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On the Hill, Parties Trade Blame for Financial Crisis

The smoke hasn't cleared yet from this weekend's massive shakeup of the nation's financial landscape, but that hasn't stopped key members of Congress from doing what they do so well -- blame each other.

Since the sound of the opening bell on Wall Street this morning, Democrats have been rushing to lay the meltdown at the foot of the Bush administration and its enablers in the pre-2007 Republican-led Congress. In the process, Democrats hope to take the GOP presidential nominee down a notch.

"Unfortunately, what we are seeing on Wall Street is the legacy of the Bush-McCain economic policies that have failed this nation," Senate Majority Leader Harry Reid (D-Nev.) said in a statement, adding: "These events are a stark reminder that America needs a fresh and improved approach to governing, not one led by a leader who insists that the fundamentals of the economy are still strong, as Sen. McCain insisted today."

But House Minority Leader John Boehner (R-Ohio) took a different tack, blaming the current congressional majority for the mess. "All across America, families are struggling with the fallout from the turmoil in the housing and financial markets -- another sign that the destructive tax-and-spend economic policies promoted by this Democratic Congress are failing to meet the needs of workers, seniors, and small businesses," Boehner said.

Boehner concluded by linking the issue to the key item on this week's House agenda, an energy bill, by saying the current crisis requires "unshackling American energy resources to help lower gas prices and create new good-paying American jobs."

Reid also used the Wall Street chaos to advance a legislative goal. He and other Democrats have been pushing to pass another economic stimulus package, full of spending for infrastructure and social programs like food stamps, before Congress adjourns at the end of the month. Bush and most Hill Republicans are opposed, but Reid said "American families are looking for Congress to deliver relief, and I encourage Sen. McCain and other Bush Republicans in Congress to work with Democrats to pass a second economic recovery bill."

Republicans may want oil drilling, and Democrats want another stimulus, but neither party's leadership has of yet offered much in the way of specific legislation to deal with the financial crisis. That lack of specifics likely represents the realization on both sides that there isn't much of anything Congress can or will do before it adjourns for the year. CQ reports that there may now be an incentive on the Hill for a broad overhaul of financial regulatory policies, but not until at least early next year.

In the interim, Republicans and Democrats will continue squabbling about oil drilling and a stimulus package, and suggesting that the other party is responsible for getting Wall Street into this mess that Congress will largely have to watch from the sidelines.

By Ben Pershing  |  September 15, 2008; 3:34 PM ET
Categories:  2008 Campaign , Agenda , Dem. Leaders , GOP Leaders  
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Comments

I am not voting for either of these two idiots. Ill be writing in Huckabee. I have a neihbor who will be writing in Hillary. I have sent off for a 2012 Huckabee sign., That is the sign I will have in my yard this election., I told my neihbor and he said he will get a Hillary 2012 Sign. LOL The funny thing is, There are no Obama or McCain signs on my street. In Ohio, We dont really like either of these Candidates. Feel Like We Do You can Go to Skip08 and order your candidates 2012 election sign, put it up for protest. http://www.skip08.com

I am not going to settle this year. I will write in a much more qualified candidate.

Posted by: Anonymous | September 15, 2008 5:14 PM | Report abuse

Not Voting?

Everyone has a right to protest.

How is your retirement fund today?

Posted by: there is no anonymous anymore | September 15, 2008 5:39 PM | Report abuse

The problem is that we all did vote last time believing the fool that would win, could with any leadership ability, bring the two parties together; however, "W" choose not to. He counts on nothing being done, unless it is his way. (Commonly referred to as a spoiled brat.) The really sad part is that the rest of the world sees the lack of leadership from clueless "W" and are all laughing at us. God help us!

Posted by: bummed | September 15, 2008 8:42 PM | Report abuse

For 18 months, DNC has tried to bring up Obama and change. And we only see the gas price up and market down.

You can blame Bush on everything. But what hell DNC faults everything Palin did in Alaska. Is that the only thing DNC can focus on?

Change Washington? Big joke!

