late 2004, captured in an article by my
  American Enterprise Institute colleague Peter Wallison, the
  Securities and Exchange Comiission’s chief accountant told
  disgraced Fannie Mae chief Franklin Raines that Fannie’s position
  on the relevant accounting issue was not even “on the page” of
  allowable interpretations.
  Then legislative momentum emerged for an attempt to create a
  “world-class regulator” that would oversee the pair more like
  banks, imposing strict requirements on their ability to take
  excessive risks. Politicians who previously had associated
  themselves proudly with the two accounting miscreants were less
  eager to be associated with them. The time was ripe.

  Greenspan’s Warning

  The clear gravity of the situation pushed the legislation
  forward. Some might say the current mess couldn’t be foreseen,
  yet in 2005 Alan Greenspan told Congress how urgent it was for it
  to act in the clearest possible terms: 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.”
  What happened next was extraordinary. 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.

  Different World

  If that bill had become law, then the world today would be
  different. In 2005, 2006 and 2007, a blizzard of terrible
  mortgage paper fluttered out of the Fannie and Freddie clouds,
  burying many of our oldest and most venerable institutions.
  Without their checkbooks keeping the market liquid and buying up
  excess supply, the market would likely have not existed.
  But the bill didn’t become law, for a simple reason:
  Democrats opposed it on a party-line vote in the committee,
  signaling that this would be a partisan issue. Republicans, tied
  in knots by the tight Democratic opposition, couldn’t even get
  the Senate to vote on the matter.
  That such a reckless political stand could have been taken
  by the Democrats was obscene even then. Wallison wrote at the
  time: “It is a classic case of socializing the risk while
  privatizing the profit. The Democrats and the few Republicans who
  oppose portfolio limitations could not possibly do so if their
  constituents understood what they were doing.”

  Mounds of Materials

  Now that the collapse has occurred, the roadblock built by
  Senate Democrats in 2005 is unforgivable. Many who opposed the
  bill doubtlessly did so for honorable reasons. Fannie and Freddie
  provided mounds of materials defending their practices. Perhaps
  some found their propaganda convincing.
  But we now know that many of the senators who protected
  Fannie and Freddie, including Barack Obama, Hillary Clinton and
  Christopher Dodd, have received mind-boggling levels of financial
  support from them over the years.
  Throughout his political career, Obama has gotten more than
  $125,000 in campaign contributions from employees and political
  action committees of Fannie Mae and Freddie Mac, second only to
  Dodd, the Senate Banking Committee chairman, who received more
  than $165,000.
  Clinton, the 12th-ranked recipient of Fannie and Freddie PAC
  and employee contributions, has received more than $75,000 from
  the two enterprises and their employees. The private profit found
  its way back to the senators who killed the fix.
  There has been a lot of talk about who is to blame for this
  crisis. A look back at the story of 2005 makes the answer pretty
  clear.
  Oh, and there is one little footnote to the story that’s
  worth keeping in mind while Democrats point fingers between now
  and Nov. 4: Senator John McCain was one of the three cosponsors
  of S.190, the bill that would have averted this mess.

• Glossolalia Black // Sep 22, 2008 at 3:48 pm

  A really perverse part of me wants to know what would happen if they took that $700B and paid off everyone’s mortgage with it…