Kyle Smith writes: “Why didn’t he denounce the way Fannie Mae and Freddie Mac had not only “pushed bad loans” but had done so by gambling our money? Maybe because he was too busy being the second-largest Senate recipient of Fan and Fred donations. Or maybe he was so busy running for president in 2007-2008 he just didn’t notice what was going on, as he candidly admitted Wednesday night: “Obviously I had no idea.””
Chalk up another lame reason for the reactionary right to hate the president: he can’t tell the future.
It’s too bad we didn’t elect John McCain; he clearly could have consulted his crystal ball and averted us from this crisis.
But in all seriousness, your argument holds little weight because you misunderstand the overwhelming cause of the current economic crisis.
The crisis, as understood by most economists, was caused by the packaging and selling of large amounts of toxic mortgages as CDOs, which were essentially worthless but were allowed to be bought and sold at high prices anyway because regulators were not doing their jobs in analyzing the actual value of the CDOs.
Fannie and Freddie had far less impact on this crisis than you incorrectly suggest, because as data shows, less than 10% of the toxic mortgages were subject to regulation by Freddie and Fannie; i.e., the vast majority of the toxic mortgages that were packaged and sold as CDOs were not associated with Freddie Mac or Fannie Mae.
Therefore, in order for the President to have foreseen the magnitude of this crisis, not only would he have had to be working at AIG, he would specifically have had to be working close enough with hedge fund managers such as Joe Cassano to understand what is was that they were doing, of which many of the top AIG executives were unaware. Obviously, if in 2007 and 2008 executives of AIG were unaware of the actions that their hedge fund managers were taking to destabilize our economy, there is absolutely no reason to believe that a presidential candidate of any party would.
Obviously.