Posted by: Anonymous | September 15, 2008 9:24 PM | Report abuse

Under Clinton the rules were relaxed which allowed unqualified persons to purchase a house. They, the senate, also allowed both Fannie and Freddie to operate within very loose guidelines all for the cause of letting persons purchase homes who did not qualify. Then the CEO's of both these got tremendous salaries/bonuses. Why are not those senaters brought charges?No wonder they rate where they do...legally stealing funds for one reason or another. Fire them all before the democrats run out of soap or the republicans stop making it due to environmental issues!!!.

Posted by: Anonymous | September 15, 2008 9:46 PM | Report abuse

The Republican AVERSION to any kind of REGULATION is the ROOT cause for these disasters. Years of stripping away regulations under the Bush Administration created a free-for-all for Big Oil, Big Pharma, Enron and our financial/mortgage institutions.

A politicized FDA results in toxic food and unsafe drugs, a politicized FEMA under Bush brought us the disaster following Katrina. Republicans have drowned America in their greed, incompetence, corruption, endless scandals (like the recent sex for Big Oil deals scandal, Mark Foley, Larry Craig, Jeff Gannon, and the list never seems to stop), market manipulations, extreme gas prices and a $10,000,000,000 per MONTH war that we were lied into. The Republicans have made a MOCKERY of America.

There is absolutely NO EXCUSE for any of this "culture of corruption". These people are EVIL personified.

If you choose to vote for a continuation of these policies under McCain/Palin, then you are literally proving to the world that you are the most IGNORANT, GULLIBLE and SELFISH humans that EVER walked the face of this earth! Obama/Biden may not be perfect, but at least they aren't Republicans. Time to let the adults drive for awhile.

Posted by: Anonymous | September 15, 2008 10:09 PM | Report abuse

America--STOP WHINING!! McCain will give your hard earned tax dollars to the corporations and do exactly what they fund him to do--and no worries; Palin is right in line as the Corruptlicans next puppet to dance to the tune of corporate socialism. It's all good. Remember, the mavericks will not let any of those hard earned American tax dollars go back to your states in order to create jobs and repair the infrastructure. No, no, no. You can count on them to prop up corporate friends in order to continue to fund their campaigns. Like I said--STOP WHINING YOU UNEDUCATED UNINFORMED SHEEP. THEY WILL FLEECE AMERICA UNTIL THEIR AGENDA HAS COME TO FRUITION.

They strain a gnat while they swallow a camel.

Obama/Biden '08

P.S. Are you not sick of uneducated Americans ruining our country?

Posted by: SouthPrairie Deb | September 15, 2008 10:50 PM | Report abuse

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Posted by: Anonymous | September 15, 2008 10:58 PM | Report abuse

"the destructive tax-and-spend economic policies promoted by this Democratic Congress are failing to meet the needs of workers, seniors, and small businesses," Boehner said.

Exactly what economic policies have the Democrats been able to get past the presidential veto since they took over Congress in 2007?

I thought this was a "do-nothing" Congress, right? Not like the Republican Congress we had for six years, when Bush did not veto a single bill, and spending soared while regulation was discouraged.

So whose policies are responsible? I'm finding the Republican argument confusing. Is it the Democratic policies that can't get passed into law, or the Republican policies that are actually in force?

It's tough sometimes working backwards from the conclusion that Republicans are never responsible for anything bad, even when they are in charge of the thing going bad.

Hey, "heck of a job," Bush!

Posted by: drossless | September 16, 2008 12:23 AM | Report abuse

Anonymous, who keeps whipping the same pony even after it's clear the poor thing is dead, says: "Under Clinton the rules were relaxed . . . "

But he forgets the second part of the sentence should be ". . . by the REPUBLICAN CONGRESS." Republicans wrote the law and passed it on a party-line vote in 1999, Clinton reluctantly signed, and since 2001 Bush has been in charge of enforcing the law his party wanted.

But of course, it just has to be the Democrats' fault because, well, it just has to be or your head will explode, I guess.

