RUSH: I’m watching Senator McCain. I don’t know where he is. He’s doing a campaign appearance right now, and he’s bashing Wall Street regulation and this sort of thing. He’s doing a good thing. He’s demanding an investigation. You know, where is the investigation of all of the individuals involved with Freddie Mac and Fannie Mae? I did a little bit more research, you would not believe the extent to which Freddie Mac and Fannie Mae existed to prop up liberal Democrat politicians and their favored agencies and organizations and PACs. It’s just stunning. Obama is number two, Chris Dodd is number one, Hillary ranks pretty high up there as well. But they better be careful here because it is clear — you know, we started yesterday talking about all this, and the thing that’s going on here with the financial markets and the housing market, this was not the result of a failure of capitalism.
This was a result of too much government involvement. Government gets involved in this stuff, uses these instruments for their own pleasure and their own survival, and when things go south, they blame capitalism and say we need new regulation. Investor’s Business Daily today with a couple of great editorials on this, we’ll get to them in just a second. One of them really takes it to the Clinton administration for getting involved in the whole process of making sure that people who could never pay back a mortgage were given mortgages in the first place. Carly Fiorina was on David Gregory’s show on MSNBC last night, and Gregory said, ‘Is it inconsistent to say that McCain believes in more regulation and federal bailout, and still talk about belief in free markets?’
FIORINA: I think you are confusing John McCain’s positions by painting it as hands-off, free market laissez-faire. I think that has been perhaps true of the Bush administration the last four years in terms of a Wild, Wild West with no regulation, but it is definitely not what John McCain believes. I think the better model for John McCain is Teddy Roosevelt, who believed that there was a robust role for government. And John McCain has consistently believed there is a role for government, a role for government is to make sure that institutions are accountable and transparent. But he also has said that, if anyone, Fannie and Freddie frankly shouldn’t exist as government entities, that the role to support the mortgage market is not something that the federal government and the American taxpayer should guarantee.
RUSH: Now, most of that’s right on the money. But there’s something in there that is off target. Why bash Bush here when all of these regulations and all of these screw-ups originated with Democrats, when Democrats have their hands in the till on Freddie Mac and Fannie Mae. I understand they’ve gotta distance themselves from Bush because the Democrats are running out saying McCain is just another four years of Bush and so forth, but this is a gratuitous attack on Bush, and it would have been better aimed at Democrats.
BREAK TRANSCRIPT
RUSH: Robert B. Reich on the MSNBC last night slips up here and tells the truth that Democrats and Greenspan were responsible for the experiment that gave houses to people who cannot afford them. Question: ‘Were conservative Democrats part of the problem here?’
REICH: In the latter years of the Clinton administration — when I was not there any longer, I should add — there was an attempt by Alan Greenspan and Bob Rubin and a few others to deregulate financial markets, and they did. They split commercial banking off from investment banking. And many people say, ‘Well, that was the beginning of the problem,’ and then, of course, in 2003-2004, Alan Greenspan reduced short-term interest rates to the point where every single bank wanted to lend money. I mean, if you could stand up straight you could get a bank loan because there was so much pressure to get that money out the door. Money was so cheap. So, yes, there is some responsibility on Democrats, some responsibility on Alan Greenspan and the Fed.
RUSH: Now, notice, notice here that the Labor Secretary wants to distance himself from any of this, and the little code word conservative Democrats. Yeah, Bob Rubin, conservative Democrat, Alan Greenspan, conservative Democrat, right. He slipped up. The point is all of this started back in the Clinton administration. You can find it, and it’s not just Robert B. Reich saying it, there are others, too. I’m looking at the Obama campaign in all of this, folks. I’m watching. Obama is, right now, saying that McCain doesn’t believe in regulating the financial market. McCain just got through saying he wants to investigate them, for crying out loud. But where is Obama? He’s now saying we must build a 21st century regulatory framework. That’s what got us into the problem is more and more government, and he’s going to illustrate the fact that he wants to get more and more. He doesn’t understand what he’s talking about. Do you realize he hasn’t the slightest clue?
