debate deconstruction, part I: the crisis

The Crisis

Last night, Sarah Palin criticized the role of predatory lenders in contributing to the root causes of the current financial crisis, but failed to mention John McCain’s years of opposition to legislative efforts to curb predatory lending practices.
-- In 2005, McCain voted against an amendment prohibiting law-breaking high-cost predatory mortgage lenders from collecting funds from homeowners who are forced into bankruptcy court.
-- In 2007, McCain failed to vote on passage of a bill that would overhaul the mortgage lending practices of the Federal Housing Administration (FHA). The bill would reduce the required minimum down payment for an FHA-insured loan and simplify its calculation, requiring a flat 1.5 percent of the appraised value of the home.
-- In 2003, McCain failed to add his name to the Predatory Lending Consumer Protection Act, which was intended to “protect consumers against predatory practices.” The bill, which was endorsed by a host of civil rights and housing advocates, including the U.S. Conference of Mayors, ACORN, and the Consumer Federation of America.
-- Less than four months ago, McCain failed to sign on to the Truth in Lending Act. Among other measures, it was designed to “establish new lending standards to ensure that loans are affordable and fair,” thereby offering protection to consumers taking out home mortgage loans. McCain also refused to co-sponsor this legislation in the 107th Congress as well.

(Contrary to what you may have heard from the talking heads, Fannie Mae and Freddie Mac were NOT perpetrators of the subprime mortgage/credit crisis. Of the $1.5 trillion in toxic subprime mortgages, practically none of them were backed by Fannie or Freddie.)

Additionally, Nobel Prize-winning economist Joseph Stiglitz stated that the deregulation of Wall Street "was core to the problem that we're facing now." The centerpiece of this deregulation, which reduced decades-old regulations separating banking, insurance and brokerage activities, was spearheaded in 1999 by McCain pal and former Texas Senator Phil Gramm. Gramm, McCain's former economic adviser, left the campaign in July (although many political insiders insist he remains close to the campaign) when he asserted that the country "had become a nation of whiners" in a "mental recession."

And if that isn't enough, boys and girls, McCain would like to deregulate the health insurance market just "as [the government] has done over the last decade in banking."

Frightening.

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