What if early calls for reform on Fannie Mae and Freddie Mac were actually heeded

We all know that the economy is in crisis, and part of that crisis is the result of the failure of Fannie Mae and Freddie Mac. My question is this what if when President Bush, Congressional Republicans, John McCain and others started raising concerns about the two GSEs in 2004 something was done about it?
How would this have effected the midterm elections in 2006 and how would it have affected the economy and our current election?
 
You mean if Congress had passed (or even debated) the Federal Housing Enterprise Regulatory Reform Act of 2005?
 
There were several attempts, actually, and they all came to the same bad end. Tightening up the regulations ends up tightening lending at the margins, ie, poorer or riskier people. The bills went nowhere because the line of attack prepared against the bill was that the people for the changes were evil bastards preventing honest, hard working poor people from getting homes and pursuing the American Dream. Supporters of reform resigned themselves to defeat because:

(1) That line of argument is more convincing than a long-winded tale of leverage ratios, bond markets, and chaos on Wall Street at some undetermined point years in the future.

(2) If they showed courage and fixed it anyways, they'd instantly create a winning issue for their opponents, who would then proceed to undo the new regulations and pat themselves on the back about how nice they were to the poor.

So, no, it's not realistic to have regulations pass. This is one of those cases where the general will among the electorate to fix the problem will only occur in reaction to a crisis.

For a better example, imagine for a minute that the Republicans had rammed through a spiffy new airport security bill in early 2001, and the terrorists ditched their plans for 9/11 because of greater security. Would the Republicans get credit for preventing the death of thousands, or blame for 'unnecessary inconveniences to travelers'?
 
For a better example, imagine for a minute that the Republicans had rammed through a spiffy new airport security bill in early 2001, and the terrorists ditched their plans for 9/11 because of greater security. Would the Republicans get credit for preventing the death of thousands, or blame for 'unnecessary inconveniences to travelers'?
While I think you made great points in general... to nitpick your chosen example: is the new airport security bill forbidding people from bringing a bottle of water through security or changing the policy from "cooperate with hijackers" to "use the crash axe"? :)
 
Either works in terms of comparative public reaction, just in different ways. Checking the water bottles will feel like insane paranoia - it STILL feels like insane paranoia, even though there was a plot to smuggle explosives that way - while telling the pilots to hack apart hijackers with an axe seems like irrationally courting danger. After all, they're just going to land the plane safely and make demands.

Right? The hijackers want to survive just as much as the passengers... until 9/11. Then the rules changed.
 
Didn't the Republicans control the house in 2004?

They controlled the entire Congress until January 2007. There was an attempt to pass reform. However, after the Republicans had some problems with the bill in committee getting Democrats to support it, the Republicans decided not to bring the bill to the floor of the house for a vote. If they wanted to, they could have forced the bill through with the votes they had. They decided not to. So, while the Republicans would like to blame the Democrats for spoiling things, in the end, the Republicans decided to take no action.

Torqumada
 
They controlled the entire Congress until January 2007. There was an attempt to pass reform. However, after the Republicans had some problems with the bill in committee getting Democrats to support it, the Republicans decided not to bring the bill to the floor of the house for a vote. If they wanted to, they could have forced the bill through with the votes they had. They decided not to. So, while the Republicans would like to blame the Democrats for spoiling things, in the end, the Republicans decided to take no action.

See my post above for their reasoning in not taking the bills to the floor. They weren't going to get thrown out of office and then have their fix tossed by the Democrats.
 
Right? The hijackers want to survive just as much as the passengers... until 9/11. Then the rules changed.
True -- although the potential for 9/11 type attacks was seen long before hand. A Tom Clancy book comes to mind.

If they had pushed through a bill (for either the economy OR the the airline thing) and it had gotten overturned... well. That would spell the end for the side that overturned it. The current fiasco might well be blamed on the Democrats rather than the Republicans, and as for 9/11, it might have given them enough of a boost that even the massive screwups and betrays wouldn't have dislodged the Republican hold on the Congress and Senate.

That'd be an interesting timeline, in fact.
 
See my post above for their reasoning in not taking the bills to the floor. They weren't going to get thrown out of office and then have their fix tossed by the Democrats.

Whatever the reasoning, they still decided not to take action. That makes them just as responsible and a bit selfish in this case. If you truly believe that something is going to result in a bad action and you fail to do something about it, it's called negilgence. For anyone else in the country, you can be sued for negligence, unless you're a member of Congress, which makes you protected by the law for your stupid decisions. No matter how many times they spin it, both parties are responsible for this mess.

Torqumada
 
Whatever the reasoning, they still decided not to take action. That makes them just as responsible and a bit selfish in this case. If you truly believe that something is going to result in a bad action and you fail to do something about it, it's called negilgence. For anyone else in the country, you can be sued for negligence, unless you're a member of Congress, which makes you protected by the law for your stupid decisions. No matter how many times they spin it, both parties are responsible for this mess.

Torqumada


Sadly it seems we’ve gone from where the “third rail” of American politics was trying to modify or reform Social Security to pretty much trying to change anything that hasn’t totally spiraled into an immediate crisis.


True -- although the potential for 9/11 type attacks was seen long before hand. A Tom Clancy book comes to mind.

If they had pushed through a bill (for either the economy OR the the airline thing) and it had gotten overturned... well. That would spell the end for the side that overturned it. The current fiasco might well be blamed on the Democrats rather than the Republicans, and as for 9/11, it might have given them enough of a boost that even the massive screwups and betrays wouldn't have dislodged the Republican hold on the Congress and Senate.

That'd be an interesting timeline, in fact.


Who knows it worked for the British Navy when they made an example out of John Byng so it might work here. You’d probably need something like this to change the current culture in Washington.
 
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