Obama is taking his teleprompter to rodeo appearances! He’s not going to go anywhere without that teleprompter. Now, how many of you have been to a rodeo and seen somebody speaking out there with a teleprompter? And they’re doing this ’cause they don’t trust him. They have to keep him on message. When he’s without that prompter, he wanders all over, he’s simplistic. I think this entire Democrat campaign is just simplistic. On the subject of energy, what is their solution? Blame Big Oil. On health care, blame the insurance companies. On the Wall Street problem, blame Republicans. Not enough regulation. In the meantime, Obama doesn’t have an even rudimentary understanding of how this stuff works. He didn’t understand the capital gains tax when Charlie Gibson asked him about it. He has no fundamental understanding of some of the most important institutions that have led to this nation’s greatness. All he has is an anger about them, a disrespect for them, a distrust of them because of how he has been educated. And to listen to Obama say he will change bankruptcy laws so families stay in homes, what, so people who do not have to pay the loans back still get to stay in the house? Is that what you mean? ‘I’ll make our laws work for working people.’ You already did that. You already came up with a bunch of laws that allowed working people who couldn’t afford to buy houses to buy them, and now look where they are?
I’m telling you, folks, when these Democrats start telling you they’re going to work for you, run for the hills, because what they mean is they are going to work for themselves. Now, about Carly Fiorina, just a couple words here. She said on MSNBC last night, ‘I think you’re confusing John McCain’s position by painting it as hands-off, free market, laissez-faire. I think that has been perhaps true of the Bush administration in the last few years in terms of the Wild, Wild West in terms of no regulation, but it’s definitely not what McCain believes in.’ Now, I like Carly Fiorina. I have never met her, but she presents herself well and the McCain campaign well, but this is a disgrace. This is a disgrace that she either doesn’t know or doesn’t have the presence of mind to tell the truth in this appearance last night. Fannie Mae and Freddie Mac have been Democrat controlled and run entities since their founding. Democrats have made tens of millions of dollars running them, and they have greased the palms of leading Democrats, including Obama.
The opposition to reforming them has come from congressional Democrats and former Clinton administration officials. It has been Republicans who did everything they could to try to get some regulation into Fannie Mae and Freddie Mac and they were beaten back by the Democrats at every turn when they attempted to try it. Those are the facts. This gratuitous attack on Bush is unnecessary. Bush is not the enemy right now. They’re running against Obama. They are running against Democrats. It’s not good to promote McCain by embracing the lies about a current sitting Republican president. It’s disloyal, it’s dishonest. She owes Bush an apology. She has totally mischaracterized him as a wild west, no regulation cowboy. He was involved in trying to reregulate these things. Bush has been big government regulator in many ways. I understand what they have to do. I understand they have to do. They have to distance McCain from Bush ’cause Obama and Biden are now back on this tack that it’s just four more years of Bush. But this is what bothers me about this. I can’t turn on a dime and buy into this dumping on Bush as a way to promote McCain ’cause Bush isn’t on the ballot, Bush is not running again, Bush is not the enemy. He is not disliked in a personal way by people that are going to vote for McCain.
To say Bush is not supportive of regulation is just not true. He supported lots and lots of it. This isn’t about free markets, as I said yesterday. We’re living in a dream world where people think that this is a laissez-faire free market. To not use the opportunity as one of McCain’s — she’s a senior economic advisor. You know, she ran Hewlett-Packard. She’s got a tremendous resume of business achievement and success. Lucent. The woman is a dynamo. But to not have enough information at hand to explain how the Democrats were essentially in charge of Fannie Mae and Freddie Mac, both as executives and in Congress? Two of the former CEOs of Fannie Mae are working on the Obama campaign as economic advisors. Franklin Raines and a guy named Jim Johnson. To not know the history of efforts by Republicans to reform Freddie Mac and Fannie Mae and then take Gregory’s scenario that this was a Bush and free market failure. Good Lord, folks. We spent the whole day yesterday explaining how the free market had nothing to do with this. This is a result of government getting involved, and now the very people who screwed this up now run it totally. There’s not even the impression of some private sector ownership of Freddie Mac and Fannie Mae. This is disappointing. The enemy is Obama and his literal lack of understanding and in experience in all these matters. And for that matter, Biden’s, too.
If you find it necessary to distance yourself from Bush, do it on something other than where the Democrats are a prime target. They are sitting ducks on this. You can tell the people the truth. You can educate them and inform them from the bully pulpit of the campaign. It’s not too complicated. It’s just a shame out there. In fact, San Francisco Chronicle — which is where Carly Fiorina lives — a story by Carolyn Lochhead: ‘Obama Needs a Sister Souljah Moment.’ The thrust of this piece is that Obama should rip the Democrats who protected Fannie and Freddie and allowed this mess to happen. You have to assume here that we’re not talking about a rock-ribbed conservative journalist here. ‘Obama has a golden opportunity with the U.S. financial system falling apart at the seams,’ which it’s not falling apart at the seams. Anybody ever heard of E. F. Hutton? Where are they today? They don’t exist, Snerdley, they went belly up. Remember the commercials? When E. F. Hutton speaks — yeah, well, where are they? These things happen all the time. These investment banking firms go south all the time. This is not the first time this has happened. Everybody’s historical perspective begins with the day the day they were born. No, we’re not teetering on the edge of a depression.
