In arguing for his amendment to the Senate’s financial regulatory reform bill to end any federal relationship with Fannie Mae and Freddie Mac, Arizona Republican Senator John McCain claims that not ending government support for Fannie and Freddie is the equivalent of “declaring war on terrorism, without going after Al Queda.”
One might suggest that McCain’s true agenda—turning over the nation’s mortgage finance system to the large commercial banks—is as specious as running for President with Sarah Palin as your Vice-President.
During his failed presidential campaign against Barack Obama, Senator John McCain (R-Ari) tried to make a campaign issue of Fannie Mae and Freddie Mac. There was little doubt that the mortgage giants invested heavily in Wall Street created private mortgage backed securities and lost billions leading to a federal Takeover, but McCain’s early record on this matter—when he was Chairman of a Senate subcommittee and the Republicans controlling the Senate—was limited to a single floor statement, no legislation introduced, nor any hearings held.
In seeking to link Obama to something to which he had no connection, McCain claimed a record of Fannie and Freddie opposition which existed only in his own mind, as I pointed out in my blog and to national audiences when—surrounded on his campaign staff by a half dozen ex-Fannie and Freddie lobbyists—McCain hypocritically and falsely hypothesized a non-existent Obama-GSE relationship, claiming it was evidence of the future President’s bad judgment.
Just as Emperor McCain had no clothes on then, he’s covered by a bare fig leaf now.
McCain’s amendment, while discussing viability of the GSEs, puts in place new rules which insure the demise of the two institutions which even in their current hobbled status are providing 75% of all US mortgage finance.
The McCain proposal is a giveaway of the nation’s mortgage finance system to the large commercial banks and their allies that would occur from the business death of Fannie and Freddie.
The Administration and House Democrats want to work on producing a successor mortgage finance system before restructuring what now is in place. But McCain and his friends are going for a kill shot now.
National mortgage finance requires constancy and is not well served by a McCain mortgage finance system controlled by unreliable large commercial banks and their subsidiaries (which right now refuse to much lending for mortgages or small business).
McCain’s legisative explanation refers to the tired rhetoric that his bank beneficiaries are “private sector,” conveniently ignoring that all receive federally subsidized deposit insurance and a boat load of federal TARP funds, initiated by the Bush Administration and continued under President Obama.
McCain’s amendment should be defeated and the Congress’ necessary work on federal financial regulatory reform should not be held hostage to “Senator McBank.”