Network News

X My Profile
View More Activity

Obama's Faulty Logic

Bill Clinton beat Papa Bush in 1992 by blaming him for economic woes, even though the downturn of that year was over by the time of the election. Now Barack Obama is hoping to blame that hyphenated adversary, Bush-McCain, even though the facts don't fit his narrative.

Obama is trying to draw a link between the Wall Street blow-ups and a lack of regulation. But the blow-ups have included Fannie Mae and Freddie Mac, two of the most highly regulated financial institutions in the country. They have included three out of five of the top investment banks, institutions that were also regulated. By contrast, there have been relatively few blow-ups at hedge funds, which are not regulated directly. This pattern of failure is not consistent with Obama's claim that deregulation caused the trouble.

Embarrassingly for Obama, the principal piece of financial deregulation over the past decade was the reform of Glass-Steagall, the law that separated investment banks from deposit-taking ones. This reform was sponsored by McCain's friend, former Republican Senator Phil Gramm, but ending the division between the two types of bank was a policy that the Clinton team also supported, which does not fit the Obama narrative. And during the current crisis, the Glass-Steagall reform has proved to be a boon. It has cleared the way for relatively healthy deposit-taking banks, such as JP Morgan and Bank of America, to rescue desperate investment banks, such as Bear Stearns and Merrill Lynch. Without that piece of deregulation, we would all be in more trouble.

The regulation-versus-deregulation rhetoric is appealingly simple, and both parties abuse it. Republicans like to say they will get the economy going by cutting red tape. Democrats like to say that they will make the economy more stable by demanding rational oversight. Neither claim is worth much.

The Republicans fail to acknowledge that the easy economic gains from deregulation were exhausted more than two decades ago, when clearly destructive restrictions on competition in trucking, airlines and so on were scrapped by Carter and Reagan. The Democrats fail to acknowledge that there is a limit to what government oversight can do. Modern financial institutions are so complex that government inspectors are hard pressed to understand their trading strategies. That is why an outfit such as Citigroup, a deposit-taking institution theoretically overseen by multiple government bodies including the Fed, could park billions of dollars of toxic mortgage securities in off-balance-sheet vehicles, with nary a protest from regulators.

Yes, Wall Street's woes reflect greed and reckless borrowing. And yes, some regulatory reform is necessary. But you can't blame the mess on either political party -- at least not if you want to remain honest.

By Sebastian Mallaby  | September 16, 2008; 4:17 PM ET
Categories:  Mallaby  | Tags:  Sebastian Mallaby  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Krauthammer, Gibson and the Bush Doctrine
Next: Carly Fiorina's Friendly Fire

Comments

For the average person, the reckless policies
and the cynical cronyism of the past 8 years sure tips the scales. So, yes, I CAN honestly blame one political party. And I do. That is what happens when you are the responsible party---you have to take responsibility. The Republicans have had the presidency for 8 years and had the Congress for 6. You can't say when one party has had that much power that they are somehow even in
blame.

Posted by: Thumb on the Scales | September 16, 2008 5:33 PM | Report abuse

Oh come on now,as it is a well known fact
that no cocaine snorting,crack smoking pot
head drug addict like fake Messiah Barack
Hussein Obama can think logically what with
all that permanent brain damage it did to
Whacky Baracky Hussein Obama as well.. It
sure looks more and more like Obama's
Former Pastor Rev Jerimiah Wright was right
about it,that Obama's "Chickens Are Coming
Home To Roost!" So anyone want to discuss
loud mouth drunk Sen Joe Biden's "drinking
problems and nepotism problems of trying to
"Crown his Crooked Son Hunter His Successor
in the US Senate or all of the crazy antics
of Madame Speaker Nancy Pelosi and Charlie
Rangel and William "Cold Cash" Jefferson?

The Socialist Democrat Party Is The Real
Home To The Culture Of Corruption. Vote
Sen John McCain and Gov Sarah Barracuda
Palin to end it on the Democrats and send
the corrupt likes of Obama,Biden,Pelosi,
Rangel and Cold Cash Jefferson behind jail
bars where they belong for life in 2008!

NOBAMA! NOBIDEN! NOPELOSI EVER! NO Democrat
Socialism Ever. Just Say NO!

Posted by: Ralphinphnx | September 16, 2008 5:43 PM | Report abuse

@Ralphinphnx: You must be a Republican.

Posted by: Ernie Mercer | September 16, 2008 5:48 PM | Report abuse

It is unfair to present the question facing the electorate as "Is Governor Palin the best choice?", when the real question is "Is Governor Palin the better choice?". I do not believe that she is the "best" choice, but I do believe that she is the "better" choice. Infact, Obama is better qualified to be our Vice-President than Governor Palin.

Obama has written 2 books, all about himself, one or both as a State Senator at a fairly young age. It lends credibility to the often-repeated Republican charge that many Democrats are often so self-driven that they can acknowledge nothing greater in their actions (not just words or letters).

I sincerely believe that actions speak much louder than words, and therefore, and solely therefore, McCain and Palin trump Obama and Biden.

Posted by: mom4palin | September 16, 2008 6:40 PM | Report abuse

More on Obama's Lies:
# Democratic Party War Room http://www.youtube.com/watch?v=R4mKWceq0vY
# The Lying King Sarah Palin Parity Voice Over http://copiousdissent.blogspot.com/2008/09/lying-king-sarah-palin-parity-voice.html

Posted by: obama_is_arrogant | September 16, 2008 6:42 PM | Report abuse

oh but I indeed do mostly blame one party. the republican penchant for privatizing profits but socializing losses via bailouts does nothing but hurt average Americans. What I took away from Obamas speech is that he's advocating for newer and better regulations to meet the needs of today's markets. I think that makes a lot of sense. And what would McCain do? Form a commission?Oh cmon now, gimme a break.

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

oh but I indeed do mostly blame one party. the republican penchant for privatizing profits but socializing losses via bailouts does nothing but hurt average Americans. What I took away from Obamas speech is that he's advocating for newer and better regulations to meet the needs of today's markets. I think that makes a lot of sense. And what would McCain do? Form a commission?Oh cmon now, gimme a break.

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

oh but I indeed do mostly blame one party. the republican penchant for privatizing profits but socializing losses via bailouts does nothing but hurt average Americans. What I took away from Obamas speech is that he's advocating for newer and better regulations to meet the needs of today's markets. I think that makes a lot of sense. And what would McCain do? Form a commission?Oh cmon now, gimme a break.

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

oh but I indeed do mostly blame one party. the republican penchant for privatizing profits but socializing losses via bailouts does nothing but hurt average Americans. What I took away from Obamas speech is that he's advocating for newer and better regulations to meet the needs of today's markets. I think that makes a lot of sense. And what would McCain do? Form a commission?Oh cmon now, gimme a break.

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

oh but I indeed do mostly blame one party. the republican penchant for privatizing profits but socializing losses via bailouts does nothing but hurt average Americans. What I took away from Obamas speech is that he's advocating for newer and better regulations to meet the needs of today's markets. I think that makes a lot of sense. And what would McCain do? Form a commission?Oh cmon now, gimme a break.

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

oh but I indeed do mostly blame one party. the republican penchant for privatizing profits but socializing losses via bailouts does nothing but hurt average Americans. What I took away from Obamas speech is that he's advocating for newer and better regulations to meet the needs of today's markets. I think that makes a lot of sense. And what would McCain do? Form a commission?Oh cmon now, gimme a break.

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

Enforcement Mallaby, enforcement. All the regulations in the world won't do any good unless the government is prepared to enforce them. The republicans don't want regulations enforced. There is the weak link.

Posted by: JoeinMN | September 16, 2008 7:02 PM | Report abuse

Maybe you're just over my head here, but in your last piece you say: "Fannie and Freddie really were crony capitalist monsters."

Doesn't it make sense that, to fix that, would require more (or "better", I should say) regulation? Just curious..

Posted by: jjbnyc | September 16, 2008 7:18 PM | Report abuse

Thank you for being the voice of sanity in the whirlwind. Personally, I think BO's efforts to panic people are shameful and traitorous. We need to remember that we have had drops in the market before and problems with industries before and we have come through them without resorting to socialism.


Our system has worked very well for more than 200 years and we are doing a lot better than most other countries. Is there room for improvement? Of course, but we sure don't need to give up on our free market economy.

Posted by: equalist | September 16, 2008 7:18 PM | Report abuse

Mallaby: You really think that logic should rear its ugly head again? I thought that Bush banished that years ago. And you expect Democrats to bring it back in these most partisan times we have ever experienced?

Posted by: J Lauber | September 16, 2008 7:18 PM | Report abuse

The lack of regulation he's talking about is actually that on interest rate swaps transactions, which was scuttled by Phil Gramm, until recently McCain's economic adviser, when they were still a nascent financial product at the turn of the century.

With no regulation, the industry grew exponentially without any government oversight or transparency even within its own market, which is why very few people outside of Wall Street's risk subculture saw this coming.

Posted by: Justin | September 16, 2008 7:20 PM | Report abuse

How can you truly have free-market economy without any kind of regulation? We haven't had the same kind of market for 200 years, anyway - we've had various different kinds of government involvement... Your comment is so obviously anti-Obama that you lose your credibility.

Posted by: jjb | September 16, 2008 7:20 PM | Report abuse

Also, I hope your post was merely meant to be disingenuous, because if you didn't already understand that, you have no business commenting on economic issues at all. Swaps have been the primary engine of economic growth in the country over the last 8 years.

Ok, thanks.

Posted by: Justin | September 16, 2008 7:24 PM | Report abuse

So I also tend to agree with a number of
other poster's comments concerning how all
that Cocaine,Crack,and Pot must have totally destroyed Messiah Barack Obama own
ability to even think logically and it
would also help explain all of Obama's Out
Of Touch With Reality,Delusional Thinking,
Grandiose Unworkable Crazy Ideas as well.

So I shudder to even think about the US having a braindamge drug addict Barack Obama snd another alcoholic Joe Biden in
the White House after the one we have in
it now,George W Bush with Obama or Biden
Fingers on The ICBM Red Launch Phone! And
I sincerely hope it scares you too as face
it Obama and Biden are Wrong For America
Now And Forever! Say NO to NOBAMA/BIDEN!

Posted by: Patty 2008 | September 16, 2008 7:30 PM | Report abuse

ok well thanks for calling me an idiot; i'm glad to at least learn about economics (this isn't actually an "economics blog" btw, it's an election blog) - as opposed to more ranting about cocaine or whatever...

Posted by: jjbnyc | September 16, 2008 7:37 PM | Report abuse

well the right voters have been going on about Obama being in a panic - but you read the blogs by Patty 2008 and RalphPhnx complete jackass comments you know who knows they are full of it and are opanicking - any rubbish to win the election..now I am not in the US but have been watching this election with a combination of worry and finding it hilarous - that the so called world leader and super power with one of the most incompetant Governments in history ( yes a close call with Carter and Nixon admins) you have a close call happening - as Ive said befoe it confirms that "Idiocracy" exists and comments by right wing bloggers like that shows that maybe McCain is right in dumbing down the elction to get in - appeal to all those JerrySpringer/Jackass/WWE/WWF/Dr Phil folks out there - sometimes I think yeh let them get in and the world will have a damn good laugh the next 4 years - but would be eventually a very black comedy - oh and then kiss your world leader status goodbye as your country and economy sink into the sunset....clowns...

Posted by: col in paradise | September 16, 2008 7:45 PM | Report abuse

oh and to get back on track re economics....funny Bush admin started with the blow up of his mates at Enron and WorldCom and finishes with this.......oh and how can you call the Democrats the socialists when the republicans have recently nationalised Fannie Mae and Freddie mac - anyway the main thing is they did not regulate, dampen down - prosecute the kiddies in Wall street who went on a inflated profit binge at the little guys expense....by thinking they were to clever with their rubbish Financial engineering and passing the parcel around amongst themselves - till the parcel blew up.....more clowns - just overpaid and yes the Govt turned a blind eye...

Posted by: col in paradise | September 16, 2008 7:53 PM | Report abuse

>>overseen by multiple government bodies including the Fed, could park billions of dollars of toxic mortgage securities in off-balance-sheet vehicles, with nary a protest from regulators.<<

That in itself wasn't enough to raise a red flag?
What, are you kidding me?
Those security instruments composed of sub prime mortgages we sold are being exported to the Grand Caymen Islands at a vast paper loss, to a company owned by the company selling the instruments?
Really?
C'mon Mallaby, are you trying to tell us that a government accountant looked at that on Merril Lynchs balance sheet and then just skipped on down to the next line?
Let's objectify this a little bit, would the IRS have looked at that and had no questions?
I have to streniously disagree with the author, he's living in a fantasy world if he thinks transactions of that magnitude were not looked at by regulators. Their was no interest to write regulation to govern these risky instruments. Nobody in the executive branch wanted to regulate the financial industry, the were too busy de-regulating it.

Posted by: dijetlo | September 16, 2008 7:54 PM | Report abuse

If you truly judge action over words, ask yourself this? Why did McCain choose a VP candidate completely unprepared for the job
while Obama took the most qualified person even thought it might cost him the support of some voters.

Governor Palin is in no way the "better" choice. She is completely the wrong choice from anything other than a political perspective and it is evidence of McCain's self-serving politics.

It's not that she doesn't have experience. The problem is that Palin's oft-cited "executive experience" is simply irrelevent as preparation for the job of Vice President.

Palin has no knowledge of any of the major issues facing America including Foreign Policy, Health Care, Economics, Energy Policy, Inner City Crime, Job Outsourcing the list goes on and on. We do know that she can recite talking points given out to by her handlers and give a good speech.

But in her years as mayor, her major achievement was passing legislation to build a hockey rink. In her own words, she called being mayor, "Not rocket science. A $6million budget and 53 employees." Oh, her one big project has been a complete fiscal mess that is still unresolved.

Her short time as governor does not provide much more evidence. Alaska is a different world from the rest of the lower 48. Most of its funding comes from oil industry taxes and government handouts. This saves the governor from making tough choices other governors face. It's just not the necessary preparation for the national stage. Ironically, Karl Rove made a similar case in arguing that Tim Kaine, the Democrat governor of Virginia and former mayor of Richmond, VA was unqualified to be VP and a heartbeat away from the Presidency for the very same reason.

Obviously, if elected, Obama would be our least experienced President since Lincoln, who just happened to be a Lawyer, Illinois State Senator, and member of Congress just like Obama. Despite his lack of executive experience, Lincoln became our greatest President because he demonstrated Wisdom and Judgement, two traits McCain and Palin lack.

We have years of evidence on the kinds of policies Obama would support and the way he thinks through the challenges Americans face. If you don't agree with these policies, you should definitely vote against him.

But to site the fact that he wrote books, or missed 130 votes while ignoring that he was also a constitutional lawyer, voted 4000 other times, and was a US senate committee head is just being willfully ignorant.

We can't keep basing our elections on who is more real, who we'd rather have a beer with, or who is most like us. We need serious leaders who can think through issues and consequences and not just make decisions based on blind ideology. Obama certainly wouldn't be my first choice for President (disclaimer, i like Tom Ridge and was hoping McCain would pick him or Fiorino), but he is by FAR the better of these two candidates.

Posted by: Charles | September 16, 2008 8:02 PM | Report abuse

they sure are panicking - latest news release over here in Oz...."quick quick they are talking about the eocnomy get Sarah out...."

"Republicans sue to stop Palin Enquiry"

http://www.theaustralian.news.com.au/story/0,25197,24359489-12377,00.html

Posted by: col in paradise | September 16, 2008 8:08 PM | Report abuse

Your analysis of "embarrassingly for Obama" is based on flawed logic and tells one side of the story. By your own logic, if the reform of Glass-Steagall had not separated the law that regulates investment banks and deposit-taking ones and had not left the former unchecked, we might have had a healthy investment banks like the deposit-taking ones. Free market is about transparency and free flow of information among market participants. The role of regulation is to make the playing field leveled so that small investors and CEOs have the same information when they make investment decisions. But investment banks and the betting sector in general has been free of any regulation and has been gambling with shareholders money and make their short-term profit and walk away leaving the unsuspected public at loss.

