Last week, U.S. Rep Henry Waxman (D-Calif.) was serving as High Inquisitor du Jour at yet another hearing on "what went wrong" with the American mortgage/financial markets.
Democrats are good at two things: holding hearings and blaming the nation's worst economic meltdown since the Great Depression on George W. Bush, Republicans in general, "eight years of failed Bush policies," and anyone who has worn the GOP label since Honest Abe.
The useful stooge witness last week turned out to be none other than Alan Greenspan, the former chair of the Federal Reserve. Greenspan, also known as Mr. Andrea Mitchell of NBC News, clearly prefers can't-we-all-just-get-along camaraderie to combat.
That's the only conclusion one can draw from Greenspan's astonishingly incomplete retelling of "what went wrong."
Greenspan said this "once-in-a-century credit tsunami" had exposed a flaw in free-markets models. He had believed banks would be more prudent in lending because of their need to protect stockholders. Now he was "shocked" that this "mistake" on his part may have contributed to the crisis.
If Greenspan really wanted to be "shocked" by the "mistakes" that led to this calamity, he should have taken a better look around that hearing room.
Let's start with Rep. Waxman, who said at the hearing: "The list of mistakes is long, and the cost to the taxpayers is staggering." In fact, Waxman and other liberal Democrats have deep political ties to the mortgage lenders who got us into this mess.
Free markets aren't the problem. They operate just fine when politicians aren't imposing irresponsible mandates that interfere with their efficient and effective operation.
Here are some of the inconvenient truths Democrats are not interested in probing:
The 1977 Community Reinvestment Act (think Jimmy Carter) strongly encouraged banks to make mortgage loans to borrowers who either did not have the capacity or intention to pay them back. Banks that failed to meet their quota of dubious loans were singled out for federal regulatory scrutiny.
The drive to put every American in his or her own home accelerated dramatically in the 1990s, when Bill Clinton and his Democratic friends decided that homeownership was an entitlement, not a privilege. They turned Fannie Mae and Freddie Mac into the engines to deliver to all Americans their housing birthright.
On Sept. 30, 1999 (more than a year before George W. Bush's "eight years of failed policies" began), The New York Times ran a remarkably prescient piece on the dramatic influence of Fannie Mae and Freddie Mac on the exploding sub-prime loan market.
"Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders," the paper reported. This "will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans."
According to the Times, this meant that Fannie Mae "is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."
Wow! The Times foresaw the $750 billion bailout coming way back in 1999. But for the Democrats, it was damn the torpedoes, full speed ahead. Iceberg? What iceberg?
By 2004, alarms were going off again in Washington about Fanny and Freddie. And just look at what Democrats were saying at a House hearing that year:
Rep. Maxine Waters (D-Calif.): "We do not have a crisis at Freddie Mac."
Rep. Barney Frank (D-Mass.): "I don't see anything in the [regulator's] report that raises a safeness or soundness problem."
Rep. Lacy Clay (D-Miss.): "Markets are not worried about the safety and soundness of Fannie Mae...."
And this from Franklin Raines, a former Fannie Mae CEO and current economic adviser to Barack Obama: "These assets [home mortgages] are riskless...."
Sen. Chris Dodd (D-Conn.), who chairs the Senate Banking Committee, has since 1989 received $133,900 in campaign cash from people tied to Fannie Mae and Freddie Mac, more than any other member of the U.S. Senate.
In second place with a bullet is Barack Obama (D-Ill.), who has received more than $120,000 from F&F Inc. Obama gets a gold star for reaching this pinnacle of campaign cash in a mere three years.
It took Dodd nearly two decades. What a piker.
By one account, Fannie and Freddie have funneled more than $16 million to members of Congress since 1997. Free rein in the free market doesn't come cheap.
In 2005, the Senate Banking Committee approved a bill to tighten regulation of these lenders. The committee's Republicans all backed the bill, while its Democrats all voted against it. The full Democratic cabal then knifed the bill on the Senate floor.
Now the Democrats want us to believe this whole mess was the fault of George W. Bush and the Republicans. Even Saturday Night Live understands that's a joke, with its recent biting skits on Dems and the housing mess.
Those who criminally corrupted the free-market model with good intentions and lousy policies now blame the free-market system when the house of cards the politicians built in Washington falls down. Amazing.
Rick Berg is a Madison-area freelance writer and political commentator.