Nancy Pelosi, a clinical liberal, allows her emotions to eclipse what little intellect she has.

She would have served herself and this country very well if she had read the information provided to her on the Fannie Mae-Freddie Mac-AIG meltdown beginning in 2001 which has been published at the link provided above. Instead, she chose to ignore the calls for reforms of Fannie Mae and Freddie Mac, Government Sponsored Enterprises directed by Democrat Barney Frank and chose to direct her attention and energy to criticize President Bush while mentioning wispy, nebulous and unquantified “failed economic policies”.  Some say her putrid comments soured the deal.

In my opinion, the Democrats, recognizing Pelosi’s gaff and wishing to spin it to their advantage, point to her speech as the reason many Republicans (ignoring the many Democrats) who rejected the so-called bailout bill.

The fact is, the bill as it was written was bad for the country and deserved to be thrown out for the trash it was.

Nancy Pelosi would have done herself a favor by studying the following facts before allowing her ass to override her brain.

2001

April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac.  (OMB Prompt Letter to OFHEO, 5/29/02)

2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.”  As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.  (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.”  To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.”  (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

Source:   http://www.whitehouse.gov/news/releases/2008/09/20080919-15.html

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