Posted by: drossless | September 16, 2008 12:28 AM | Report abuse

The blame for the Market turmoil, falls on Barny Frank the chairman of the House Committee on Financial Services and Christopher Dodd Chairman of the Senate Banking Committee, and all their buddies at Fannie mae and freddie mac. Democrat policies are the blame for the financial crisis, and nothing can change the truth.

Posted by: xthat | September 16, 2008 12:53 AM | Report abuse

Housing market is failing and we've still not seen the worst. Banks are now failing and we've not yet seen the worst. We have a number of working people aged 65 and older at an all time high. Unemployment has been at a consistently higher rate during Bush's term than it was during Clinton's term. In fact unemployment is still higher now than it was over a decade ago. The trend is on a dramatic increase. Average hourly pay is down compared to over a decade ago.

The republicans can blame the dems all they want over this one. It hardly has credibility when the reps ran congress for 6 of the past 8 years and ran the show for the past 8 years. If they want somebody to blame for it they should look in the mirror.

I thought Boner's comment was completely off base. He's in effect admitted to the failed policies and in passing the buck to the democrats is inherently saying, "What have the democrats done to clean up the mess we created?" Read his spin carefully...that's what he's saying.

Well Boner, how about I correct you. Lets see, I seem to remember this little bill related to SCHIP which was supposed to increase funding for health insurance for children...which the president vetoed and your henchmen stopped from overturning. Boner, I seem to remember Foreclosure Prevention Act 2008, Housing and Economic Recovery Act 2008, Stop Excessive Energy Speculation Act of 2008, Lieberman-Warner Climate Security Act of 2008, and I can go on and on. Incidentally the Housing and Economic Recovery Act of 2008 started out as the Housing and Economic Recovery Act of 2007...but Boner and his friends have been elemental in stalling..and the President as well having threatened veto last time around. So basically if these idiots would just get the hell out of the way we'd be on the road to recovery. The other reality, of course, is that over 6 years of neglect things are just a little screwed up...so bad that it isn't going to get fixed so quickly.

Hey Boner, lets talk about that oil drilling...what exactly did the republicans do when they had carte blanch to address the issue? Why they gave tax credits to people buying big ass SUV's, they exempted big trucks from fuel efficiency standards, and did nothing to pave the way for offshore drilling nor did they invest a single dime into alternative energy research. That's right, you could get the same amount of tax credit if you bought an Excursion or Suburban for business as a prius. Isn't that self defeatist? Lets incent some people to save gas so we can incent others to waste it. And now we have all this concern for the issue they created? Lets see, I think this all came as part of the "Clean Air Act" if I'm not mistaken.

8 years of these fools is enough. If you don't, yourself, bring home a personal income of 200k a year you have no business voting for this platform. There is absolutely no benefit to it. I've seen McCain's platform before. Look at the one Bush ran under twice. Its the same.


Posted by: fortheclueless | September 16, 2008 1:35 AM | Report abuse

I love how Boehner somehow blames this crisis on Democrats. He exemplifies everything wrong with this country's political divisiveness. His argument has absolutely no merit and does nothing to help this country. The people are speaking as to what impact Bush has had on this economy

Posted by: B | September 16, 2008 10:37 AM | Report abuse

I love how Boehner somehow blames this crisis on Democrats. He exemplifies everything wrong with this country's political divisiveness. His argument has absolutely no merit and does nothing to help this country. The people are speaking as to what impact Bush has had on this economy

Posted by: B | September 16, 2008 10:38 AM | Report abuse

Economic and Energy crisis, the real 3 a.m. call for Obama and McCain.

Lehman Brothers fails today. Falling values for homes continues to affect financial institutions all across the country. The real truth is that the crisis in the economy and the energy crisis are really one and the same. As the price of energy, and everything else has soared, this has a ripple effect throughout the entire economy. Gas cost more, so you have less to spend on other things and all the people that work in the stores that sold you those things now have a lower income. They therefore cannot afford to buy things, like houses, and on and on down the line. Plus the cost of everything that you have to buy goes up. Everything in every store you ever visited got there by truck. Any energy prices are causing the cost of driving a truck to go up. There is an underlying energy cost in virtually every single product that you buy, be it houses, electronics or food. Farmers had to buy gas to plow their fields, plant their seeds, harvest the crops, and transport the crops to market and on and on.

