Tuesday, September 16, 2008
Where Was Sen. Dodd?
There is a lot of fault associated with mortgage banking; however, it appears to be overwhelmingly heavy on certain Senators...
Al Hubbard and Noam Neusner blame Congress, and name names in their Washington Post article:
"The president's budget proposals reflected the nature of the challenge. Note the following passage from the 2005 budget: Fannie, Freddie and other GSEs 'are highly leveraged, holding much less capital in relation to their assets than similarly sized financial institutions. . . . A misjudgment or unexpected economic event could quickly deplete this capital, potentially making it difficult for a GSE to meet its debt obligations. Given the very large size of each enterprise, even a small mistake by a GSE could have consequences throughout the economy.'
That passage was published in February 2004. Dodd can find it on Page 82 of the budget's Analytical Perspectives.
The administration not only identified the problem, it also recommended a solution. In June 2004, then-Deputy Treasury Secretary Samuel Bodman said: 'We do not have a world-class system of supervision of the housing government-sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision.'"