To your credit, yes, modern financial institutions are complex. That is why we needs a president that understand the complexity of the real world and provide real solutions.

Posted by: Shim | September 16, 2008 8:08 PM | Report abuse

jjb--not you, Mallaby. He's the one throwing around economic buzzwords that haven't been relevant since he was tossed from the Economist to the financial backwaters of the Post.

Posted by: Justin | September 16, 2008 8:10 PM | Report abuse

I read this article and I am emabarrassed that you refer to John McCain and Phil Gramm as reformers. They are far from it.

Remember ENRON, the accounting fraud scandal from 2001 where the executives misled investors by covering up millions of dollars of losses. While they were selling, they told investors to buy.

Who was the #2 person in Congress at the time to receive campaign contributions from ENRON before it collapsed? -Phil Gramm. Who was on the Enron board of directors? -Gramm's wife Wendy.

I guess he was being paid back for helping to legislate for deregulation of energy commodity trading in California. Deregulation to the max...dude,...isn't that why our economy and financial markets are in the toilet right now.

Oh, and fyi- Dick Cheney met with Enron officials 4 times in 2001. For what???

Overall, I am embarrassed that we have a candidate running for president who picked Gramm as his "campaign chairman and economic advisor" so he manipulate our fears about high gas prices, mortgage foreclosures, and wall street bail outs by telling us we are experiencing a "mental recession."

Give the American voter more credit and real change. We work hard for our money and our freedom. What a slam to the intelligence of the American voter.

However, I do have one reason to vote for McCain...he was smart enough to fire Gramm.

Posted by: Tim Denny- Minneapolis | September 16, 2008 8:20 PM | Report abuse

Apologists please...... eyen for deregulation led by Phil Graham is the cause of this meltdown. We are tired of this privatization of profits and socialization of risks or losses. You guys got town your stuff and stop trying to run away from it.

Posted by: f4skyhawk | September 16, 2008 8:21 PM | Report abuse

re Enron - the reason Cheney and co visited Enron a lot is thanking them for buying the power out of California to create the brownouts - and help the Repub election causes in 1999/2000 (both Stae and Fed) - they wanted to help there mates out of themess of this "shorting the states energy" strategy... but yes all in bed togther but hey someone had to take the fall..but yes the lesson was there in regards to financial transparency and the dangers of derivatives and mkt manipulation...and they dropped the ball completely as they wanted Wall Street onside..

Now Paulson I note Mallaby's other article today mentions he washead of Goldmans before taking the plum political job..but have a look at Goldman Sachs Financial reports in 2007 - they actually made some big profits from shorting the Sub Prime Mortage markets and associated Investment categories...so Paulson must have known how bad it was if that the direction his company was going - or was he just another Wall Street Investment Banker CEO who didnt have clue what the traders where really up to inrisk taking??????

Posted by: col in paradise | September 16, 2008 8:33 PM | Report abuse

Freddie Mae and Freddie Mac gave obscene amounts of money to Obama.

Posted by: drawlings | September 16, 2008 8:50 PM | Report abuse

Greed?

You are supposed to be an economist. It's all about greed, illuminating.

I didn't know that economic analysis is still at the times of the Nicomachean Ethics. I thought Smith, Ricardo, Jevons, Pareto, Schumpeter, Keynes, Hayek wrote some books in order to explain how the free market works.

Posted by: Anonymous | September 16, 2008 8:52 PM | Report abuse

This guy is really funny. Mallabeee, economics is not for you, find a woman and go dancing once in a while.

Posted by: stearm | September 16, 2008 8:55 PM | Report abuse

And the expert says: greeeeeeeeeeeeed

Posted by: stearm | September 16, 2008 8:57 PM | Report abuse

Oh Malleable, you tool. You're smart enough to know it really is lack of adequate oversight and regulation which is a prime contributer to the financial system meltdown. All those billions and billions of junk real estate loans, made to people who couldn't pay them back, on property which wasn't worth it, by the likes of Countrywide and IndyMac. They were quickly bundled into pretty little confections with sugar on the outside, and crud hidden inside, and peddled to Bear Stearns and Lehman Brothers and all the rest, who then got indigestion. Kind of like laundering drug money, except this particular scam had the stamp of approval of Grandpa Greenspan. The people you work for loved it while times were good, and they whispered to their Republican friends to keep petty paws off, and they were obliged.

Posted by: Phully Phedup | September 16, 2008 8:59 PM | Report abuse

I suspect your a journalist and not an economist.
Rhetoric is fine but the facts aren't there.
Lehman, Bear Stearns, LTCM were all entities that took more risk than their capital reserves allowed. The SEC changed capitalization standards during this administration, which meant that the investment banking community took on more risks.
I also have tremendous difficulty when people use the word deregulation too loosely. Deregulation of the type that permits entry, that permits firms to compete rather than have their rates be first approved, is one thing...that is the model of airlines, trucking, and ocean shipping dereg.
But, it is a different type of deregulation when you deregulate to permit persons to fail to disclose information, or do not require them to disclose information. It is also a false deregulation if the government or others may be called to cover your risks (because of negative externalities) when they have no ability to prevent the fiasco from happening or to mitigate any damages.
Don't confuse the term deregulation.

Posted by: Bill | September 16, 2008 9:05 PM | Report abuse

From the Center on American Progress, on Phil Gramm:

While in the Senate, he was behind the Commodity Futures Modernization Act and the Gramm-Leach-Bliley Act. The former made legal "the mortgage swaps distancing the originator of the loan from the ultimate collector," while the latter "destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies." As The Nation wrote, "those two acts effectively ended significant regulation of the financial community."

Posted by: Len | September 16, 2008 9:30 PM | Report abuse

This is an excellent article, right to the point, truly fair and balanced.

Posted by: berrymonster | September 16, 2008 9:47 PM | Report abuse

Those who criticize Phil Gramm for the Gramm-Leach-Bliley Act... SHOULD ALSO CRITICIZE Bill Clinton for signing it.

Posted by: aaron87 | September 16, 2008 9:53 PM | Report abuse

@aaron87

You're so right. Bill, bad dog! See the mess you made?! It was only a forecast surplus anyhow. Bad Billy!

Posted by: neo | September 16, 2008 10:18 PM | Report abuse

yeh blame Bill - Bush and co where just toooo busy trying to save the world to really worry about there mates on Wall Street so must have been Bill.....also in regards to Tim Denney 8.20 comment..

"I do have one reason to vote for McCain...he was smart enough to fire Gramm."

Lets be real here Gramm should have gone when ENRON went - Mc Cain will have him straight back into the clubhouse (whitehouse) if he wins the election.... all the old cronies will resurface...

Posted by: col in paradise | September 16, 2008 10:31 PM | Report abuse

The entire problem is a result of the Gramm-Leach-Bliley Act. The vote on this bill was strictly along party lines with 53 Republicans voting for the bill. The lone Democrat to vote for the bill was Ernest Hollings of South Carolina. And yes, Senator McCain voted for it. See http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00105


Gramm-Leach-Bliley effectively repealed the second Glass-Steagall Act which, among other things, barred investment banks and retail banks from merging. Gramm-Leach-Bliley effectively removed this restriction, allowing a single institution to both create a debt-based investment, and then facilitate its sale. Previously, with two institutions involved in that process (Three if you count the investment rating company - Moody's for example), there would have to be a high degree of clarity involved. One institution (Investment bank) wouldn't just buy, repackage, and re-sell another institution's (Retail bank) products without first understanding exactly what it was. It would also be far less likely to hold those assets and count them as capital.

With a single institution operating on both the commercial and investment banking fronts, the motive for clarity was eliminated.

Posted by: Oscar | September 16, 2008 11:03 PM | Report abuse

Mallaby--where's the outrage? Your blithe essay holds the political parties blamesless, which is like believing neither is responsible. You can nitpick Obama's logic all you want--but he's introducing a new concept: we, the people, need to take responsibility for the problem. Up until then, we were talking about lipstick.

Posted by: phughez | September 16, 2008 11:19 PM | Report abuse

wapo's media filters are illogical. reagan is the root of this, or is it adam smith? clinton signed the bill to reduce regulation because he believed in wall street's honesty. big mistake for all concerned. Embarrassingly for mallaby, his party is dishonest, or wall street would not need regulation. Obama would be wise to understand the level of desperation and margin covering that will be going on for the entire first year of his presidency. Do not let gramm, romney or fiorina anywhere near tax dollars.

Posted by: PreAmeriKKKan | September 16, 2008 11:41 PM | Report abuse

Sebastian Mallaby's statements on the Fannie/Freddie situation and on the role of the investment banks are just plain wrong, as is his assertion that regulation has little role in resolving the subprime problem.

(1)Fannie and Freddie got into hot water NOT because they were regulated and NOT because they held significant quantities of subprime mortgages (which, for the most part, they did not), but because the value of mortgage assets have declined generally, slicing away their asset values. If Fannie and Freddie had not been regulated, their situations likely would have been worse.

(2)The subprime problem is the direct result of a lack of prudent regulation and oversight of a key private market. Mortgage brokers failed to qualify lower-income borrowers. Mortgage lenders relaxed their underwriting standards and accepted poor quality loans into their portfolios. The resulting junk mortgage loans were turned into securities by investment bankers who failed to perceive the underlying risk of subprime loans. The resulting securities were rated by the major bond rating firms, who also failed to see the underlying risk in subprime mortgage debt.

These problems were created by an unregulated private sector. All of the above-referenced players were operating WITHOUT regulation and NONE of their efforts to create and sell subprime mortgages and securities were regulated. Members of the FDIC and a former governor of the Federal Reserve Board called for regulation, but were rebuffed.

The mortgage industry fought hard and successfully against government regulation in the years leading up to the subprime crisis. The industry argued that the market was transparen, efficient and effective. A key argument used by industry was that the private sector could deliver mortgages to lower-income Americans more effectively than a government program could. Another argument advanced by the industry was that support from Fannie and Freddie took business away from the private sector. A third influence was the Bush Administration's reliance on the private sector (instead of government programs) to deliver housing opportunity for lower-income families. Support for an unfettered private sector lies at the heart of the subprime crisis.

Subprime loans with variable interest rates and monthly payments insufficient pay down the debt are the residential mortgage industry's equivalent of defective products. More regulation is needed in this arena, not less.

Mr. Mallaby also applauds the elimination of the Glass Steagall Act. Unless investment banking activities are more closely regulated, however, the new bank-investment bank combinations could be infected with the same problems that torpedoed the subprime industry.

In sum, Mr. Mallaby's wrong on this one. Judicious regulation is needed to prevent the subprime crisis from recurring.

Posted by: ANetliner | September 16, 2008 11:59 PM | Report abuse

did you watch or read obama's speech in colorado today?

Posted by: farah | September 17, 2008 12:07 AM | Report abuse

Are you friends with guy who wrote in this newspaper on sunday that the economy is not in a bad shape? The one who was an advisor to mccain?

Posted by: Lisa | September 17, 2008 12:09 AM | Report abuse

Mallaby is dead wrong here. Gramm deregulated the swaps market. He also pushed through a federal preemption of predatory lending laws which allowed the subprime market to flourish. These are the cause of the current credit crisis. Call it the Enronization of the mortgage market. It's all about Gramm and his good friend McCain, the staunchest deregulators you are ever going to meet. Not that McCain understands anything about the economy. He is just for deregulation on principle. Oh wait, he just flipped his position.

Posted by: Mary | September 17, 2008 12:22 AM | Report abuse

Obama and His cult followers don't care about the truth -- they'll lie, smear, and cheat.

Socialism at any cost.

Posted by: info | September 17, 2008 12:27 AM | Report abuse

Both parties may have a level of culpability, but some actors have more culpability than others.

Let's take the example of Phil Gramm.

What constructive purpose did the Gramm-Leach-Bliley Act of 1999 play in this mess? Just on the face of it, the idea of allowing loan originators to unload debt seems like a recipe for encouraging some reckless behavior. The current crisis seems to bear this out.

What constructive, long-term purpose is created by allowing stockbrokers, banks, and insurance companies to merge together?

This seems like another one that trades short-term returns at the expense of long-term returns.

And why in the world would any serious candidate for office have a guy like Gramm as their chief economic adviser? (see McCain, John)

It's absolutely crazy.

Posted by: JP2 | September 17, 2008 12:36 AM | Report abuse

Lets face facts,

if Mallaby knew what he was talking about he wouldn't be writing about it, he would be making a killing on wall street.

Those that can't do...... write about it.

Posted by: wrolston | September 17, 2008 1:05 AM | Report abuse

The truth is that no drug addict can kick
the kind of heavy duty cocaine,crack and pot addiction that lying phony drug addict
and drug pusher Messiah Barack Hussein Obama has self confessed to doing himself
can ever thinking logically again and I for
one do not want a drug addict brain damage
pathological liar screwball like that fake
Messiah Baraxk Hussein Obama in charge of
our ICBMs and Nukes and I also do want that
big mouth drunkard Joe Biden around them
either so I am voting for Reformers Sen
John McCain and Gov Sarah Palin to clean up
the mess in Washington DC starting with
Nancy Pelosi,Barack Obama.Joe Bidem.Harry
Reid,Charlie Rangel,Cold Cash Jefferson and
all the rest of the Culture of Corruption
Democrats off to jail where they belong.

A Fed UP Female Indepenent Voter!

Posted by: Claudine 1000 | September 17, 2008 1:16 AM | Report abuse

If you can't blame either party for the current debacle, why is this piece titled "Obama's faulty logic" and not "The candidates' faulty logic" ?

Posted by: Sly74 | September 17, 2008 1:26 AM | Report abuse

Keep putting that lipstick on the pig that is Republican incompetence - it will still be stinky pig.

The gig is up dude.

Posted by: Sam | September 17, 2008 1:35 AM | Report abuse

look, who's been running the show for 28 years? when enron went belly up due to all the corruption, what did the rethugs do? uhhmmm, well, nothing. of course bush and the ceo were bff and phil "nation of whiners" gramm's wife was also a member of the board, and after a little tough talk from bush, no one's head rolled. no changes were made in oversight. and five years later, now we're all screwed. we have got to stop electing oil execs like bush, cheney and miss alaska drill baby drill runner-up. mccain, mr. dregulator, who "doesn't get the economy," who doesn't have "any answers for the mortgage crisis" is NOT the right old coot for this job. i wouldn't hire mcgeezer as the late-shift greeter at the local wal-mart for fear he'd croak on a customer. and as for the moose hunter, she's not fit to run a duncan donuts. and they're going to solve the problems? the rethugs must be driving from office in shackles for the lies and corruption they have wrought since that a-hole bush stole his way into the white house.

Posted by: manny | September 17, 2008 1:43 AM | Report abuse

Since regulation fails, the only solution is to let firms go under, and recycle the debris.

Posted by: Brian H | September 17, 2008 2:04 AM | Report abuse

Come on Mallaby crap just doesn't happen there is a cause and effect relationship here and it is simply because of deregulation or no regulation the house of cars fell. If there had been a regulation that stated institutions must keep enough capital on hand to cover the risk of the investment and that borrowers had to make a down payment and eliminate sub prime interest and adjustable rates mortgages that the average borrower couldn't understand we would not have the economic conditions that we have today.

Posted by: Michael Gibbons | September 17, 2008 2:13 AM | Report abuse

I'm afraid this column misses a major point: The current financial crisis - by far the worst since the Great Depression - is the direct result of a failure in mortgage lending regulation and supervision. Although relevant in the context of Sunday's bailout, discussions about Glass-Steagall really miss the point as to the cause of this mess.

We have experienced a real estate bubble that most everyone saw coming, but no one did anything about. We had reckless lenders financing more than 100% against already highly inflated home values, and borrowers with inadequate or falsified income. This horrific failure in regulation and mortgage lending supervision could have happened with or without the repeal of Glass-Steagall.

It goes without saying that the party running the government over the past eight years - and espousing the "magic of the markets" (hah!) over sound regulation for much longer - must bear the lion's share of responsibility.

p.s. This blog needs some moderation: duplicate entries, and way too much foaming at the mouth.

