It's easy to blame Bush for everything but in this case - he tried to stop the hammer and his actions kept things from getting worse.  Here are three articles - two from last year where Bush pushed again with everything the executive branch could do and the third - a rather good description of who really is responsible....

Bloomberg
August 10, 2007

President Bush said Fannie Mae and Freddie Mac must complete a "robust reform package" before the government will allow the two largest mortgage finance companies to buy home loans beyond current federal limits.

Congress needs to get the companies "reformed, get them streamlined, get them focused, and then I will consider other options," Bush told a White House news conference yesterday.

August 11, 2007
AP
WASHINGTON - Mortgage finance giants Fannie Mae and Freddie Mac will not be allowed to take on more debt, the government said yesterday, denying requests to relax the companies' investment caps as a way to pump cash into the struggling mortgage market.

The decision by the Office of Federal Housing Enterprise Oversight capped a week of speculation that buoyed the stock prices of the government-sponsored companies. Investors drove Fannie's share price 17 percent above last Friday's close, and pushed up Freddie's stock by 11 percent.

Democratic lawmakers and others made the case for federal regulators to ease the investment limits on Fannie and Freddie in order to provide much-needed liquidity in the market for mortgage-backed securities.

The Bush administration, though, opposed the idea: President Bush insisted that a higher priority should be placed on tightening the oversight of Fannie and Freddie, which only a few years ago suffered multibillion-dollar accounting scandals.

Motley Fool -

The People Responsible for Fannie Mae and Freddie Mac By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly September 10, 2008

It was a wise man who noted that the only corporate structure more insidious than a government-sponsored monopoly is a government-sponsored and investor-owned monopoly. In the end, as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have now so painfully proved, trying to serve the master of public policy while generating returns for investors will lead to disaster.

Fannie and Freddie collapsed because they were part and parcel of the widespread gross financial misconduct that has taken place in the United States over the past decade. It's easy to miss this fact, but the reality is that too many people were making too much money pumping up the housing market. In 2005, the Office of Federal Housing Enterprise Oversight (OFHEO), the erstwhile regulator of the two, attempted to limit their use of off-balance sheet entities to groom earnings. In the end, it didn't, because, as one reform-minded politician admitted, Congress was afraid of undermining the housing boom.

Some are more culpable than others As part of the conservatorship, the Department of the Treasury has demanded that Daniel Mudd and Richard Syron, the CEOs of Fannie and Freddie, respectively, step down. Certainly, at the time of a corporate collapse, those in charge have to bear some responsibility. But Mudd and Syron came into their roles when the great pillaging was well in process.

At some point not too long from now, the nation's attention is going to turn from the immediate players to those who benefitted the most, shouted down the skeptics, and/or stood by as Fannie and Freddie deviated from their core business in the name of growth and/or mission. These people are keeping a low profile right now, until the taxpaying public starts paying attention to something else. As taxpayers, we don't particularly enjoy our role in this relationship, and we're hopeful over the longer term that the following folks cease to enjoy theirs.

Franklin Raines Fannie Mae was always a political beast, but it reached its elbow-swinging heights during the time when former Clinton administration budget director Franklin Raines sat in the CEO chair. Under Raines' leadership, Fannie overstated earnings by a stunning $10.6 billion, all the while paying Raines and his senior management team massive bonuses.

It was under Raines' management that Fannie morphed from being a company in a sleepy business -- issuing debt to buy mortgages from lenders -- into a far more risky and exciting one: buying up mortgages and holding them, thus capturing the spread between its borrowing costs (which were lower than anyone's other than the federal government's) and the interest rate received. It was a great business, except that it had nothing to do with Fannie's charter. According to a May 2006 report from OFHEO, Raines became obsessed with keeping earnings per share as high as possible and motivated management to achieve that goal by setting up a bonus system that rewarded increasing earnings per share (EPS).

The thing is: Any company can hit an EPS number if it doesn't worry about little things like accounting rules, debt levels, and risk factors. All told, Raines pulled in some $90 million between 1998 and 2003, the majority from bonuses. And when OFHEO began to ask uncomfortable questions, Raines actively lobbied Congress to cut its funding. In April, Raines agreed to disburse $24 million for his role in the accounting "errors."