We still haven’t had one quarter of down economic growth. The Consumer Price Index is plummeting, meaning inflation is plummeting. Oil is at 92 bucks a barrel. The one thing that had people all upset, gas prices, pretty soon they’re going to be down to the three-dollar range again. At any rate, we’re not falling apart at the seams. Let me get back to her piece here. ‘Congressional Democrats were and remain the leading defenders of Fannie Mae and Freddie Mac, promising to resist efforts to shrink the companies, now under government control, and sell off their assets. Democrats had plenty of help from Republicans, to be sure, but it was mainly conservatives who have been warning for more than a decade that their public risk/private profit model was a disaster waiting to happen.’ Yes, how in the world can you have a so-called private sector entity — Freddie Mac, Fannie Mae — that’s owned in part by the government and then say it’s private sector? You can’t.
‘If Obama were to use the financial crisis to rise again above partisan orthodoxy, he might shake people out of their party ruts that they are fast falling into. He would have to do so in a way that people understand — borrowing from the master, Bill Clinton. Obama’s unwillingness to take on his own party is his weakness and McCain’s strength.’ Now, San Francisco Chronicle there, Carolyn Lochhead. But she inadvertently, as does Robert B. Reich, lays the blame squarely at the feet of Democrats. Why in the world can people in San Francisco understand this and Robert Reich and McCain’s leading economic advisor want to blame Bush for this? Damn.
BREAK TRANSCRIPT
RUSH: The real culprits in this meltdown: ‘Barack Obama and Democrats blame the historic financial turmoil on the market. But if it’s dysfunctional, Democrats during the Clinton years are a prime reason for it.’ Let me give you some of the details here from the Investor’s Business Daily editorial. It was the Clinton administration — and we have Robert B. Reich backing this up on television last night — ‘obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions. Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making.’ Robert B. Reich just confirmed this last night on TV. ‘It was either that or face stiff government penalties,’ if you didn’t loan to these people.
‘The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but ‘predatory.” See, the very people that designed the program that led to all of this mess now get to blame the private sector and they’re put back in total control and charge of it. ‘Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck. And it was the Clinton administration that mismanaged the quasi- governmental agencies that over the decades have come to manage the real estate market in America. As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.’
Can I translate that for you? Franklin Raines was a Treasury employee, some sort of cabinet secretary in the Clinton administration. He ends up at Fannie Mae and pays himself a hundred million bucks from 1999 to 2005, and they finally had to get rid of him because the scandal could not be contained. Democrats propped up this, Carly! Bush didn’t do any of this. ‘Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.’ Gorelick again. ‘In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk. But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.’ Hello, Mr. Chris Dodd, number one receiver of campaign contributions from Fannie Mae. ‘At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households. The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists.’
By the way, do you know what affordable housing is? Housing nobody can pay for. Housing that people who live in it can’t pay. Affordable housing, that’s right, is welfare state housing. Next time you hear the term ‘affordable housing’ think welfare state housing paid for by you, me, and all the rest. ‘The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today’s nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars. … But the government-can-do-no-wrong crowd just doesn’t get it. They won’t acknowledge the law of unintended consequences from well- meaning, if misguided, acts.’ So here we are, we’re back to the old excuse, ‘Well, our heart’s were in the right place.’ Forget examining the results, just like the Great Society went south, the war on poverty, all this garbage never works, doesn’t matter, we’re not supposed to examine the results. We’re supposed to examine their good intentions, the size of their hearts. All well and good. Democrats are sitting ducks on this. Democrats are sitting ducks on the energy issue. Democrats are sitting ducks in the culture war. Democrats, Obama, Biden, are sitting ducks on every back-pocket issue that matters to American families, and we’ve got McCain people bashing George Bush. Now, I understand the need for distance here, Bush on popularity. But find something else to do it, like hunting. Folks, it pains me. Obama and the Democrats are sitting ducks on the issue that has Americans feeling unsettled, and that is the economy. Their money. Their houses. Democrats did this! George Bush did not!