Posted by: Paul | September 17, 2008 3:06 AM | Report abuse

Sounds like Wall Street needs to find a way to diminish complexity. That is, unless the density of the product is a sham meant to fleece the unsuspecting. Either way, those salaries should be cut and people who steal from other people should be jailed. Societies are too important to be left to the whims of worshipers of "Invisible Hands".

Posted by: Ray Evans Harrell | September 17, 2008 3:18 AM | Report abuse

And during the current crisis, the Glass-Steagall reform has proved to be a boon. It has cleared the way for relatively healthy deposit-taking banks, such as JP Morgan and Bank of America, to rescue desperate investment banks, such as Bear Stearns and Merrill Lynch.
----------------------------------
Let me get this straight. If we hadn't had Glass-Steagall "reform" there would have been no need "to rescue desperate investment banks, such as Bear Stearns and Merrill Lynch." Talk about faulty logic.

Posted by: Anonymous | September 17, 2008 4:20 AM | Report abuse

The Post reported that one of the governors of the Federal Reserve wrote Greenspann that the subprime mortgage market needed to be regulated because of the possible consequences to financial institutions if there was failure of this market. According to the reporting Greenspann ingnored this warning.

Posted by: douglas | September 17, 2008 4:21 AM | Report abuse

Mr. Sharp says it for me.

The Right needs to understand: we have no reason to trust your judgment. You finally realize that "huge mistakes have been made," although you don't seem ready to admit that you are the ones who made them.

Starting From Zero
by Bruce Sharp

Posted by: pakarpis | September 17, 2008 4:53 AM | Report abuse

Based on the writer's logic, hedge funds did better with little oversight, eliminating regulation would improve the situation. Yeah right.

Posted by: Dranoel | September 17, 2008 4:56 AM | Report abuse

What I haven't heard of and I waiting is what about the simple frauds that were the basis for this crisis? I have yet to hear about waves of prosecutions I would seem like crime pays.

Posted by: Anonymous | September 17, 2008 5:09 AM | Report abuse

I still believe US has strong economic fundamentals, my investments in the market are still safe, see the rebounds? I fear Obama is wishing a meltdown just so he wins. What a crap candidate.

Posted by: Mazhar | September 17, 2008 5:40 AM | Report abuse

Should'nt there be some regulation that says "Dont lend money to people that can not pay you back".

Posted by: kumar | September 17, 2008 6:10 AM | Report abuse

Should'nt there be some regulation that says "Dont lend money to people that can not pay you back".

Posted by: kumar | September 17, 2008 6:10 AM | Report abuse

Should'nt there be some regulation that says "Dont lend money to people that can not pay you back".

Posted by: kumar | September 17, 2008 6:18 AM | Report abuse

Of course the Republicans are to blame. It's not necessarily the lack of regulation, but the enforcement of it. Bush has done his best to gut all the regulatory agencies and squashed their enforcement powers. He's also taken over the Justice Department and dragged down prosecutions against loyal Republicans. And McCain is to blame too. He was involved with the K Street/ Abramoff crowd - as were all the Republicans (and none of the Democrats). What happened to the prosecutions in that case? Ask Mukasey. He'll give you a straight answer, like, I refuse to discuss it.

Posted by: GeorgeSimian | September 17, 2008 7:14 AM | Report abuse

To those who say that this is just a normal correction and that we are doing better than most countries, the head of the International Monetary Fund begs to differ.

CAIRO (AFP) - "Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Tuesday the current international credit crisis was "unprecedented" but cautioned against panic."

Two other comments - one, thank God the Republicans didn't have their way in privatizing Social Security. Yeah, that would have worked really well for the average American when even the most sophisticated and experienced Wall Street traders blew it.

Second comment - does anyone else find the comments to Obama's "arrogance" and "sleaziness" disturbing? There is a subcontext to some of the comments I hear from people expressing mistrust of Obama that, frankly, doesn't seem to come from anything but his "differentness".

Can we all stay focused on facts and figure out the best way to lead our country out of the stinking mess that we're in?

Posted by: Not more of the same | September 17, 2008 7:15 AM | Report abuse

Enforcement only works if someone is breaking the law. Banks were certainly guilty of bad business practices, but have been operating within the letter of the law.

Posted by: ian | September 17, 2008 7:33 AM | Report abuse

We cannot blame a political party for this mess, then who should we bame?

Posted by: kofiikutanah@yahoo.com | September 17, 2008 7:44 AM | Report abuse

Does anyone actually moderate this garbage?

Posted by: John Basic | September 17, 2008 8:00 AM | Report abuse


Mallaby must surely think we are dolts. The regulators under the Republicans don't regulate. They are shills for the corporate interests from which they are recruited. So even the regulated are poorly regulated. Face the facts. Republican cronyism is at the heart of this failure. Read Pearlstein's critique of the moral decadence on Wall Street and be honest about who is to blame.

Posted by: ahprice | September 17, 2008 8:00 AM | Report abuse

Of course these guys broke the law. I remember the head of Fannie Mae saying that their financials were completely sound just a week before they collapsed. There were ads about AIG which were driving home the point about how safe your money was with them. I think they're still running! Banks have a responsibility to be responsible. Buying lousy mortgages without due diligence is a crime.

Posted by: GeorgeSimian | September 17, 2008 8:00 AM | Report abuse

Mr. Mallaby's column reflects a shallow understanding of the securities markets and of Glass-Steagall. The Act was never intended to supplant Congress as the sole means to regulate the banking and securities industries.

Congress has recourse to enact emergency legislation to "save" failing institutions; nothing in Glass-Steagall precludes that. A paradox: The dissolution of G-S made emergency legislation more likely.

Financial markets are driven as much (maybe more) by psychology as by financial fundamentals. Sometimes regulation is necessary to counterbalance the quirks and temptations of the human mind.

Posted by: Don | September 17, 2008 8:05 AM | Report abuse

this is a bit off topic, but is anyone else bothered that this board, which usually consists of informed opinions, gets infiltrated with the "Nobama, Crack-smoking, Muslim" bits, which have nothing to do with the topic at hand? Can any of them offer an intelligent argument, not the taunts of a schoolyard bully, or an ignorant regurgitation of rumors and lies?

Perhaps I should just ignore them, but its hard to tolerate such nonsense and stupidity. I beg of these trolls to make decent arguments, on topic. Oh, and learn the rules of grammar, capitalization, etc. It will help prove your point, when you have one to actually make.

Posted by: crazydayz | September 17, 2008 8:13 AM | Report abuse

"And during the current crisis, the Glass-Steagall reform has proved to be a boon."

Um. What?

"It has cleared the way for relatively healthy deposit-taking banks, such as JP Morgan and Bank of America, to rescue desperate investment banks"

Yes, that's working out splendidly, isn't it? It's miraculous how the government hasn't had to step in.

Way to go Phil Gramm (who used to be McCain's chief economics adviser, but is now merely his "friend").

Posted by: HeavyJ | September 17, 2008 8:19 AM | Report abuse

The difference under the republicans is the lack of enforcement. Laws don't change but enforcement did, it went away. Sort of like the laws against illegal immigration and how they are not being enforced. Did you notice how illegal immigration swelled under this misadministration, but no laws changed?

So you can point to all the laws you want but that has nothing to do with how bankers on Wall Street felt when they decided to make risky mortgages. They knew this administration would do nothing, which is all they did, and might even bail them out, which it is doing.

Now as people are losing homes due to foreclosure this administration is using taxpayers money, money from the same people losing their homes, to bail out these people who they failed by law to regulate. There is a lot of blame and it rests soley on the shoulders of the republican party and primarily on the Bush administration, the cop asleep at his post. But of course this administration's main doctrine is to avoid any accountability.

Posted by: Fate | September 17, 2008 8:23 AM | Report abuse

but we CAN blame one party that pushes endlessly for tax breaks and perks to be given to huge, insanely profitable, barely-regulated companies, and then stands by to rescue the stockholders with taxpayer funds when they fall. would it hurt taxpayers if they fall? you bet. but that doesn't mean some new and improved oversight isn't called for. the tired republican drumbeat of 'free market' can't possibly be taken seriously by intelligent citizens any longer.

Posted by: suz | September 17, 2008 8:24 AM | Report abuse

I agree with suz. The impossibly huge national debt is surely part of the problem and that is the fault of the Republicans. And I'm sick of Republicans who throw around the idea of free markets, when what they practice has nothing to do with that.

Posted by: GeorgeSimian | September 17, 2008 8:33 AM | Report abuse

The republican party has worked since the 1950s to reverse the laws put in place after the great depression to ensure such a financial calamity never happened again. They have fought for national banks, and fought to end regulation. They have done everything they can to bring back the days of the 1920s, when profits were high and the rich got richer without the stability regulation brings.

Now we are seeing the results of 50 years of republican work. They did bring us back to those days and the financial instability is also back. Now we are learning what people in the 1930s learned, that regulation of the financial sector is necessary to stabilize that sector of our economy. The problem is that in the 1930s it was evident enough that both parties knew what needed to be done.

So far the republicans are still blind from the drunken binge of making billions on Wall Street. It will take a few more years of economic collapse before the majority of people, like the 1930s, agrees the government needs to not only have laws to regulate the financial sector, but it must ENFORCE those laws. And then we'll go about 10 years before the republicans start again working to chip away at the new financial laws and their enforcement, and wait until 2050 for the next collapse.

Why do republicans hate America?

Posted by: Fate | September 17, 2008 8:35 AM | Report abuse

wow sebastien,

there is plenty to take Obama to task for, but please do it without adding to the lazy, hazy cloud of nonunderstanding. The American people have no grasp of of this financial crisis.

Fannie and Freddie avoided quality regulation the same way the Wall Street biggies did. They lobbied Washington and were left alone.

The derivatives markets that are causing this mess ARE UNREGULATED. That's a fact.

Posted by: oz comments | September 17, 2008 8:40 AM | Report abuse

yes, you can blame the Republicans, it ia a known fact that when they are the party in powerall wealthy people get richer, the poor get poorer and the middle class pay the piper. If all these companies making all these trillions of dollars cannot stay afloat let them go broke,why should we bail them out.instead of bail outs the government should give all this money to every individual who is losing a house, not these blood sucking companies. Do you realize if these people were given 150,000.00 dollars each, the homes would be paid, the money lent paid back to the government at a lower rate, we would be out of this recesion in no time.
As far Pailin, i think she has a lot to hid.The problem is women will flock to Pailin,not because she is smart or dumb, but because she is a woman, it is that gender war again, that is ever so present in America. I also believe Obama may have dropped the ball by not having a woman on the ticket. His choice for V.P has been in Washington too long and will not bring the change we need in our country.
People you need to pull your heads out of your butts,when Bush gained the White House, America was #1 in military, money, and a leader, 8 years later we are broke as a nation, most of our stock is in the hands of other countries, we are at the bottom of democracy,our military is in ruin and all we can do is sling mud at each other.
This election is not about Pailin,it is about McCain and Obama. The uneducated people who claim BO takes all these drugs, get a life, you are just ignorant, uneducated, and afraid a man of color could win. We will get the government we deserve GOOD or BAD

Posted by: the jackal | September 17, 2008 8:44 AM | Report abuse

Oh, what a surprise. The Post's most reliable shill for the GOP, and a man whose ignorance of current financial regulatory structures is equaled only by the GOP's Presidential candidate, says it is all the Democrats fault. Who would have guessed? Buttressing the brilliant logic employed by the WaPo's very own Deputy Dawg, mom4palin and patty 2008 remind us of the keen logic and incisive character analysis that have characterized the last 8 years of the Rethuglican reign. Well played, Seb!

Posted by: tgid | September 17, 2008 9:04 AM | Report abuse

This is a truly bizarre argument. How is placing a wall between two types of bank, a regulatory measure, an example of deregulation? Presumably it is because one side of that wall was then freed from various regulations. That side, of course, being the side that is failing and has to be rescued by the side that remained regulated. To get an argument for deregulation out of that is stunning.

Similarly, while it is true that Fannie Mae and Freddie Mac are highly regulated, one has to not be following the story to think that they are the source of the current problem. They exist as levies for the unregulated parts of the loan industry. The problem is that their walls were overrun by the mess made in the unregulated parts. We have known since the S & L mess that there is a danger in providing protection for unregulated parts of the market.

There may be a serious argument to be made in defense of deregulation now. But this isn't it. And the idea that Obama has it wrong does not go any deeper, so it is similarly ineffective.

Posted by: Lon | September 17, 2008 9:06 AM | Report abuse

As Harry Truman said "The buck stops here"
The economic meltdown happened on Bush's watch. End of story.

Posted by: Anonymous | September 17, 2008 9:09 AM | Report abuse

Cheez. Maybe it's true that too much logic makes one blind.

I do seem to recall Obama moaning on about inadequate oversight/management of Fannie and Freddie quite some time ago. Pain in everyone's u-no-where. His position has always been that these august institutions should disappear and be replaced by 'something completely different'.

And the current 'biggie', AIG, was taken down because of 'credit default swaps', which were not regulated at all because no-one in the Administration was able to decide whether these products were 'insurance' or 'investments'. Either/Or, they are subject to regulation. Neither, they fall through the cracks.

If 'credit default swaps' had been regulated when the subprime problem first reared its ugly head, maybe it would not be necessary now for the Fed (read 'taxpayer') to bail out this ailing giant.

The faulty oversight at Fannie and Freddie and the fall out from irresponsible loans and other excesses of Wall St. happened on the Administration's watch. Senator McCain could easily have spoken out, and did not. How could he. He has no clue how the financial system works ('scuse me, doesn't work).

I crack up at this mental image of Big John doing 'a google' on 'credit default swaps'. Wicked, I know.

It would be nice if, from time to time, one were to read a piece and think, 'Gee, that's not bad. The guy's not stupid. He's thought about this some.'

David Brooks (NYT) revealed today that he had actually trashed an entire piece because it was, well, trash.

Not a bad example to keep in mind Mr Mallaby.

Posted by: Rob Bentley | September 17, 2008 9:13 AM | Report abuse

Could we all Stop whinning about the economy now? Geez, the Repub's can handle this, just like they stepped up to the plate after hurricane Katrina. Pretty soon we will be saying, "good job Sarah!"

Posted by: J Lauber | September 17, 2008 9:15 AM | Report abuse

Corporatism and privatization of government assets and services are destroying this country..becoming large large corporations is also harming our country..their very size is causing us to bail them out because..well..gee..they are just too large to fail...

The corporate capitalistic system is bringing the American Empire down..we are falling just as Rome fell and the British Empire fell..what will the ultimate result look like..it can go two ways..a police state .. which the Republicans think will be necessary..or it can become a place where the people pitch in to help each other..it is up to us..this is our survival..we are already seeing communities coming together around sustainable issues and I hope we see more of it because there are not going to be solutions coming from corporations or the Federal government .. the political parties are seemingly at war with each other..nothing gets done..and really from some of the posts by Republicans here, we can see how crazy they truly are...

Posted by: goodcake4 | September 17, 2008 9:17 AM | Report abuse

I had thought Mallaby understand a bit of economics -- now I don't!

The obvious root cause of the current crisis is sub-prime and even not so-sub mortgages. The lending standars were lowered so much that even a first time student of real-estate 101 would see it's going to lead to big trouble.

And the administration did nothing, all the time touting the resilience and innovativeness of the american financial industry.

Is't it to blame?

Posted by: Michael | September 17, 2008 9:22 AM | Report abuse

"Obama is trying to draw a link between the Wall Street blow-ups and a lack of regulation. But the blow-ups have included Fannie Mae and Freddie Mac, two of the most highly regulated financial institutions in the country."

Poor Mallaby - he's oh so wrong, and all he can do is try to spin the failure of conservatism as somehow Clinton's fault. Fact is that Conservatives don't believe in government, don't believe in regulation, and now billions of citizens's investment dollars have disappeared forever. Yeah, we're 5 months from the end of the Bush Presidency and yet our problems are Clinton's fault. Is Mallaby drunk, hungover or both?

Posted by: Marc Edward | September 17, 2008 9:23 AM | Report abuse

The American press has assumed prime role in ensuring Obama's defeat in this election. How can truth be told when the US media distort simple truth against the most qualified person for this election....at least, even the whole world knows the best person for US Presidency is Obama.