The underlying economic problem in this country for quite some time is the very simple fact that we import more than we export. You can relate how this works to a household budget. Your imports are the amount that you spend your exports are the amount of income you earn and if you continuously spend more than you earn, you're not going to end up doing very well economically. For years, the biggest factor in our trade deficit has been the importation of oil. Decades ago when oil was cheaper, we decided to make a trade-off. That trade off was a willingness to spend money to import oil and produce less domestically, because it was dirty. The oil spills off the Gulf coasts and off the coast of California were an annoying problem for anyone who went to the beach. I am old enough to remember visiting the beach as a youngster, and at the steps of every hotel along the beach there was basically some rags in a bucket of kerosene or some similar solvent to clean your off the bottom of your feet so you wouldn't track oil back into the hotel. The technology has greatly advanced. Offshore wells now have shut off valves below the seafloor. They close automatically in an emergency to prevent large quantities of oil from leaking into the sea. As a side note, 80% of all the oil on the earth that’s ever been formed has already leaked to the surface. The amount of oil spilled into the ocean today by man is only a tiny fraction of natural leakage of oil. Oil is lighter than water or rock, and after enough rock builds up over the top of it, it gets squeezed and the pressure goes up. If there are any fissures or cracks in the rock, it rises to the surface. Bacteria consume it and it becomes part of the food chain. After all, crude oil is pure organic material; it only causes problems in high concentrations, like a major oil spill. There have been no major oil spills off the coasts as a result of offshore drilling in many years.

And most importantly, the economics of our decision to import oil instead of producing it domestically has changed. At current world prices, and especially their peak price reached a few months ago, we are spending hundreds and hundreds of billions of dollars to import oil. The cost of the Iraq war is also an economic drain but the economic drain of the Iraq war is only about 20 or 30% of the economic drain of importing oil. In 1973, the Arab oil embargo caused a similar economic crisis in our country. Of course the obvious effects were the gas lines and the increased price of filling up your car at the pump. But our entire economy suffered greatly. Inflation soared and jobs were lost. Pretty much the same thing that we're experiencing right now. It was because of the ripple effects of energy prices, which is an underlying cost to produce virtually everything we eat or use in our daily lives. This is somewhat mitigated however, if the energy that we are paying increased prices for comes from inside the US. Because the net wealth stays inside our country, increased income from producers of oil is used to purchase goods, products and services that everyone else depends on for their income. If the money flows outside of the United States it is a net loss of wealth.

Earlier this year, when the price of energy soared, that was the 3 a.m. wake-up call. It should have been easily foreseen by Obama and McCain and everyone else that the ripple effects of virtually doubling of energy prices would have throughout the economy. The fallout was going to be brutal and widespread. McCain reversed his earlier position, and the position of pretty much everyone else, and said it was time to open up the outer continental shelf, but not ANWR, for drilling. He made it part of the way but didn't really propose an all-out plan to increase production. Obama came out against offshore drilling. It's McCain that got a grade of “incomplete” and Obama, a grade of complete failure.

The real solution to both the energy and related economic crisis is to become energy independent. Either Obama or McCain could have said the following statement and passed their 3 a.m. test:

“We are in a national emergency. We must become energy independent. This emergency requires the concerted efforts of our most creative and hard-working people all across the country. We need to greatly increase our investments in alternative energy sources, especially carbon free sources, like nuclear, wind and solar. But we also must realize that the time has come to explore every resource we have available to us. We need to produce every additional alternative energy source we can produce, and we need to extract every last barrel of oil and cubic foot of natural gas on American soil that we can find in an environmentally sound way. And we need to do it very quickly. We are out of time.”

