Time for Democrats to Face a People’s Court

Terry Paulson
Monday, May 10, 2010

Whether it’s Toyota or Goldman Sachs/US, Congress loves to publicly feast on executives’ failures to address problems with a rapid-fire stream of questions. They love to blame banks, CEO’s, “corporate greed,” and, of course, President George Bush. With Toyota executives on the hot seat, Democratic Rep. Eliot Engel observed, “There was kind of an attempt to sweep everything under the rug, keep it under the table, not tell anybody and maybe it’ll just go away.”

With an exploding deficit, a new, expensive healthcare entitlement, a jobless recovery, and the expanding shortfalls in Medicare and Social Security, maybe it’s time we invite some of our current politicians to the People’s Court to grill them in like manner.

Yes, Republicans and many corporate executives played a role in our economic train wreck, but what about the Democrats’ role in pushing for unwise housing loans and limiting regulatory oversight on Fannie Mae and Freddie Mac?

Republicans have now allowed Congress to move forward on Wall Street reform, but they are also pushing for more reforms at Fannie and Freddie, whose failures were at the heart of our financial meltdown. Those failures continue. According to Politico, Freddie Mac has now requested an additional $10.6 billion dollars from you, the people who pay taxes. Why? They lost $8 billion dollars in the first quarter of 2010.

House Financial Services Committee Chairman Barney Frank, in a two-page memo to Chief of Staff Rahm Emanuel, HUD Secretary Shaun Donovan, Treasury Secretary Timothy Geithner, and Senate Banking Committee Chairman Chris Dodd (D-Conn.), has urged the White House to fight back in defense of the Democrats’ Wall Street reform bill.

Rep. Frank was not alone in fighting the Bush administration’s efforts to introduce more regulatory oversight on Fannie and Freddie. But since Rep. Frank is so interested in fighting back, here a few targeted questions I’d love journalists to ask at our first People’s Court:

Is it not true that beginning in 2001, President Bush and his administration, on numerous occasions, warned Congress that an economic crisis was coming unless something was done to better regulate Fannie Mae and Freddie Mac?

Is it true that on September 10, 2003, before the House Committee on Financial Services considering a Bush administration proposal to further regulate Fannie and Freddie, you stated: “I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two Government Sponsored Enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis.”

Did you not say on September 25, 2003, “I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.”

In 2003, when then-Treasury Secretary John Snow testified before the House Financial Services Committee and recommended 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, did you say as the Democrats ranking member of the House Financial Services Committee, “these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

After accusing the Bush Administration of creating an “artificial issue” in a speech to a 2004 Mortgage Bankers Association conference, did you say, “People tend to pay their mortgages. I don’t think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren’t there?”

Is it true that between 1989 and 2008, you received $42,350 in campaign contributions from Fannie Mae and Freddie Mac?

In light of what we now know about the abuse instituted in response to the Community Reinvestment Act of 1977 and subsequent revisions, was it not an egregious mistake and irresponsible practice to push people into buying homes they couldn’t afford and banks into making loans that have proved six times more likely to default?

America has struggled through one of the most costly and potentially calamitous economic stories in America’s history. Many Americans have questions most major media outlets have refused to pursue. It’s time for our “free” press to use that freedom to bring more scrutiny to those now in control before they make things worse.