For example, what is the problem in understanding that the problems of Wall Street happen in Bush Administration and McCain belongs to Republican Party, and being very influential Party member must have supported the major legislations of his Party under Bush. Besides, what is McCain's academic records, OR that of his beauty queen, that should be compared to the stunning record Obama had in academics.

Just like the way the US media have stage-managed a very rude, small town mayor, who just became Governor in the smallest of the American States into significance, that is the way the same media are desparately ushering a Party that has been epitome of woes to US Allies, the World as a whole and even US itself back for a third term, not minding the same Party rigged the two previous elections and achieved only woes and death to US.

It is difficult to accept such 'demmocratic system' as examplary. For one thing now, for we Africans, after the China Olympics, we have come to realise that contrary to US media reports, China is infact more civilised than US.

You can take this to the Bank.....We are becoming tired of US falsehood and media manipulations. This is same with their Apartheid Democracy.

Posted by: Uche Agonsi, Nigeria | September 17, 2008 9:24 AM | Report abuse

Thank you for objectivity and reason.

Posted by: Anonymous | September 17, 2008 9:24 AM | Report abuse

attn @Ralphinphnx: & caroline whoever..

You are both small scared people and if you cant see what the Bush / McCain republicans have done to America over the last 8 years you are lying to yourself. Your allegations of drugs etc show how small,scared and stupid you are. Payday loans at 25%, no student loans, no jobs, no insurance, foreclosures, 4000 + kids dead, 1 billion to georgia ( not us ) fisa, troopergate, cheney lies, gonzalez, rumsfeld, iraq fiasco (pre + post inv)...

I can continue......get real dude - what are you smoking....

Posted by: Bruce | September 17, 2008 9:24 AM | Report abuse

Nice article but I don't expect a few salient facts to get in the way of liberal demagoguery.

Posted by: hz9604 | September 17, 2008 9:26 AM | Report abuse

Mallaby wrote: "The Democrats fail to acknowledge that there is a limit to what government oversight can do."

No they don't. Democrats have favored some deregulation, but republicans have favored ALL deregulation, from wall street to energy, and in most cases that sector of the economy became unstable. Check your electric bill or price at the pump if you have doubts.

Mallaby wrote: "Modern financial institutions are so complex that government inspectors are hard pressed to understand their trading strategies."

What are you saying? Government regulators are dumb? That they cannot demand an explanation of a complex trading strategy? Is the CDC so dumb they cannot tell when food producers are making people sick and are too dumb to track down the cause? You seem to think the feds are a bunch of dolts, but in reality there are some very smart people who are being told to sit on their hands by this administration and, like climate scientists, told to shut up.

Mallaby wrote: "That is why an outfit such as Citigroup, a deposit-taking institution theoretically overseen by multiple government bodies including the Fed, could park billions of dollars of toxic mortgage securities in off-balance-sheet vehicles, with nary a protest from regulators."

Exactly, nary a protest from regulators, who were told to stay in their offices and sit on their hands. If this administration had allowed regulators to do their jobs, and even given them a little encouragement, a lot of this would have been averted long ago. Elliot Spitzer, who had a tiny staff compared to federal regulators, was able to send people on Wall Street to jail while the fed sat on its hands.

You just don't get it Mallaby, its not the laws, its not the greed, its the Bush administration backed by the republican party actively telling regulators not to regulate that has brought this on.

Here is an article that might interest you:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/13/ccschwartz113.xml
It tells of Anna Schwartz, a woman who has been in the banking industry for over 60 years. She has written books on how the Fed caused the depression in the 30s and she blames the fed for today's problems:
"According to Schwartz the original sin of the Bernanke-Greenspan Fed was to hold rates at 1 per cent from 2003 to June 2004, long after the dotcom bubble was over. 'It is clear that monetary policy was too accommodative. Rates of 1 per cent were bound to encourage all kinds of risky behaviour,' says Schwartz."

Get a clue Mallaby, the Fed and SEC are supposed to monitor the financial industry and oppose risky behavior and enforce laws. They did neither during the Bush administration to the glee of republicans and wall street, until it all collapsed, to their astonishment. And then the Bush administration reaches into taxpayer pockets to bail out those they failed to regulate.

Posted by: Fate | September 17, 2008 9:37 AM | Report abuse

In 2002, McCain introduced a bill to deregulate the broadband Internet market, warning that "the potential for government interference with market forces is not limited to federal regulation." Three years earlier, McCain had joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country's financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.

That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.

McCain now condemns the executives at those companies for pursuing the ambitions that the Gramm-Leach-Bliley Act made possible, saying that "in an endless quest for easy money, they dreamed up investment schemes that they themselves don't even understand."
So McCain is shocked that Wall Street did what the Gramm bill proposed and he voted for? Is he confused again or just plain stupid?

Posted by: wrong again Mallaby | September 17, 2008 9:42 AM | Report abuse

Interestingly, it seems that most of the regulations attributed to Mae and Mac actually regulate the consumer and not the lender.

Posted by: J Lauber | September 17, 2008 9:48 AM | Report abuse

Where Obama's logic is faulty(at least he has some) I really don't understand the apologies people keep making and expecting intelligent people to make for McCain's obvious blunders. He is coming across as idiotic as Bush.

Nobody wants to play the race card but looking at McCain's blunders and Sarah's inabilty to manage - even a household - I am inclined to believe race has displaced logical thinking in this election. Not by all people, but by most people. Its is impossible that logical people can digest what McCain and Palin represent.

Sarah Palin, on the other hand, is in a mess of a scandal and, she is ignoring her sick child .
Will somebody tell her to stop using this child as a political pawn. And will somebody tell McCain a bumbling war-hero is no longer en vogue.

Posted by: Anonymous | September 17, 2008 9:49 AM | Report abuse

As with any responsible organization, the chief executive is held liable if something happens "on his watch"...and I don't mean his Rolex. Watching the heads roll at Fannie, Freddie, Bear, Lehman and Merrill prove that statement. Generals are fired for incompentence on the battlefield, doctors sued for malpractice and politicians not re-elected because of scandals and illegal activity (well, maybe not so much).

It is fair to point the cold finger of this latest reality square at the republicans and stick it directly in their eye. Your point about deregulation is valid, but the republicans have happily taken all the credit...let them sadly take all the blame. They are one of the "fundamentals" of this economy that have not been strong...let McCain spin that!

Posted by: Anonymous | September 17, 2008 9:52 AM | Report abuse

"Will somebody tell her [Palin] to stop using this child as a political pawn."

Its not her, its the RNC that is driving the McCain/Palin campaign that is doing this.

But I really have to wonder about those conservative republicans, who when Palin brought her teenage pregnant daughter out on stage, with the boy who "did it", stood and applauded

What a strange party the republicans have become. I would not let my daughter be friends with a member of the Palin family, would you? Conservatives give applause to something they publically decry. You only need to compare how republicans reacted to Jamie Spears' pregnancy with revulsion to see the total hypocrisy. Maybe it has something to do with politics and strange bedfellows. I don't know, all I know is the hypocrisy is just amazing in how blatant it has become, and how no republican seems to be ashamed by it.

Posted by: Fate | September 17, 2008 10:00 AM | Report abuse

Well, thank goodness we have Sarah Palin advising the McCain campaign about economics - gotta admire a pol who has the audacity to charge rape victims for rape kits, that's economic know-how.

McClatchy papers report that when she was mayor of Wassilla, the police department actually charged victims for the rape kits that were needed to prosecute - and Alaska has a huge problem with rape of native women.

http://www.twincities.com/politics/ci_10438129

Posted by: Mom | September 17, 2008 10:00 AM | Report abuse

Just because Fannie and Freddie were "regulated" doesn't mean there wasn't a lack of regulation.

Posted by: jake | September 17, 2008 10:03 AM | Report abuse

Fannie Mae and Freddie Mac may be as highly regulated as you say. However, the average voter will think otherwise. The party of deregulation and privitization has shown a tendency to ignore regulation and to throw out sound fiscal policy. Even the years that the Republicans controlled congress under Bush showed little tendency to exert appropriate congressional oversight. I see no problem at all with Obama's positions and the needed reforms. McCain is the one with explaining to do. Another one of his "principles" bit the dust yesterday. McCain has more moves than a squirming snake.

Posted by: Earl C | September 17, 2008 10:03 AM | Report abuse

The problem came from the sub-prime mortgage mess. This is a fault of the government, financial institutions and irresponsible borrowers. However, the government, as Bush and will McCain's history show, refused to entered into this mess and try to clean it up in time. If the government had regulated these risky loans and had set limits on the use of these loans, then the fall would have been much softer on the overall economy - so it is the government's fault to a degree (McCain the deregulator! - read the article in the front page). Then things got worse because of inflation (who can you blame for that if not the government), lowering interest rates irresponsibly, which resulted in irresponsible borrowing (already covered that one) and raising inflation, along with a falling dollar. Not to mention the deficit the government is running - further decline to the dollar (and I won't even go into America's debt to other nations such as China). And finally, the government's constant disregard for our oil dependency contributed to the overall crisis. If the government had worked on alternative fuels, energy efficiency and such, the conflicts in Iraq, Iran, Nigeria and Venezuela would not have had such a huge impact on us. The kid writing this article should pick up a newspaper every now and then - this logic article has no ground other than the candidates' voting history! If we don't change the course of this nation, the consequences will be far worse.

Posted by: LMR | September 17, 2008 10:08 AM | Report abuse

I think it's disingenuous to say that Freddie and Fannie were some of the "most regulated financial institutions" when, by all accounts I read when they were bailed out, their failures could be traced back directly to the "passes" they received when there was any smell of regulation in the air.

And, yes, I understand the difference between regulation on the books (which may have been strict) and the enforcement of those regulations (which may have been lacking). But I think it's misleading to tout the (over)regulation of these bodies as a point in your argument if we all know that those regulations were thrown out the window whenever it was convenient...especially with a so-called fiscally responsible party in power.

I assume and hope when Obama talks about regulation, he's talking about enforcement as much as law making.

Posted by: ckmarlowe | September 17, 2008 10:20 AM | Report abuse

Sebastian - God is in the details - meltdowns in capitalism are common - regulation might catch some of the problems but greed is inherent to the system.

The fundamental problems are our trade deficit, our low national savings rate, the decision of this administration to fund the Iraq war using credit instead of cash, and increasing dependency on middle east oil which has negative environmental and geopolitcal ramifications.

Oil imports ascerbate the trade deficit.
Without funds to cover the meltdowns we are forced to borrow. Money that's borrowed can be pulled out of the country by the creditors.

If the borrowed funds were all to be pulled out at one time the economy would collapse and it could cause a global economic depression. The more we borrow the more likely a total pullout and the more tragic the consequences.

Bush was told about the dangers to the dollar posed by the trade deficit by a bi-partisan commission in October 2000. He chose to ignore the danger. He knew the surpluses were needed to cover the trade deficit. Alan Greenspan also knew the same thing. He was briefed as well. Both of them got up and lied to congress. Greenspan was forced to do to keep his job. We shouldn't be trashing Alan for being employed by a egotist.

However, your whiney bi-partisan diatribe displays an acute ignorance of the situation. Stay with what you know - whatever that is.

Posted by: Jack | September 17, 2008 10:22 AM | Report abuse

Mr. Mallaby, I suggest you read Paul Samuelson's column in today's Post. It lays out in detail how you are mistaken.

Posted by: Snedly1 | September 17, 2008 10:23 AM | Report abuse

ANetliner,

Correct me if I'm wrong, but wasn't Fannie Mae a victim of subprime mortgages like every other bank. They bought 100K mortgages that are secured by an asset (home) which may now be only 50K. The collateral is not sufficient to cover their losses.

Posted by: BajanYankee | September 17, 2008 10:27 AM | Report abuse

So face it,Messiah Barack Hussein Obama and
Loud Mouth Joe Biden WRONG For America Now
And Always And Forever! Reject Obama/Biden.

My vote will go to McCain/Palin as a Fed Up
Independent Voter! NOBAMA/BIDEN EVER!

Posted by: Sherry Kay 2004 | September 17, 2008 10:28 AM | Report abuse

Bottomline is that Washington should have helped the homeowners NOT bailout out the criminals who tricked normal Americans into crazy mortgages.

PS who is this idiot and why is he talking nonsense on what should be the non-biased spin free zone of the Washington Post?

Posted by: Becky | September 17, 2008 10:36 AM | Report abuse

Pure BS. The worldview that led to the current economic disaster is Republican and only Republican. On top of that Mallaby isn't very honest. Though Fannie and Freddie are government sponsored enterprises, they engineered under the Bush administration unprecedented degree of independence for such enterprises. Though on paper they were regulated enterprises, in practice under an anti-regulation administration they weren't. Thereby, the golden parachutes for executives and the use of borrowed money to purchase mortgage based securities, very basis for the subprime loan fiasco.

Posted by: jreed11665 | September 17, 2008 10:37 AM | Report abuse

The Socialist Democrat Party Is The Real
Home To The Culture Of Corruption. Vote
Sen John McCain and Gov Sarah Barracuda
Palin to end it on the Democrats and send
the corrupt likes of Obama,Biden,Pelosi,
Rangel and Cold Cash Jefferson behind jail
bars where they belong for life in 2008!

NOBAMA! NOBIDEN! NOPELOSI EVER! NO Democrat
Socialism Ever. Just Say NO!
========================================
The US government is loaning 85 million dollars for two years to AIG while taking 80 % of the company as collateral; at an interest rate of 11.5%

The US gov't took over the management of Fannie Mae an Freddie Mac.

This IS socialism. What we do in this country is privatize the profits an socialize the losses.

Posted by: Rlritt | September 17, 2008 10:38 AM | Report abuse

I should probably know better, but I just don't understand why opinion columnist just make things up out of whole cloth...Obama repeatedly said that things have not changed for the better for the past 30 years...It's part of the reason the Clintons did get upset, because Obama would not acknowledge they had a transformational administration. Please cite instances of Obama saying that the Fannie Mae and Freddie Mac needed to be regulated. If you listen or read carefully, which I know may be hard for you, you will see he was decrying the lack of regulation on subprime mortgage lenders, which then sold those mortgages to Fannie Mae and Freddie Mac. Without you referencing those points, it seems like you are just making things up.How can anyone take you seriously?

Posted by: Anonymous | September 17, 2008 10:52 AM | Report abuse

www.barackobamaslipstick.com is up!!!! It is Barack "Maybelline" Obama!!!!

Blacks who automatically vote for a black candidate are as racist as whites who automatically vote for a white candidate. I would vote for Alan Keyes in a heartbeat. He isn't looking to tax me for purposes of buying votes from those who haven't worked as hard as I have.

Posted by: Baroprah Obafrey | September 17, 2008 10:57 AM | Report abuse

Anyone who thinks McSame and Palin are qualified to run this country is intellectually challenged and should be voted off the island.

Obama may not bring all the changes he talks about, but he will bring change for the better.

And the book banning Palin who says she has national experience because see can SEE Russia. WTF?

Posted by: Obama '08 | September 17, 2008 10:57 AM | Report abuse

Who is the editor who allows you to peddle your faulty logic as Obama's? Is he/she letting you embarass yourself for a reason?

Posted by: jpscratches | September 17, 2008 11:02 AM | Report abuse

What a pathetic load of free-market malarkey.

Posted by: Becca | September 17, 2008 11:03 AM | Report abuse

i think the reason you are hearing of a cultural divide is that the american public no longer trusts it's obviously bias media to report for them.
at the same time the obama camp is saying change and hope and new politics they are serving up classic power politics and hoping we don't realize it.
the problem with that is that the internet that he is so dependent on has also suppled WE THE PEOPLE with the ability to get around his media.
saying she's so scary...you know what's scary to me.
first they clog our governing body with partisan bs and power struggles.
then they take over our media.
now it's our monetary system.
what does that sound like?

mccain/bush doesn't scary me as much as obama/soros/ayers/wright/resko/alinsky

they are counting on us voting pocketbook instead of country.
it doesn't surprise me that the market crumbles when they say the gloves are coming off.
without putting country first it isn't going to matter you won't have your pocketbook anyway.
we are in debt. and those chickens have come home and we will have to deal with them. it's not going to be fun or pretty but, it beats the alternative.
mccain isn't perfect and i don't agree with him about everything but, one thing i do. he means it when he says COUNTRY FIRST
i pray for our country and all of us

Posted by: rebekah | September 17, 2008 11:07 AM | Report abuse

The Keating 5: http://en.wikipedia.org/wiki/Keating_Five

Posted by: deregulation | September 17, 2008 11:07 AM | Report abuse

So Fannie and Freddie were "regulated"? Were the "regulators" asleep or just didn't do their job?

