No one can say the financial collapse that $700 billion of taxpayer money is being asked for to fix wasn't seen coming. Trouble is those who could have stopped it, didn't want to change their ways and blocked proposed reforms.
Soon after taking office, Bush had his hands full with the Clinton recession and 9/11. But by 2003, he proposed what the New York Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."The plan included a new regulator for Fannie and Freddie, one that could boost capital mandates and look at how they managed risk.
Even after regulators in 2003 uncovered a scheme by Fannie and Freddie executives to overstate earnings by $10.6 billion to boost bonuses, Democrats killed reform.
"Fannie Mae and Freddie Mac are not facing any kind of financial crisis," said Rep. Frank, then-ranking Democrat on the Financial Services Committee.
North Carolina Democrat Melvin Watt accused the White House of "weakening the bargaining power of poorer families and their ability to get affordable housing."
In 2005, then-Fed Chairman Alan Greenspan told Congress: "We are placing the total financial system of the future at substantial risk."
McCain Urged Changes
That year, Sen. John McCain, one of three sponsors of a Fannie-Freddie reform bill, said: "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole."
Sen. Harry Reid — now Majority Leader — accused the GOP of trying to "cripple the ability of Fannie Mae and Freddie Mac to carry out their mission of expanding homeownership."
Saddest Thing About This Mess: Congress Had Chance To Stop It
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