The question of course is which candidate will figure this out, and will they figure it out before it's too late.
http://strategicthought-charles77.blogspot.com/2008/09/economic-and-energy-crisis-real-3-am.html

Posted by: Charles Hill | September 16, 2008 5:12 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Bush and his Party ,is to blame for the shape our country is in,and If McSame and / palin win this election ,we will be a lost country,

Posted by: worldofnana | September 16, 2008 6:59 PM | Report abuse

Today, Barack Obama said that a McCain administration would be controlled by the same lobbyists responsible for the crisis on Wall Street. Obama didn’t name any names, but simply pointed out that some of McCain’s advisors are lobbyists.

A closer look reveals that Obama is more likely to be controlled by corrupt persons responsible for the crisis on Wall Street than McCain, so perhaps he was going on offense as a good defense. Obama was the number two recipient of campaign funds from Fannie Mae, and in fact the two corrupt fat cats that ran Fannie, Franklin Raines and James Johnson served as economic advisors to Obama. So if they ran Fannie into the ground and they advise Obama on economics, how well does that bode for America under an Obama administration?

So Obama claiming that McCain would be “more of the same” and controlled by the persons responsible for the current financial troubles is absolutely ridiculous considering Obama’s own ties to persons directly involved in the mess.

Posted by: SeekingTruth | September 17, 2008 5:12 AM | Report abuse

Is it lost on all of us that the man who yesterday called for a "9-11 commission" to help him undertand what went wrong with the markets happens to be the chair of the Senate Commerce committee? I can appreciate that a person in such a position shouldn't be the one to investigate his own evident misdeeds, whether committed through incompetence or malfeasance, but I've yet to see any astonishment expressed that the person most directly responsible for oversight of markets needs somebody to help him understand what went wrong.

For those who are a little behind, the chairman of the Senate Commerce committee and the man who needs help to understand the causes of the market crisis are one and the same, John McCain.

What makes this doubly remarkable is the fact that McCain quoted Theodore Roosevelt that "laissez-faire leads to corruption."

I can save Mr. McCain a lot of time and expense. What happened to the housing and credit markets isn't hard to understand. It's simply a matter of fraud, perpetrated on the grandest scale in the known history of the world. The mortgage market managers set up a reward system that sponsored the origination of millions of mortgages that were designed to fall into foreclosure, by originating those loans at unrealistically low interest rates, then adjusting those rates in ways that escalated the monthly payment far beyond the borrower's ability to pay.

These "poison pill" ARMs were antagonistically peddled to consumers ignorant of their details, because nobody who understood such a loan would ever sign one. Because of the corruption built into the reward structure, ARMs were frequently sold to consumers who could have qualified for fixed-rate mortgages that would have been much less likely to fail.

The excessive origination of self-sabotaging ARMs promoted housing inflation by enabling large numbers of consumers to enter into unaffordable mortgages, and the scheduled interest rate and payment resets set up the market tsunami of foreclosures to come. By failing to properly oversee the markets, contemporary laissez-faire philosophy enabled lenders to cheat borrowers on a scale of hundreds of billions of dollars.

To further exacerbate the potential for failure, the government shrank from fiduciary oversight of Fannie Mae and Freddie Mac, a function for which the government was responsible as the insurer of Fannie and Freddie's securitization practices. This failure was egregious, in that any entity that insures bonds without first examining the underlying assets more than deserves to lose money when those assets prove to be fraudulent.

This is not an issue of interference by the public sector in the affairs of the private sector. This is a case of gross neglect of an insurer's fiduciary responsibilities. The fact that the insurer in question is the US government is incidental to the neglect of risk management responsibility.

There's nothing overly complex about the failure of the market to police itself. This crisis was created by two primary factors: a corrupt reward system for loan originators that placed no value on the quality of the loans issued, combined with a grand-scale securitization process in which nobody was checking the books. It's not that hard to comprehend.

All of which leads me to ask: "Why are these simple events, and the mechanisms by which they occurred, beyond the understanding of Senate Commerce committee chairman and presidential candidate John McCain?"

Posted by: Ken in Dallas | September 17, 2008 10:18 AM | Report abuse

How long are the Democrats back from vacation before they head away from work again?

Posted by: Anonymous | September 18, 2008 12:41 PM | Report abuse

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