Posted by: AZrebel | September 17, 2008 11:08 AM | Report abuse

Let me see if I get this right - McCain has a history of being against regulation - You admit we need more regulation - Yet you say that McCain is better for the economy. Something does not compute here

Posted by: Robert Hurley | September 17, 2008 11:10 AM | Report abuse

the problem with the democratic logic is that they think it applies to us.
it doesn't.
you keep thinking because you put party gains above all else including the welfare of the country that we put party first and if you can tie mccain up with bush that we will blame him.
we won't.
it's about the man to us not the party.
we don't trust your man and we do trust sen. mccain

Posted by: rebekah | September 17, 2008 11:13 AM | Report abuse

Its funny to hear McCain supporters go on and on about how Obama will tax the US into the ground when virtually every independant economist and tax policy think tank has said the average US household would do better, and often vastly better, under the Obama tax plan. 4 out of five see tax reduction under Obama, while 1 out of 5 do better under McCain. Yet McCain still pounds the drum of "Obama will raise everyones taxes". So much for the "straight talk express". "Straight to Lyingtown in Liarville Express" more like it.

Posted by: BrianinCanada | September 17, 2008 11:17 AM | Report abuse

if you have to go all the way back to the keating 5 to find dirt on mccain that says a lot to me because he made mistakes as a junior senator (who else is a junior senator?)and he learned from them.

i only have to go back to recent facts to learn that sen. obama is #2 on the list of gains from the fannie/freddie debacle. and also to find that sen. mccain warned of this in 2005

Posted by: rebekah | September 17, 2008 11:17 AM | Report abuse

As a mother, I am frequently required to find the "silver lining" for my children, but I really cannot beat the optimistic view of the Republican boosters.

Statements like "And during the current crisis, the Glass-Steagall reform has proved to be a boon. It has cleared the way for relatively healthy deposit-taking banks, such as JP Morgan and Bank of America, to rescue desperate investment banks" from Mallaby today and this from Luskin on Sunday "today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time" exceed all expectations. What you say to encourage a child to persevere is one thing, but to push such hooey on adults is mendacity.

McCain is lucky to have two such cheerful bucketheads supporting him.

Posted by: Yo'mama | September 17, 2008 11:22 AM | Report abuse

Hooray finally a sane voice in the wilds. There is a lot of blame to go around. It is not one party or just Wall Street. Main street was as much involved. Everyone was getting drunk on low interest rates and as long as everyone was doing fine, all turned and looked the other way. Alan Greenspan started the mess by holding interest rates too low for too long to get GWB elected again. The resultant drunk fest was enjoyed by all. Second mortgages and new cars every 3 years, no savings to speak of,etc. Blame to go around everywhere.

Posted by: D Gifford | September 17, 2008 11:23 AM | Report abuse

"Embarrassingly for Obama, the principal piece of financial deregulation over the past decade was the reform of Glass-Steagall, the law that separated investment banks from deposit-taking ones."

The Left is always embarrassed by the truth, that's why truth is the ultimate enemy of the Leftist.

Posted by: Rufus | September 17, 2008 11:24 AM | Report abuse

I have to say that this is the most embarrassing article that I have ever read in the Washington Post.

The premise of the article: Well hey, if the meltdown includes Fannie Mae and Freddie Mac, two of the most regulated industries in the business, the problem can't be regulation.

Oh boy, do we need somebody who understands economics at this newspaper. By definition, because of regulation, the securities that Fannie Mae and Freddie Mac issue cannot be subprime. The unregulated financial firms issued subprime mortgages and then sold them on in fancy bundles that made them look lower risk (and many of these were insured by, you guessed it, AIG). Fannie Mae and Freddie Mac's problems are a result of others actions, not because of their own actions. The housing market bubble was caused by non-regulated industries issuing loans to people who could not afford them which pushed up demand for houses (many of them for investment and not to live in) and thus prices. Fannie Mae and Freddie Mac issued loans to people who could afford to repay them but, because of the bubble caused by the other firms, the value of these assets tanked once the bubble burst. If all the securities firms were regulated to the degree of Fannie Mae and Freddie Mac the bubble wouldn't have existed in the first place.

In short, healthy firms have been dragged into this mess by unregulated financial firms. Included in those firms are Freddie Mac and Fannie Mae.

And you have the balls to title your article "Obama's Faulty Logic" ?!?!?

You make me sick. Partisan hacks spewing false information pretending to be experts are what are destroying America today. Washington Post editors: you should add a correction to this article as it is in its entirety a lie (not a different opinion, not a stretch of the facts, a lie!), and you are a "News"paper not a spin machine.

Posted by: Selims | September 17, 2008 11:26 AM | Report abuse

This joker must have an economics degree from the University of Gobblety Gook!

Posted by: powerstrike | September 17, 2008 11:27 AM | Report abuse

Freddie Mae and Freddie Mac gave obscene amounts of money to Obama.

Posted by: drawlings | September 16, 2008 8:50 PM

_________________________________________

Fannie/Freddie did not GIVE money to Obama. Employees who work for those companies donated to the campaign. The same way they donated to the McCain as well, albeit to a lesser degree. I'd say that the fact that more employees of those troubled companies donated to Obama than to McCain could possibly show that they know who is better suited to lead this country out of this financial mess.

Posted by: swat68 | September 17, 2008 11:33 AM | Report abuse

There is no way that phony Marxist/Socialist Democrat Obama Fraud
Barack Hussein Obama and his loud mouth
VP Nominee will ever be elected President
and Vice President of the US and no matter
how many lies,and smears and personal attacks that the rabid Obama Brats Paid
Posters launch or how much more Dirty Chicago Type Political Tactics that the
Obama Fraud and Big Mouth Drunk Joe Biden
try the next President and Vice President
will be Repulbicans Sen John McCain and
AK Gov Sarah Palin! NO WAY OBAMA EVER!

Posted by: Ralphinphnx | September 17, 2008 11:36 AM | Report abuse

when obama goes out with his fear mongering on the day that wall street is collapsing is irresponsible and also plays into most people seeing the far left of the democratic party (who appear to own him i.e. the teleprompter that he can't talk without now)attempting to frighten us all into running to big government's protection. we realize big goverment is not protecting us and it isn't just the republican party. pelosi/reid/rangel? they are protecting US?!?!?! you think the recent drill baby drill...but, not where it will do you any good is going to pacify?
how stupid do you think we are?

Posted by: rebekah | September 17, 2008 11:37 AM | Report abuse

Democrats for John McCain and Sarah Palin in 2008

Posted by: Jennifer | September 17, 2008 11:40 AM | Report abuse

Thank God for Mr. Mallaby and some rational thought.

The problem with this entire campaign is that both sides are telling whoppers. It's difficult for people to understand that neither the GOP nor the Democrats can have it all ways.

Posted by: Adanielch | September 17, 2008 11:44 AM | Report abuse

right! again we are too ignorant to figure out the way your political machine got around regulations for contributions.
i can't take it from you in a lump sum but, you can get it for me in a grouping of small sums. which make it appear that the little people have embraced and are supporting me.
and you can't say that mccain is going to owe big corporations so watch out because he's indebted to them through all those lobbyist in the same breathe that you say that the money obama has gotten from them is because they believe in this bright new future that is ahead of us if we will just elect your guy. BS
even we state educated people understand that projections into the future are away of distracting us from focusing on your past....where has he made an attempt to save us money? show us his record not his promises

Posted by: rebekah | September 17, 2008 11:44 AM | Report abuse

if erkel is elected president will he immediately run for higher office?

Posted by: dick cabesa | September 17, 2008 11:45 AM | Report abuse

The most important regulatory contribution to the current crisis was Alan Greenspan's refusal to move to tighten up regulation of the sub-prime mortgage market. Edward Gramlich, a Fed governor, urged this action and Greenspan refused. Greenspan is a life-long Republican and devotee of the Ayn Rand anti-government philosophy. So Obama is completely correct to blame the current crisis on a Republican ideological allergy to regulation.

Posted by: Tom | September 17, 2008 11:45 AM | Report abuse

Democrats for John McCain and Sarah Palin 2008

Posted by: Jennifer | September 17, 2008 11:47 AM | Report abuse

The MSM has failed to do its job regarding providing the American Voter with the TRUTH about Obama. They are clearly biased and failed to report on Reverend Wright and Obama’s relationship to other questionable associates in Chicago. They have also failed to question his ethics, principals and values. His supporters BELIEVE in everything he says or they see in the paper. But no one questions HOW he got to where he is today. I am not a reporter, but I have voted democrat for 37 years. Please read and do your own research.

Obama 1996 - 2000
Senator Obama: promoted to Senior Lecturer in constitutional law at the University of Chicago Law School. Elected to the Illinois Senate. Sponsored more than 800 bills. In 2000, lost a Democratic primary run for the U.S. House of Representatives to four-term incumbent Bobby Rush by a margin of two to one.

What mattered was that, beginning on Jan. 2, 1996, his campaigners began challenging thousands of petition signatures the other candidates in the race had submitted in order to appear on the ballot. Thus Mr. Obama would win his state Senate seat, months before a single vote was cast. Note that when he finished he was the ONLY democrat on the ballot. Republican candidate had to step aside for political reasons.

The 800 bills he ALLEDGEDLY sponsored were actually submitted by other democrats and all OBAMA did was date and stamp. He voted present 130 times on bills that would require him to step out of the box. Gained a reputation that the ‘then’ governor would make him a United States Senator.

2001 - 2004
Obama: reelected in 2002 and became chairman of the Illinois Senate's Health and Human Services Committee.
Initially the committee was looking at Health Care for all residents of Illinois. After accepting funding from insurance lobbyists he insured that universal healthcare became merely a policy goal instead of state policy, basically learned how to again use his power to benefit himself at the expense of doing what was right for the residents of Illinois.

Publicly spoke out against the invasion of Iraq BEFORE the congressional authorization in 2002, and then again before the actual invasion in 2003.

This was a given speech that sounded great but was actually a speech that was critical of the war BECAUSE it was distracting from the real issue regarding the black community in the United States. (Note gave this speech with support of Jessie Jackson)

Wrote and delivered the keynote address at the 2004 Democratic National Convention.

The Black Elite country and the DNC decided along with the good ole boys… that to put a Democrat President in the White House in 2008 that they needed to attract the black vote… and that a Black Harvard Lawyer named Obama was the one that they needed. He was seen as an upcoming star because he won the Illinois US Senate Seat. (See the real facts of how he won by such a large number.) No one knew the Republican Candidate. So naturally the Illinois voters voted for one of their own that had been heavily promoted by Chicago Papers.


November 2004: elected to the US Senate, receiving over 3.5 million votes, more than 70% of total.

Now this is an interesting election even by Chicago standards. Seems that the front runner (Hull) mysteriously become involved in a domestic abuse trial and withdrew his name from the race. (Sounds like the Chicago Political Machine may have dropped a dime on Blair.) So Obama had a cake walk to get the democratic nomination for the U.S. Senate Seat. (Reminds me of how he won his State Senate seat by having his legal team disqualify his opponent’s signature petitions. At the same time Jack Ryan won the Republican Nomination, but announced his withdrawal from the race — four days after the Chicago Tribune succeeded in persuading a California court to release previously-sealed child custody records containing embarrassing allegations by Ryan's ex-wife. Now how is that for being one LUCKY politician. Obama walked into the US Senate Seat, when the Republicans brought in the little known Keyes to run as a Republican. Now it looks like the Chicago Political Machine along with Ayers, Jackson, Rezko Wright and the rich and wealthy Black community in Chicago loaded the deck in Obama’s favor.

There is a ‘pattern’ that one can obviously see about how OBAMA runs his campaigns. He has sent his Hack teams into Alaska to discredit Palin, because she is a serious threat to him.

This is the individual that wants to change politics in Washington, the champion of bi-partisanship. The one that offers HOPE to the American People.
Is he corrupt? Does he say one thing and do another? Is he deceptive and hiding a hidden agenda? Does he use the ‘system’ to achieve his goals? You have to decide.

There is nothing illegal, or wrong about how he rose to political power.

I for one firmly believe in Duty, Honor and Country. (West Point Motto)
Obama is EXACTLY what we do not need in Washington. He is not about Duty, Honor and Country. His is about deceit, lying; winning at all cost, wealth, power and fame.

Posted by: Miller51550 | September 17, 2008 11:47 AM | Report abuse

There is no way that phony Fascist/Nazi Republican John Fraud McCain and his loud mouth Right Wing Wackjob VP Nominee will ever be elected President and Vice President of the US and no matter
how many lies,and smears and personal attacks that the rabid McCain Brats Paid
Posters launch or how much more Dirty Rovian Type Political Tactics that the
McCain Fraud and Big Mouth Sarcastic Born-Again Hypocrite Nazi Sarah Palin try the next President and Vice President
will be Democrats Sen Barack Obama and
Senator Joe Biden! NO WAY MCCAIN EVER!

Posted by: Ralphinphnx | September 17, 2008 11:50 AM | Report abuse

There is a flaw in Mr. Mallaby's own logic. Yes, all the players in this game are politicians, so we can watch them flit about in all directions, trying to find the wind direction at any particular cultural moment. But Republican ideology is very basic: Government intervention and regulation is bad, period. Wealth, power and greed are good, period: "Government is the problem." Democrats, in their quest for cash, will buy in to this or that scam, if that's where the power is for the moment. But there is a residue of liberal values still present in the Democratic party. It's still very much a part of the Roosevelt and Truman tradition. Republicans believe that wealth and power should have as unfettered a right as possible to trash the lives of lesser, poorer people. In elections, this core value can present a problem. So a framework of lies must be constructed to make everything as obscure as possible. Thus, John McCain proposes another commission to "study" the financial meltdown. Obama's reaction to this is fundamentally accurate. Another commission is just part of the same old scam. Mr. Mallaby can talk details of economic logic all he likes, while avoiding the logic of politics and government. It makes his critique essentially meaningless.

Posted by: Eric | September 17, 2008 11:53 AM | Report abuse

D Gifford wrote: "Hooray finally a sane voice in the wilds. There is a lot of blame to go around. It is not one party or just Wall Street. Main street was as much involved."

That's like saying the fault of an ecoli outbreak is the people who bought and ate the hamburgers and not the meat packing company where the ecoli got into the meat. And Bush saying we should not reward homeowners who bought these loans is like saying we should not help those who got ecoli infections. They should have been more careful what they ate!

Lets let AIG and Fannie and Freedie and all the others go under and take the $300 billion or so it looks like this will cost and give that money to victims who bought into the advertising saying they were "qualified" to get the loan. That pumps money into the system AND allows people to keep their homes.

Instead Bush is giving money directly to those who caused this mess leaving the homeowners to lose their homes. That's like giving money to the meat packing company to clean up the plant while ignoring all the people who got sick. Or like blaming the residents of New Orleans for not getting out of New Orleans before Katrina hit. Its heartless and shows the republicans care little for Americans, except those with big wallets. Time for them to go until the understand who they work for, all Americans.

Posted by: Fate | September 17, 2008 12:35 PM | Report abuse

The Nazi Republican Party Is The Real
Home To The Culture Of Corruption. Vote
Sen Barack Obama and Sen Joe Biden to end it on the Republicans and send
the corrupt likes of Bush, Cheney, Stevens, Lott, und fat little pink Nazi-boy Rove behind jail
bars where they belong for life in 2008!

NOMCAIN! NOPALIN! EVER! NO Republican
Naziism Ever. Just Say NO!
========================================
The US government is spending trillions of your dollars waging a war in Iraq so that Bush's oil and defense company buddies can get rich. Makes the 85 million dollar AIG loan look like a pimple on a gnat's butt.

