I’m sitting here watching news and reading all sorts of news stories about how our wonderful Congress, led by the Democrats with a combined 18% approval rating, is trying to find the cause of the financial debacle. You know the one that has been responsible for 36% of the DOW Jones values to have vanished since the peak at 14,000 earlier this year.
My premise as written earlier in this blog, is that the improper application of the Community Reinvestment Act, Freddie Mac and Fannie Mae who developed the financial instrument known as Mortgage Backed Securities (MBS) and sold them on Wall Street are the true root cause. Within that set of events Representative Barney Frank and Senator Chris Dodd and their committees focused on issuing bad loans.
So, what is the congress focusing on? They are going after Moody’s and Standard & Poor’s (see Bloomberg Article) who issue credit ratings as the culprits for the fall. How does that make sense? If you have a Government Sponsored Entity like Freddie Mac and Fannie Mae with the backing of the US of A, how can you question the risk of such MBS. Do you see what I mean? The US Government stated that the power and credit of the Treasury backed the MBS’s then why should S&P or Moody’s give it a low rating (high risk warning)?
So, a little slight of hand, a little shell game and the real culprits get to avoid the real scrutiny and Government gets to say we’ve done our investigation. Take a look at the article from the Originator Times (Daily News and Information of the Mortgage Loan Originator on Thursday, October 23, 2008 entitled Who’s Really to Blame for the Banking Meltdown?) and see who the people who know the industry blame for the problem. Do you see anyone that says that it was caused by the credit rating companies? No, because that’s not where the root cause lies, so why is Congress investigating them? The shell game of politics is the true reason.
We, as voters who look at the issues and make up our own mind, must do the research and hold our government accountable.
Write to your congressman. Write to your Senator. Write to your Governor. Write to your State representatives and senators and get them to focus on the true cause of this financial debacle, and don’t let them play the blame shell game. If we don’t find the root cause, then all the fixes we put in place are going ineffective because they attack the wrong problem.
Questions to ask:
1) What is Chris Dodd (D-CT) doing with Countrywide Mortage and how did it affect his oversight of Freddie Mac and Fannie Mae
2) How is Franklin Raines involved in the falsification of financial reports to congress and to the investors?
3) How is it that a GSE (Government Sponsored Enterprise) is allowed to make contributions to their watchdogs?
4) What is Representative’s Barny Frank’s responsibility for the financial crisis that has literally rocked the world’s financial system?
5) What is the connection between the root cause of the problem, and the credit rating company’s like Moody’s? Why are they being audited?