GOP- The "Financial Taliban"

March 22, 2009

The financial market collapsed last fall under the Bush administration and his supporters, mainly Republicans would like to forget about that. They would also like to forget they were in total control from 2001 through 2006 and during that time, financial industries were deregulated and ignored.

It is nonsense to say the current mess belongs to the Democrats and President Obama. Republicans tend to forget their role and a big one it was. This is a Bush-Republican Recession and they are the "Financial Taliban".

While in power, Republicans did not want any effective control over Fannie Mae or Freddy Mac whose lending policies became “ground zero” for the current crisis. Those agencies became part of the Financial Taliban because of enthusiastic support from Republicans in Congress.

Despite this heavy handed control, there were attempts by Democrats in 2005 to regulate those institutions, but their efforts were sidetracked by House Republicans and ignored by Republican Senators.

Most significantly, the Bush administration actively ignored developing problems responsible for the national and global meltdown. Bush and Greenspan believed financial institutions would regulate themselves and the market would do what is best. Further, state laws which regulated markets and institutions were preempted making the Feds the sole regulator of the financial market.

Plus, during his tenure, Bush wanted Freddie and Fannie to increase the percentage of sub prime loans so more Americans could own homes, a policy he called the “ownership society”.

After Republicans lost in 2006, the Democrats were finally able to create a bill to regulate Freddie and Fannie, something Republicans did not want to do. Despite Republican opposition the bill was signed by Bush in the spring of 2007 . After that success, Democrats proposed legislation to restrict sub prime mortgages. It passed in the House but a Senate Republican filibuster stopped its passage.

Unfortunately, it was too little to late. The path to our market destruction was paved by Republican corruption.

Who or what caused the present financial mess besides the Republicans? It was the:

1. Mortgage brokers who created sub-prime loans,

2. Financial institutions which packaged bad mortgages into securities and sold them as low risk,

3. Rating agencies which labeled bad investments and financial institutions as sound and

4. Insurance companies like AIG which issued Credit Default Swaps, a type of  insurance that gave bad assets a “guaranteed” value.

Republicans and those mentioned above are the "Financial Taliban" and like all terrorists, they must be challenged at every turn and defeated. Now they are hiding in plain sight blaming others from their misdeeds.