This IS fascism!!!! Sieg heil!!!

Posted by: Rlritt | September 17, 2008 12:37 PM | Report abuse

Slam on the brakes, Mallaby. You dare write that Fannie, Freddy, and investment banks are "heavily regulated"? True there are laws and rules, however, what do they matter if there is NO ENFORCEMENT...say no enforcement for SEVEN Straight YEARS?

Once, Bush/Cheney took office and started eating away at the Clinton budget surplus, they also began replacing qualified people at federal regulatory agencies with their own GOP toadies. In the worst cases, the inmates were put in charge of the prisons and foxes in charge of hen-houses.

(1) A former problem bank president was put in charge of FDIC? (Don Powell proceeded to declaw and shrink FDIC to the point where banks were almost without supervision...)

(2) A former wall street laywer who represented Fortune 500's placed in charge of the SEC?

(3) An arabian horse judge placed in charge of FEMA? (Heckuva job, brownie)

(4) A former coal industry exec placed in charge of the mining safety administration?

(5) Gonzo? Enough said.

(ad infinitum)

I cannot go on with this...but lets just say with 200 employees total, OFHEO, the Office of Federal Housing Enterprise Oversight was never supported to regulate Fannie and Freddy properly. Even if all 200 people were examiners and super-men and super-women, its doubtful they could have effectively maintained pull on the steering wheel of either entity.

You slipped in to a whooper with that "heavily regulated" comment. Maybe you did not know, but its just not true. Effective and efficient regulation of the financial world ended in 2001. Now, we are reaping what Bush/Cheney sowed.

Posted by: Donny | September 17, 2008 12:41 PM | Report abuse

Mallaby, this is absurd. The GOP via Bush has had executive power (and UNITARY executive power at that) over these issues for nearly 8 years, and they watched this catastrophe develop, fester and boil over. Clinton legislation may have been imperfect, and is often the case in financial markets, financial players (quickly) found ways to rachet up risk by working around any safeguards that may have existed. The party in power ignored this process (and may have even encouraged it) for the past two Presidential cycles. Pointing back at Clinton and saying "him too, him too" is laughable, despite the fact that there seem to be many out there who find it to be an adequate rationalization and diversion of responsibility. You know better, however, shame on you for publishing this tripe. And shame on the Post for their continued decline as a serious outlet for information and opinion.

Posted by: bdbd | September 17, 2008 12:42 PM | Report abuse

What Mr. Mallaby and indeed many of my friends who are Democrats forget is that we do not have an infinite array of choices 48 days from now.
Some suggest that Sen. Obama is merely the lesser of two evils. Well, if you dont vote for the lesser of the two, doesnt the greater of the two evils win?
According to Michael Kinsley, Alaska ranks No. 1 in taxes per resident and No. 1 in spending per resident.....2 1/2 times the national average in its tax burden per citizen. Alaska spends money on its own citizens and taxes the rest of us to pay for it. Alaska is No. 1 in the amount it receives from Washington over and above the amount it sends.
Every day reveals a new lie. Not one thing has been true so far.

Posted by: fanofann | September 17, 2008 12:48 PM | Report abuse

A simple regulation like making 0 percent down/low introductory rate mortgages illegal would have prevented this whole mess from starting in the first place. Also- if financial institutions are using instruments no one can understand or audit....perhaps logic dictates those should also be illegal. Since when to taxpayers owe the financial industry the unlimited right to make money any way they want. No other industry enjoys that option.

Posted by: KBarr, Toronto | September 17, 2008 12:48 PM | Report abuse

This sounds pretty simplistic to me. Does Mallaby really want to celebrate the deregulation of the airline and trucking industries?

With the airlines, we have come full cycle, with deregulation being supplanted now by layer upon layer of consolidation. The civil air transport industry has been transformed from the pride of the nation to cancelled flights, ever more cramped cabins, the outsourcing of aircraft maintenance to foreign countries, ever decreasing oversight by the FAA, and a progression of major problems that fortunately (as of now) did not become tragedies, as the standards for maintentance, repair and crew flying hours have been lowered and/or ignored.

The trucking industry has been reduced to a mad rush of "independent" drivers hauling the trailers of the major freight companies. The drivers have been reduced to peons, each "negotiating" his/her own deal with the major carriers, in a virtual Adam Smith dreamworld. At every truck stop amphetamines are in demand as much as diesel fuel.

Both in the airline and trucking industries, "deregulation" has been a means of lowering costs, especially labor costs, thus giving Wall Street more money to play around with, too often with an eye towards quick profits and ever more sophisticated paper rather than prudent venture investment banking.

As to Fannie Mae and Freddie Mac, they are prime examples of reverse regulation, where, through intense lobbying, regulation is turned on its head and manipulated, to the short term benefit of the entity that was supposed to be regulated in the public interest. Fannie Mae and Freddie Mac have emerged as the poster children for the dangerous corrupting consequences of privatization.

As to the acquisition of investment banks by deposit-taking banks, it remains to be seen if this is a short term cosmetic fix, frought with terrible risk (the bad paper is still there), perhaps cushioned by some as yet undisclosed government backing, like in the J.P Morgan/Bear Stearns deal.

Bottom line is that so-called free market capitalism has once again been exposed as taxpayer backed welfare capitalism, relying on government to bail out the malefactors after they have wrung the system dry.

And there Obama is right, that free markets do not mean the right to manipulate and game the system, thereby destroying markets. I'll believe in so-called free markets when I see news of repossessed bank-owned McMansions by the score in Boca Raton.

Posted by: Deja Vue | September 17, 2008 12:51 PM | Report abuse

My understanding was that Freddie and Fannie did not accept sub-prime mortgages. The definition of a sub-prime was a mortgage that Freddie and Fannie would not accept. It is possible that if all the other players played by the same [regulated] rules, we wouldn't have this crisis. I get the impression that the columnist is not too swift on this subject.

Posted by: rj2z | September 17, 2008 12:51 PM | Report abuse

The display of ignorance and hate in these comments is simply incredible. "Socialist Democrats?" That's a good one, as the Republican controlled Fed is using our tax money to bail out AIG, Freddie and Fannie. I guess it's not "socialism" if our tax money is used to prop up corporations.

Posted by: phreeman | September 17, 2008 12:58 PM | Report abuse

I have to take issue with his comment that Glass-Steagal is good for the economy;

This is the separation of investment from savings banks enforced prudently during the aftermath of the Great Depression,and even if the narrative is wrong; the man Phil Gramm is still a member (albeit a hidden one) of the McCain campaign. It was enacted during the Clinton years and wrongly supported by Clinton as well; but lets face it Wall Street has their hooks in every candidate; McCain, Obama, etc. Citicorp is officially represented on Obama's board (see Rubin)

The fact is, repealing Glass-Steagal got us into this mess with the fancy derivatives and Credit Fault Swaps which have been allowed to take place fueled from the Mortgage meltdown; it was the bridge that linked our home mortgages (savings banks) with the crazy "sell-bad-mortgage securities" down the river schemes (investment banks). A bridge that previously had been banned; blocked and kept at bay.

I hope someone in the Obama campaign quickly moves to reinstate Glass Steagal as an ACTUAL POLICY STANCE. This is the only way to correct the 8 year mess that is culminating at the end of this Decade.

Posted by: Matt Miller | September 17, 2008 1:01 PM | Report abuse

There was simple piece of regulation that needed to be in place but wasn't. It was regulation to prevent predatory lending in the sub-prime market. If this had existed we wouldn't be in this particular financial crisis.

That said, I believe Fanny May and Freddie Mac actually had the authority to regulate, but apparently chose not to. Maybe there were cronys appointed, or maybe a specific regulation was removed(although I've not heard it said which regulation it was), but I tend to think that this crisis is a more common tale of human corruption, incompetence, and shortsightedness.

Sadly, these traits are going to stick with humans whether they work in the private or the public sector.

Posted by: Patrick | September 17, 2008 1:04 PM | Report abuse

Tim Denny says that contributions from Enron's executives are a reason to vote against McCain.

Well, the Fannie and Freddie collapse dwarfs Enron by a huge margin, and involved far more accounting fraud and malfeasance, and even worse, is going to wind up costing the US taxpayer tens of billions of dollars (unlike the Enron failure, which cost US taxpayers a big fat zero), and guess who was No. 2 in the Senate in receipt of contributions from Fannie and Freddie executives? Mr. Obama.

So, Mr. Denny, do you care to reconsider your vote?

Posted by: DBL | September 17, 2008 1:06 PM | Report abuse

Mallaby calls Fannie and Freddie "two of the most highly regulated financial institutions in the country." That's complete nonsense. Until the recent bailout bill passed, the regulatory authority over the two GSEs was divided among three separate entities, none of which had any teeth, and none of which were allowed, by statute, to see the big picture. In addition, both GSE's were exempted from regulation by the SEC and from following generally accepted accounting principles, so neither was subject to even the most basic regulation that every public corporation has to follow. Moreover, the GSEs were not subject to any regulation at all by the Fed, FDIC, Comptroller of the Currency, CFTC, or any of the other entities that govern other "financial" institutions. Their regulators were entities like HUD that doesn't know the difference between financial risk and a pink elephant. So, once again, we have a WaPo writer who is pontificating on something he knows absolutely nothing about.

Posted by: billinvirginia | September 17, 2008 1:21 PM | Report abuse

Let's ask McPalin about his Keating 5 involvement, the republicans have ran this country into the ditch they have had no over site on any of these people, they overturned the laws that were put into place after the
"GREAT DEPRESSION", by the way which also happened under Republican rule.
This is the ownership society,
look at the great "REPUBLICAN ECONOMY"!
No more of the same no more of the Republican rule.

Posted by: sb | September 17, 2008 1:23 PM | Report abuse

Republicans - the party that wrecked America.

Posted by: Katie of St. Paul | September 17, 2008 1:24 PM | Report abuse

For Barack Obama and John McCain--both are say-anything-to-get-elected men--it's not about right or wrong. It's who can look the best to the majority of american people.

Posted by: Anonymous | September 17, 2008 1:25 PM | Report abuse

Nonsense, Sebastian, and unworthy of you. Of course Dems have had a part in the earlier deregulation efforts - though note that almost all Dem Senators voted against the Gramm bill - but theonly one party was in power when the whole subprime disaster built up.

It might not have been possible to foresee it, but it was most certainly possible to observe it happening - and many people argued for intervention and regulation which never happened.

Posted by: Simonbuc | September 17, 2008 1:26 PM | Report abuse

Thank you for an interesting article. I don't blame either party, but I am frightened that these men can't get the bucking bronco called Wall Street under control, and I resent the golden parachutes given to lousy managers who fiddled while Rome burned.

Posted by: zaney8 | September 17, 2008 1:34 PM | Report abuse

Mallaby, you ignore the fact that what underlies all of the recent financial crises is the collapse of the housing market which was primarily due to the flood of unregulated subprime mortgages. Both Bush and McCain have been vocal advocates of deregulation over the years, especially during the crucial years when the subprime crisis was brewing. While Republicans are not the only ones who espouse deregulation, it is a major foundation of their ideology and they were the ones in power at the time when regulations could have been put in place to prevent or at least mitigate some of the financial chaos that has spilled over recently.

Posted by: Woody | September 17, 2008 1:44 PM | Report abuse

As the Dow Industrials sink slowly behind the horizon after eight years of over-grazing by the GOP and their camp followers, the paid McCain trolls on this site and their dearly brainwashed brethren and sisteren are working overtime to blame this mess on the Democrats (Socialists, Communists, Chicago thugs, etc). Sorry, lads and lassies, but it won’t stick. This is your mess. You bought it, paid for it and now you have a man as your standard bearer who probably can’t balance a check book (or even remember where he left it).
One of McCain’s chief advisers is Phil Gramm—and that’s the guy who sneaked into congress in the middle of the night and inserted language into a bill when nobody was watching. Our Mr. Gramm made all of this possible. McCain has mentioned making this greedy flake Secretary of the Treasury. That’s progress!!!
Now McCain wants regulation? Next he’ll advocate raising taxes to pay our bills!
Let McCain leap into history as a man who sold out for the sake of his ego. Let him go quickly and while he’s leaving take Battlestar Sarah with him.

Posted by: spence | September 17, 2008 1:49 PM | Report abuse

Please. A fundamental basis of the Republican Party is less regulation. Been that way for decades.

Mr. Mallaby also wrote, "This reform was sponsored by McCain's friend, former Republican Senator Phil Gramm, but ending the division between the two types of bank was a policy that the Clinton team also supported, which does not fit the Obama narrative."

Doesn't fit because Bill Clinton was involved? I don't know if you noticed during the past year, but Senator Obama sometimes disagrees with the Clinton's on issues. McCain was up to his knees on this one and the savings-and-loan debacle.

Phil Gramm is more than a "friend" of John McCain. He was the designated economic advisor of the campaign until he said we're all a bunch of whiners. He's the guy is advised Senator McCain on a continuing basis. And you're saying Senator Obama can't use this because Bill Clinton was involved? Again...please.

Posted by: amaikovich | September 17, 2008 2:00 PM | Report abuse

Not only do the Republicans oppose regulation when they are in power they refuse to enforce the regulations that are in effect. The Republicans are also responsible for drastically running up the national debt and increasing the size of government which the exact opposite of what they say they stand for. Then too you have the Iraq war which has syphoned off over a trillion dollars which could have been used to stimulate the economy through direct investments or return to the taxpayers. Don't try to say that there is no difference between Obama and McCain policy and performance it just is not true and you are wrong for suggesting that it is true.

Posted by: cdgainesville | September 17, 2008 2:04 PM | Report abuse

Why don't you read Samuelson's article - he knows what he is talking about but you,on the other hand, have a problem with facts and history

Wall Street's Unraveling
__

» Top 35 Opinion Articles
» Most Popular on washingtonpost.com

TOOLBOX
Resize Print E-mail Yahoo! BuzzSave/Share + DiggNewsvinedel.icio.usStumble It!RedditFacebookmyspace
COMMENT
washingtonpost.com readers have posted 130 comments about this item.
View All Comments »

POST A COMMENT
Your washingtonpost.com User ID, gweeks, will be displayed with your comment.

Discussion PolicyYour browser's settings may be preventing you from commenting on and viewing comments about this item. See instructions for fixing the problem.
Discussion Policy CLOSEComments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.

Who's Blogging» Links to this article
By Robert J. Samuelson
Wednesday, September 17, 2008; Page A19

Posted by: Anonymous | September 17, 2008 2:07 PM | Report abuse


By TERENCE HUNT, AP White House Correspondent
Tue Sep 16, 5:39 PM ET

DENVER - How does Barack Obama lure wealthy donors to a big-money fundraiser in Hollywood? Bring in Barbra Streisand as the headline performer.

The Oscar-winning singer and actress was to perform Tuesday night on Obama's behalf in Beverly Hills. It was to be a two-step evening with a reception and dinner costing $28,500 a person followed by a later event featuring Streisand at $2,500 a ticket.

Obama was flying to Los Angeles after an appearance Tuesday morning in a Denver suburb.

The wealthy fundraiser comes on a day when the crisis in the U.S. economy remained an urgent issue for many Americans. Monday's sharp sell-off left the Dow Jones industrials and the Standard & Poor's 500 index down by more 4 percent, eroding the value of individual retirement and investment accounts, for example.

It also prompted a populist jab from his Republican rival, John McCain.

"He talks about siding with the people — siding with the people — just before he flew off the Hollywood for a fundraiser with Barbra Streisand and his celebrity friends," McCain said at a rally in Vienna, Ohio. "Let me tell you, my friends: There's no place I would rather be than here with the working men and woman of Ohio."

Streisand originally backed Sen. Hillary Rodham Clinton but switched to Obama when he emerged as the Democratic presidential nominee.


Posted by: Dubs | September 17, 2008 2:20 PM | Report abuse

Good grief, Sebastian!

Why did you fail to mention Senator Gramm's Commodities Futures Modernization Act of November 2000? This act prevented both the SEC and the CFTC from regulating SWAPS.

And if you don't think that Swaps are at the heart of the AIG bailout and other failures that have caused this liquidity crisis, then there is something definitely faulty about Sebastian's logic.

Repealing Glass Steagall wasn't the best idea, but allowing swaps - unregulated betting on the market whose dollar value is about 4 times the "real" market -with no oversight - that was truly priceless!

Posted by: Commodities Phil | September 17, 2008 2:21 PM | Report abuse

"no cocaine snorting,crack smoking pot
head drug addict like fake Messiah Barack
Hussein Obama can think logically...NOBAMA! NOBIDEN! NOPELOSI EVER! NO Democrat
Socialism Ever...by: Ralphinphnx"

Well Ralph, I'm sure that you will win a lot of converts with your thoughtful, articulate, logical statement of the facts. Especially with regard to the "pothead" Obama" who can't "think logically." No editor of the Harvard Law Review or Professor of Constitutional Law at U. of Chicago could match your intellect. He should just give up.

Posted by: BobH | September 17, 2008 2:22 PM | Report abuse

Obama theme song:

Weezer:
wanna live a life like that
I wanna be just like a king
Take my picture by the pool
'cause I'm the next big thing

Posted by: Dubs | September 17, 2008 2:22 PM | Report abuse

More of Obama theme:

Beverly Hills
That's where I want to be
Livin' in Beverly Hills
Beverly Hills
Rolling like a celebrity
Livin' in Beverly Hills

Posted by: Dubs | September 17, 2008 2:25 PM | Report abuse

For many voters, it comes down to one thing - kick the bumbs out. Many of us are willing to take what some hysterically call a moderate risk and bring in Obama and his denizens who will advise. I have lost all confidence in McCain, whom I vigorously supported in 2000 with campaign donations and volunteer time. With his manipulative selection of Governor Palin to appease the social conservatives and ditto heads, I realized who this man has become. He asserts, "Country First" but he means "Election First." No doubt about it. He will indeed be more of the same, and I am unwilling to put as 2nd in command a woman who is being kept in a cone of silence for obvious reasons - she is not ready. I say this former Republican will give Senator Obama-Biden a chance.

Posted by: politicallysavvy | September 17, 2008 2:26 PM | Report abuse

Fannie and Freddie, yes they were regulated. But you must remember that Bush has said that he decides what the law means and what will be enforced. Do you recall signing statements which Bush attaches to every law. Same with regulatory agencies, they work for Bush/McCain and if they are ordered to look the other way they comply.

Your column ignores the fact that Bush feels free to ignore the laws of the US and its Constitution. Bush is to blame, he seized total power and must be held accountable.

Posted by: Tom | September 17, 2008 2:27 PM | Report abuse

Is Barack Obama the Messiah?
"... a light will shine through that window, a beam of light will come down upon you, you will experience an epiphany ... and you will suddenly realize that you must go to the polls and vote for Obama" - Barack Obama Lebanon, New Hampshire.
January 7, 2008.

Posted by: Dubs | September 17, 2008 2:32 PM | Report abuse

Texas for OBAMA O8! Because the republicans F***ed the economy. I am loosing my job people.

Posted by: Mike | September 17, 2008 2:37 PM | Report abuse

Dubs wrote:

More of Obama theme:
Beverly Hills
That's where I want to be
____________
Funny thing. I had the pleasure of sitting in the lobby of the Beverly Hills Hilton Hotel on August 25 as, by accident, my family and I watched the aging cadre of Hollywood celebrities enter for a celebrity fund-raiser for Senator John McCain: Jon Voight, Pat Boone, Wilford Brimley, Robert Duvall. We were told it was an exclusive $1000 a plate celebrity fund raiser for McCain's candidacy with 1000 expected to attend. Seems like no one cares that McCain is a hypocrite and will be the first to accuse Obama of celebrity status while McCain also cavorts with the stars fawning for their money or "yukking it up" on regular appearances on Leno or Letterman. There is a double standard operating here. Notice McCain now refuses to appear without Palin, the real star, at his side, hoping to draw the crowds her new-found celebrity status draws Come on. Get real here. This celebrity accusation is such a bogus, meaningless criticism.

Posted by: Marcee | September 17, 2008 2:44 PM | Report abuse

Mallaby talks about "...nary a protest from regulators" - the regulators were Republicans. Congress may bear some responsibility for the laws that were passed, but if laws aren't enforced, that is the fault of the executive branch of the government and the executive branch of this government is Republican.

Second, 2 years ago when the problems with subprime mortgages started impacting home buyers, the attorneys generals of several states tried to ride herd on mortgage brokers. The federal government (that is, the Republican administration) invoked federal primacy to force the AGs to back off from regulating the mortgage brokers.

This mess is solely in Republican hands and attempts to blame Democrats for this mess is ridiculous.

Posted by: Anne | September 17, 2008 3:01 PM | Report abuse

Hmmmmmmm.... the Graham Deregulation act of 1999 which many economists have pointed to as the catalyst to the financial mess right now was voted on in the Senate on party lines, all Republicans voted yes, all Democrats voted no. Does that sound like both parties to blame?

Posted by: DWHarper | September 17, 2008 3:35 PM | Report abuse

Gee Golly, guess we're all dufuses sir, surely you jest. Sure Fannie and Freddie where highly regulated, and sure Glass-Steagall separated investment banks from deposit-taking ones, and sure Bill Clinton supported some conservative legislation, considering that the Repugs held the majority for his terms, but for you to suggest that republican economic ideology has played no role in this is criminal, and misleading. The basic premise of that Ideology and Glass-Steagall is trickle down economics, freedoms at the top so there may be pentance for those 95% of Americans on the bottom. The strongest among us need more freedoms to produce more. But sir payroll is has and will always be a liability, and will always be the first to be cut rather due to technological advances, or market instability. For decades Neocons have made the case that Govt should only be large enough to facilitate Top heavey market growth, free trade and national security. Deregulation, Deregulation, Deregulation, and what now regulation? This is the NEOCON FRANKENSTIEN, OWN YOUR FAILURE, accountability is what its called when you speak of street crime. Glass-Steagal deregulated "default credit swaps" conservatism pushed for the securitization of housing mortgages, knowing full well that Freddie and Fannie was the credit anchor for the national economy and would never be allowed to crumble. Republicans knew that bad paper could be sold of for a profit with this legislation, corporations knew this was happening and so did Phil Graham thats what lobbyist do explain their problems to lawmakers, most times for a fee, this lesgislation simply offered an out for risky investors. This is the fleecing of America and while regulation may have stiffled growth to some degree, the chances of something like this happening would have been nearly zero to none. What lawmaker wants to harm the American middle class, the democrats considering regulation wanted regulation to stop this from eventually happening you would call it PROTECTIONISM, and now you would have us all suck it up and own this debackle, no sir we are accountable in this country for what we say and do, and so are you. America first, we need new industry, and a new direction, clean energy technology should be the new cotton of America, and yet the Republicans would have us drill till competitiveness springs forth, won't happen with 3% world supply, and if it does, China will already be green, and still out-competing us, so please cut the choir boy act, and stop dumbing the country down. The middle class will have to be utilized in the solution, the quick fast money is gone, and now the country is less competitive for it. Conservtives talk about middle class Americans and small business, but where do small business come from, if not the middle class, how about this going forward lets start making America competitive on main street, give 95% of Americans tax-breaks and even more if they can assist in developing the business models and technologies of the future. Companies fall and rise, the problem is that trickle down economics is only concerned with those Americans who have already made it, staying exactly where they are through tax-payer assistance, we should get back to the American tradition of accountability in all sectors you take risk, overscale you business, pay the few to much, and crumble thats fine as long as there is someone there to step up. Thats all democrats have ever suggested, that while we don't hamper those at the top govt should be more concerned with having others prepared to take advantage of short-comings, if that was the case I doubt that those companies would have seen any benefit is securing all those risky "me first, nation second" securities. It is politics that has misdirected the public away from the issues, is is the negative Karl Rove, Willie Horton, anti-identity-based, anti-Affirmative action, we hate baby killers, the terrorists gonna kill us politics, that has for 20yrs kept Americans preoccupied away from evaluating these issues. IT is that simple regulation or deregulation, no one is suggesting pointless legislation, only rationale regulation that keeps America working for Americans ALL AMERICANS NOT JUST THE TOP 2%.

Posted by: ukiddnme | September 17, 2008 3:49 PM | Report abuse

Don't be ignorant like this guy--
Ralphinphnx, he a racist who has accomplished nothing his entire life, he calls Obama a drug addict, without even knowing the Cindy is the only drug addict near this campaign, he wouldn't know socialism if he saw it. This is a game to him, but al he knows is was mommy and daddy indoctrinated into him, he has no feet and no understanding therfore he cannot walk, stand or think.

He wants to get personal not knowing that his candidate is the only under-achiever is this race. Success is American Ralphinphnx, try it you may gain a reason to get up every morning.

Posted by: you see | September 17, 2008 3:55 PM | Report abuse

mom4palin, good post, but what achievement are you speaking of. Share your rationale not just your ideology. McCain's whole political career was pure opportunism not a desire to serve, he cheated on his wife and married the daughter of the guy who financed the beginnngs of his political career, the same group of cash hounds who started needed protections from the Lincoln Savings and Loans Scandal and asked John to vouch for them, unless you are unaware the exact same thing is going on now, teach your son that and he grows truwe to form you can get ready to take can of your grandchildren in your old age.

Ridiculous for you to discredit the only life story that you your son, and the majority of Americans will ever have a chance of living, unless you get shot down in Iran and marry a corporate princess, why would she marry him?

Posted by: 90210 | September 17, 2008 4:05 PM | Report abuse

Mr. Mallaby, you fail to mention the negative affects of BAD regulation, which even the NYT has begun to explore this week. Democrats are principally responsible for loosening credit standards and forcing banks to make bad loans through legislation like the Community Reinvestment Act. Phil Gramm's singular mistake was his failure to get Bill Clinton to back down from the CRA during the repeal of Glass-Stearns.

Of course, one of the chief concerns of the next President will be to tighten up lending standards, and the CRA will have to go, or be severely limited. If Obama is elected, this will not happen.

Posted by: man00ver | September 17, 2008 4:09 PM | Report abuse

How is everyone managing to overlook the fact that three years ago McCain stood alone in questioning Freddie Mac and Fannie Mae and demanding they lose their special status and lobbying privledges?

Posted by: charity | September 17, 2008 4:21 PM | Report abuse

It's really very simple. Ask yourself this question, are you better off than you were 8 years ago? Check the numbers: The deficit (largest in America's history), cost of the war ($10 Billion a month!), Unemployment (Up), Halliburton profits (Way up!), Oil companies' profits (largest EVER).
Now ask yourself who's been in the White House the last 8 years? Getting the picture yet? Want more of the same? Vote for McSame.

Posted by: Lorcan | September 17, 2008 4:31 PM | Report abuse

A good leader does not make a situation worse by wringing his hands and saying it's broken. McCain said the fundamentals of the economy, meaning the American worker, is still firm and strong. I agree. This is all a harsh market adjustment that will cause the speculators, etc. to get back on firm ground instead of the Las Vegas style betting in the market that has been going on. I think Mr. Mallaby is correct in that there is reason to blame different parts on each party for the situation. But now is not the time for blame - now is the time to get to work to fix it. I do not believe electing a neophyte like Obama is the way to do it.

Posted by: Georgetowner1 | September 17, 2008 5:15 PM | Report abuse

This article is as stilted, deceitful, and full of crap as McVain and His Lipstick sidekick are. How do you even look at yourself in the mirror in the morning, Mallaby? For all the writing you have done, you sound more like Mike Oxley and other current and former Washington con artists.

Posted by: Sick of the Garbage | September 17, 2008 6:17 PM | Report abuse

Real Brother here.

One of the reasons why so many are against the Racist,White Supremacist(Black man hating lesbian)arguments of the GOP is due to their Racist,White Supremacist(Black man hating lesbian) nature like Ralphinphnx.

We wouldn't mind a legitimate argument against Obama but these are simply Racist attacks based on nothing other then the HATRED that Racists have for Black people.

These Idiots are simply too stupid to realize that they insult our intelligence by portraying Obama as a drug addict and as stupid and dumb.

They simply are too STUPID and DUMB to realize that if indeed Barack Obama was that much of a GENIUS that he could fool the world and mask how drugged out and stupid and dumb he was that he would be such a genius that we should forget the election and simply annoint him president now.

Its silly and they need to quit.

TKCAL

Posted by: Realbrother | September 17, 2008 6:42 PM | Report abuse

Real Brother here.

[...I think Mr. Mallaby is correct in that there is reason to blame different parts on each party for the situation. But now is not the time for blame - now is the time to get to work to fix it. I do not believe electing a neophyte like Obama is the way to do it.]

Posted by: Georgetowner1 | September 17, 2008 5:15 PM

-------------------------------------------

Georgetowner1, for as typical, weak and as ridiculous as your argument was it was at least an argument, one that needs to be addressed. First, I think its lame to blame the Democratic Party for what the Republican Party has done, but with that said, I also think its wrong to blame Barack Obama for what his party has done while he wasn't its leader.

Second, the argument that Obama is a neophyte and therefore we should ignore what he's saying about the economy in crisis and needing a change(tax cuts for the middle class end to this expensive war etc.) while listening to the 30 year Washington insider(who doesn't know how many homes he owns) suggest the economy is just fine and Americans are simply whinning and are in mental depressions(Phil Graham)is silly.

You are suggesting that someone with experience telling you to jump off the Empire State building he'll catch you, is more valid then the new guy who's telling you how DUMB that is?

Stop it.

TKCAL

Posted by: Realbrother | September 17, 2008 6:56 PM | Report abuse

Actually a non partisan committee would be a good idea instead of putting bandaids on the problem -then fix it. I don't believe more regulation is the answer but better oversight is. Lets be adults everyone is responsible for the problem, lets acknowledge it and move on to fix it. Enough already, I'm the one that can't retire!!!!!

Posted by: Eileen | September 17, 2008 7:01 PM | Report abuse

McCain and his campaign is starting to fall apart - the lies, the confusion, the flip flops. Very sad to see a patriot fall apart.

Posted by: Anonymous | September 17, 2008 9:54 PM | Report abuse

Real Brother here.

[Obama has written 2 books, all about himself, one or both as a State Senator at a fairly young age. It lends credibility to the often-repeated Republican charge that many Democrats are often so self-driven that they can acknowledge nothing greater in their actions (not just words or letters).]

Posted by: mom4palin | September 16, 2008 6:40 PM

-------------------------------------------

Mom4palin that's such a weak argument.So he was supposed to write two books about who? But see that's the kinda' silliness that doubles for an argument. Don't vote for Barack Obama because before he knew he was Presidential material he wrote two books about himself(while Idiots are claiming to not know him).

He becomes a State Senator at a "young age" another perfectly valid reason NOT to vote for him for achieving at a young age, oh and we forgot he's Black.

Its lame.

TKCAL


Posted by: Realbrother | September 17, 2008 9:58 PM | Report abuse

YES SENATOR OBAMA,SPEAK FROM YOUR HEART & THE AMERICAN PEOPLE WILL TRUST YOUR LEADERSHIP ?? THE US CONGRESSIONAL LEADERS OF THE FREE WORLD, WITH THE # 1 ECONOMY IN THE WORLD, DO NOT WANT TO OFFER REAL JUSTICE TO EVERY AMERICAN WITHIN OUR US JUDICIAL SYSTEM ???

WHERE ALSO ARE OUR AMERICAN RELIGIOUS LEADERS ??

SENATOR OBAMA, PLEASE GIVE AMERICA ~ A DOSE OF REALITY ON THIS HORROR OF JUDICIAL INJUSTICE THAT HAS BECOME AN AMERICAN ART FORM,AND NOW CAN NO LONGER BE KEPT HIDDEN OR SECRET FROM THE AMERICAN PEOPLE ???

LETS ALL HOPE OUR MEDIA FRIENDS CONTINUE TO SHOW AN INTEREST IN REPORTING ON THIS AMERICAN HORROR FACING THESE (TENS OF THOUSANDS) FORGOTTEN AND TRAPPED POORER AMERICANS, AND HOW THIS PRESIDENTIAL CONTENDER HANDLES THIS VERY SERIOUS ISSUE FACING AMERICA’S LATINO AND BLACK AMERICAN COMMUNITIES ??

WITH 80% OF THE BLACK AMERICAN VOTERS SAYING THEY SUPPORT SENATOR OBAMA IN THIS PRESIDENTIAL ELECTION, IT IS ONLY FAIR FOR EVERYONE TO KNOW PRIOR BEING ELECTED OUR NEXT PRESIDENT OF THE UNITED STATES HOW THIS DEMOCRATIC SENATOR TRULY FEELS ABOUT THIS AMERICAN JUDICIAL INJUSTICE CONTINUING TO INFLICT GRAVE HARM ON THE BLACK & LATINO AMERICAN FAMILIES AND THEIR COMMUNITIES NATIONWIDE ???

*** WHEN GOD’S FACE BECAME VERY RED ***
THE US SUPREME COURT GAVE ENEMY COMBATANTS FEDERAL APPEAL HC RIGHTS LAWYERS AND PROPER ACCESS TO US FEDERAL COURTS,AND POORER AMERICANS (MANY EVEN ON DEATH ROW) ARE DENIED PROPER FEDERAL APPEAL LEGAL REPRESENTATION TO OUR US FEDERAL COURTS OF APPEAL, AND ROTTING IN AMERICAN PRISONS NATIONWIDE ????

**** INNOCENT AMERICANS ARE DENIED REAL HC RIGHTS WITH THEIR FEDERAL APPEALS !
THE AMERICAN PEOPLE ARE $LOWLY FINDING OUT HOW EA$Y IT I$ FOR MIDDLE CLA$$ AND WORKING POOR AMERICAN$ TO FALL VICTIM TO OUR U$ MONETARY JUDICIAL $Y$TEM.

****WHEN THE US INNOCENT WERE ABANDONED BY THE GUILTY ****
The prison experts have reported that there are 100,000 innocent Americans currently being falsely imprisoned along with the 2,300,000 total US prison population nationwide.
Since our US Congress has never afforded poor prison inmates federal appeal legal counsel for their federal retrials,they have effectively closed the doors on these tens of thousands of innocent citizens ever being capable of possibly exonerating themselves to regain their freedom through being granted new retrials.

This same exact unjust situation was happening in our Southern States when poor and mostly uneducated Black Americans were being falsely imprisoned for endless decades without the needed educational skills to properly submit their own written federal trial appeals.

This devious and deceptive judicial process of making our poor and innocent prison inmates formulate and write their own federal appeal legal cases for possible retrials on their state criminal cases,is still in effect today even though everyone in our US judicial system knows that without proper legal representation, these tens of thousands of innocent prison inmates will be denied their rightful opportunities of ever being granted new trials from our federal appeal judges!!

Sadly, the true US *legal* Federal Appeal situation that occurs when any of our uneducated American prison inmates are forced to attempt to submit their own written Federal Appeals (from our prisons nationwide) without the assistance of proper legal counsel, is that they all are in reality being denied their legitimate rights for Habeas Corpus and will win any future Supreme Court Case concerning this injustice!

For our judicial system and our US Congressional Leaders Of The Free World to continue to pretend that this is a real and fair opportunity for our American Middle Class and Working Poor Citizens, only delays the very needed future change of Federal Financing of all these Federal appeals becoming a normal formula of Our American judicial system.

It was not so very long ago that Public Defenders became a Reality in this country.Prior that legal reality taking place, their were also some who thought giving anyone charged with a crime a free lawyer was a waste of taxpayers $$.

This FACADE and HORROR of our Federal Appeal proce$$ is not worthy of the Greatest Country In The World!

***GREAT SOCIETIES THAT DO NOT PROTECT EVEN THEIR INNOCENT, BECOME THE GUILTY!

A MUST READ ABOUT AMERICAN INJUSTICE:
1) YAHOO AND 2) GOOGLE
MANNY GONZALES THE KID THAT EVERYONE FORGOT IN THE CA PRISON SYSTEM.
** A JUDICIAL RIDE OF ONES LIFE !

lawyersforpooramericans@yahoo.com
(424-247-2013)

Posted by: DOUGLAS FIELD | September 17, 2008 10:36 PM | Report abuse

The comment that the regulated firms like Merrill Lynch, Bear Stearns, and AIG went bankrupt, while unregulated hedge funds have done all right is completely specious. Hedge funds are totally private, and the financial press has been filled with reports of hedge funds suffering mightily in this downturn. Only the millionaire/billionaire subscribers to hedge funds will tell you the pains they've been having with them lately.

Posted by: Karl Eysenbach | September 17, 2008 10:50 PM | Report abuse

Wall Street is the victim of its own greed. However, it is wrong to blame Wall Street and deregulation for everything. Federal Reserve kept interest rates too low for too long to prop up the Economy, which created the huge housing bubble. For years, Federal Government and Congress encouraged home ownership. Fannie and Freddie were created for this purpose. Last but not the least, everyone, from Alan Greenspan to Wall Street, to average Americans, had false expectation about home prices. The expectation that home prices would go up forever and money can be made by flipping houses, creating fancy loans and derivatives, caused this meltdown. The solution is simple but painful. Americans need to spend less and save more. Those who can't afford a home shouldn't buy one. More regulation alone won't solve the problem.

Posted by: HH123 | September 17, 2008 11:32 PM | Report abuse

What a load of crap. The Republicans have been running the country for almost all of the last eight years, so who else is responsible for the mess this country is in? The Easter Bunny?? The fact is that one of McCain's advisors, Phil Gramm, contributed heavily to the mess we're in. And as for hedge funds, many of these are quite secretive and not subject to US law, so who the h*ll knows what's going on with hedge funds.

Posted by: Bob22003 | September 17, 2008 11:34 PM | Report abuse

Anyone who lacks either the honesty or intelligence to admit that their party isn't always right and the opposation party isn't always wrong has no creditbility in critizing anything anyone does.

Posted by: Marx Bro | September 17, 2008 11:50 PM | Report abuse

Here's another vote that this article is entirely disingenuous. Yes, Fannie and Freddie were subject to some degree of regulation, but it's very easy to imagine a set of regulations (for instance, requiring adequate documentation from prospective homeowners, and not allowing them to take on more debt than they could plausibly service given their documented income) that would have reduced the degree of sh__storm we now find ourselves in. Likewise, hedge funds have been protected by the government's shoring up of AIG for instance, and protected from a quick demise, but I doubt Mr. Mallaby himself would bet money that we won't see a wave of hedge fund failures as other shoes continue to drop.

Lots of Americans are spinning up pretty quickly (though sadly too late) on the various species of calamities wrought by the 'shadow banking system' recently, in the cover provided by flawed or non-existent regulation. The kind of slight-of-hand misdirection Mr. Mallaby is perpetrating here is either baldly politically motivated, self-delusional, or simply out of touch. Whichever, it is unhelpful in helping us understand what really happened and what is likely to happen next.

Posted by: Darth Snowshoe | September 18, 2008 12:37 AM | Report abuse

Well rest easy with the policies of Barrack Obama. Helping him craft his economic policies will be two guys who drove Fannie Mae into the ground, Franklin Raines and James Johnson.

Because of Raines, Fannie Mae had to restate earnings down $3b. Good luck, America!

Posted by: Anonymous | September 18, 2008 1:22 AM | Report abuse

Apparently polls in America show that Americans trust the Democrats more with regard to managing the economy. All the most recent Democrat Presidents have been fiscally conservative in the management of the economy, both Bill Clinton and Jimmy Carter. Whereas the Republicans had Ronald Reagan who the press coined the term “Reaganomics” because he put the government deeply into the red with tax cuts and a huge binge on defence spending. Similarly today, George W Bush has just taken Reaganomics to a more extreme level.

With regard to the question of whether there is enough government regulation I would say definitely not, especially when distressed mortgagees can simply hand over the keys to the bank without them taking any responsibility for the outstanding debt.

Posted by: Martin Doyle | September 18, 2008 5:07 AM | Report abuse

Actually, I've seen a speech gave by super-Palin where she blamed the American economy downfall for "lack of regulation". So, it isn't only Obama complaining for no regulation on the financial market (even though I think that the lack of regulation in the US is really non existent in any market - take the health care industry for example).

And even so, even if you're right (I disagree - if citizens have rules, so should companys - and maybe even more because they have a greater degree of responsability to the public/consumer), the last 8 years of the Republican administration left the world a chaos and proof of that is that I can't really recall any other election in the US capturing so much attention from the rest of the world. It's really like "we're watching you, please be wise".

Anyway, my best wishes for all those in pain, that have lost their job or even their homes with the recent events in the American economy.

Posted by: European | September 18, 2008 7:08 AM | Report abuse

www.barackobamaslipstick.com is up!!!! It is Barack "Maybelline" Obama!!!!

Posted by: Baroprah Obafrey | September 18, 2008 8:42 AM | Report abuse

Mr. Mallaby is wrong on too many points about regulation - but the big one is that the crisis currently facing most of the financial institutions has to do with financial instruments/products that are completely unregulated and very poorly understood, even by the people peddling them. So regulation would have curtailed these problems.

Posted by: D Klein | September 18, 2008 9:39 AM | Report abuse

@kbar

You said that "no other industry" can make money any way it wants. [referring to the financial industry bundling of different instruments].

I would disagree. Essentially ANY industry, or company, can make ANY product it wishes in the attempt to gain profit. Typically, the free market will reward those with good products and punish those with bad products.

For instance, California tried to regulate/mandate that 10% of the cars sold there be zero emission. Well that failed. But now we see the automakers and the consumers wanting these cars and so we will someday probably see 10% or more of the cars sold there be zero emission.

The FAA can mandate all sorts of safety rules, but the fact is that an airline that didn't practice good maintenance and their planes crashed wouldn't be in business very long.

Same thing with the financial industry. They made creative, innovative new products. But many of these products didn't work. People lose out and are upset. If the plane i was on crashed or the car I bought broke, I'd be upset (or dead). But regulation probably would not in the long run have made things better.

When the goal is a good product that the market wants, there is usually success. When the goal is to develop something that is questionable, but passes regulatory hurdles, you just get a failed product that happens to be legal.

I think Mallady's argument is correct.

But, then I'm also a Libertarian and will be voting as such this Nov.

Posted by: Dave, Minneapolis | September 18, 2008 10:55 AM | Report abuse

Everyone is now complaining that these financial instruments are too confusing to understand and they should have been illegal. The assumption is that legality would somehow determine the safety or risk of the instrument. Regulations don't do that.

Unfortunately we are all suffering because almost everyone has been too greedy. If your 401k was invested in these things then you're to blame. If you bought a house with no money down and an ARM, then you're to blame. I'm in this too and am to blame for not researching and understanding the risks. I should not have had any money related to this. But, unfortunately most of us did in one way or another.

It is collectively OUR faults. Not the government for not "protecting" us from poor decisions. We all, at some point in our lives will have to write-off something. And unfortunately, that's happening now and hurting all of us. But I don't think for a minute that the government regulations would have made things better. The Government can't balance it's OWN books, how can anyone think that they know what they're doing when they bailout or shore-up financial institutions.

Until a candidate shows me a balanced budget and takes the leadership role on that, I think they should not be regulating ANYONE else. The government needs to get it's own house in order. When the government (you and I) are done bailing out all of these institutions, who will bail us out? The loss of some of these, albeit big, institutions is nothing compared to what will happen if the Government falters.

Posted by: Steve | September 18, 2008 11:35 AM | Report abuse

Democrats for John McCain and Sarah Palin in 2008

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

Only one ticket for me in November

MCCain/Palin 2008

Posted by: DCMOM | September 18, 2008 12:48 PM | Report abuse

It is democrats fault. Read 9/11/03 NYT article titled "New Agency proposed to oversee Freddie...." Bush, McCain and most republicans have been warning possibility of this kind of a mess since mid 2003. It was Barney Frank, Chris Dodd, Chuck Schumer, and company who fought them and accused them of being against poor people owning their homes. And unfortunately, they won at our expense.

Posted by: koner | September 18, 2008 5:41 PM | Report abuse

Aw crapola, and that's what this author is full of, seems as though his IQ is as low as the sediment in the septic tank, I don't know where he's been snuffling lately but sure has'nt been anywhere near reality.
Let us not forget the the wisen'd visage of Phil Graham calling us all whiners for not thinking that the economy is hunky dorey, hmmm Phil could you please check your greed at the entrance to our country door, the statue of Liberty.
It is he who is responsible for the collapse we are witnessing this day, who else snuck in the legislation that deregulated the banks and other lending ins tuitions that we are dependent upon,Oh yea the great impostor REAGUN RONNIE the star gazing fool who,s economic policies left this country in ruins,

Posted by: nightslider | September 18, 2008 8:44 PM | Report abuse


I have one question: who is responsible for this mess?

We are. Because we buy things we can't afford, confuse want with need, and turn our backs on really educating our children (which is a fundamental piece of the economy).

Oh, and for electing an administration that, in aggregate, has made very poor decisions about how they spend our money. Yes, our money. I think I hear our empire falling, and we , the American people, deserve it for being so stupid.

Posted by: Tina | September 18, 2008 10:16 PM | Report abuse

McCain - President should fire Chairman of SEC.

Uh, John, the President can't fire the Chairman of the SEC. And I thought Sarah Palin was an idiot for not having a clue what the Bush Doctrine was. He is going to reform a government that he doesn't even know how it works?! Now that's a guy whose finger I want on the button. "Am I suppose to push the red or the blue button now?"

McCain is just saying anything that comes to is addled head now. He won't meet with the President of Spain. SPAIN! I wonder if McCain can see Spain from one of his houses. Yes, let's nuke Russia and Spain.

Hey, Sarah, do you know what the Keating 5 means? Do you know who was one of the Keating 5? Do you know they lobbied federal officials on behalf of the Savings & Loans to prevent them from investigating the people who cause the S&L crisis? Are these too hard for you? Okay, an easy one. Is North Dakota north or south of South Dakota? No going back to the notes you took in one of the 6 colleges you had to go to before you could get a degree in journalism. Journalism! My god, you are a mole for the liberal elite.

Posted by: MarvAlan | September 18, 2008 10:56 PM | Report abuse

Hey, Ralphinphnx and you other logicians out there. You do know that Obama became the President of the Harvard Law Review? This was after whatever drugs you said he did. I know this is a tough idea for you, but do you have any idea how smart you have to be to become the President of the Harvard Law Review? You truly have to be one of the best minds of your generation. The depth and breadth of knowledge you need is incredible.

And going to Harvard doesn't make you an elitist, especially when you grow up with just a single mom and need loans and scholarship money. You know, Bush went to Yale, yes, Yale! Now there is an elitist for you. Well at least unlike McCain who was one the lowest members of his class at the Naval Academy (gee, did Daddy the Admiral get him in like George Sr. got George Jr. into Yale? Now there is affirmative action for you), George only graduated in the bottom half of his class.

Oh, I forgot. Stupid is better than smart! Well, we have had 8 years of stupid and all that it has gotten us is a $9 Trillion national debt, 50% more unemployment, the highest gas prices ever, 4,200 dead and thousands wounded in Iraq, the war in Afghanistan lost, the worst economic crisis since the Great Depression. I think its time for smart.

Posted by: MarvAlan | September 18, 2008 11:08 PM | Report abuse

MarvAlan, you're wrong. The President can fire the Chair. Here's how it works. You have 5 Commissioners. They must be confirmed by Congress. One of those is selected by the President to be Chair. That title does not require confirmation from Congress.

Therefore, McCain could fire Cox from the Chairmanship and appoint one of the other Commissioners without Congressional approval. Cox would remain one of the Commissioners, but not the Chair.

Don't listen to Olbermann so often. Also, which of these policies represents the original version of the Bush Doctrine

1) Unilateralism regarding Kyoto and the ABM treaty
2) That we reserved the right to treat terror-sponsoring states as we would terrorists
3) That we reserved the right to preemptively attack threats, as Kennedy declared during the Cuban Missile Crisis
4) That it is our right of self-interest and our mission to promote democracy around the world

Pencil's up. The correct answer is 1. It has evolved since then to include 2-4. I'm shocked you got that wrong.

Posted by: AmosWright | September 21, 2008 2:50 AM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company