Timothy Howard Former Fannie Mae CFO Timothy Howard is another major player who is probably cowering in a corner somewhere. For all of the expletives and derogatory names thrown at former Enron CFO Andrew Fastow, he at least stayed around to take his punishment. Inmate No. 14343-179 pleaded guilty to fraud and is serving a six-year prison term. Howard, on the other hand, saw the writing on the wall -- largely because he was the author -- and got out of Dodge.

As Fannie's CFO from 1990 to 2005, Howard signed off on the financials that overstated the company's earnings by $10.6 billion from 1998 to 2004. His reward? A cool $14 million in salary and $16.8 million in bonuses during the period -- bonuses based on the earnings plan that Raines set up.

While Howard was not the only person at Fannie guilty of constructing fraudulent financial statements quarter after quarter, as CFO he is most responsible for the integrity of said statements. Whether he left early enough to avoid culpability remains to be seen. However, we've heard through the low-security-prison grapevine that Fastow is lonely these days and wouldn't mind talking shop with a fellow former CFO.

Barney Frank The House Financial Services Committee chairman and Democratic congressman from Massachusetts has long been a proponent of both Fannie and Freddie, assuring the public that their mission to encourage home ownership outweighed the distortive risks they brought to the market, and that the federal government was not, in fact, on the hook for their liabilities. In fact, it seems clear now that Frank had no idea of just how poor a grasp Fannie and Freddie had on their lines of business. As recently as Aug. 25 he told Money magazine, "Fannie and Freddie are better off than the market thinks. ... Part of the problem is rumormongering by short-sellers."

What's more, though Frank will blame past political opponents for failing to further regulate the mortgage market by banning products such as subprime loans, the fact of the matter is that the very presence of Fannie and Freddie incentivized brokers to overstate the creditworthiness of borrowers and then pass on that risk to the federal government, all while being cheered for helping more people "realize the American Dream." While we can all agree (I hope) that mortgage markets only function when -- as Frank told Money, banks "do not lend money to people who can't pay it back" -- Frank's ideology in this case blinded him for decades to the realities of the marketplace and the operations at these companies, leading him to stonewall realistic reform efforts that might have helped us avoid the current calamity.

Angelo Mozilo There's good reason for Angelo Mozilo to hide under a desk these days. Few, if any, extracted more personal profit from the credit bubble than the CEO and founder of Countrywide Financial. Mozilo's talking points always borrowed heavily from the propaganda of our government-sponsored enterprises (GSEs). Countrywide liked to pretend that it was performing some kind of public service -- "breaking down barriers" -- by making homes more "affordable" to the average (or subaverage) wage earner. Unfortunately, as speculation drove home prices to ridiculous levels across the U.S., "affordability" came to be the code word for gimmicky, high-interest subprime loans lavished on the riskiest of borrowers in order to get them into a mortgage that would soon be bundled and shipped off to the suckers on Wall Street.

Unfortunately for borrowers and investors in Countrywide's mortgage paper, the American Dream of home ownership quickly morphed into a nightmare. Default rates surged, followed by the inevitable foreclosures, and mortgage paper backed by Countrywide loans became as valuable as post-bubble, dot-com stock options. Countrywide was only spared the ignominy of bankruptcy when its longtime sugar daddy, Bank of America (NYSE: BAC), stepped in to take it out.

As captain of this sinking ship, CEO and founder Mozilo was, for a time, very vocal in defending his company's legacy. But like so many others in America's great housing bubble, talk was one thing, and actions were another. As the housing bubble began peaking in 2003 and 2004, through the period when Countrywide's risky lending fell apart, Mozilo engaged in one of history's greatest stock dumps, selling more than $480 million worth of shares, according to the tally of insider filings on secform4.com. This graph tells the tale.

Alan Greenspan If not the boldest of the group, then at least the most public, Greenspan, the man many are now blaming for the housing bubble (there were a brave few that piped up years ago), has refused to go quietly into his well-padded retirement. The man charged with providing the country with a financial voice of reason fell far short, so much so that it might be comical if it weren't so tragic.

Greenspan's denial of the possibility of a housing bubble has been widely derided in the past year, but a single statement could be excused as human error. However, a quick scan shows that this wasn't a single event. He also promoted the adoption and expansion of adjustable-rate mortgage (ARM) products in early 2004, when short-term rates were at or near historic lows. That same year he claimed, "securitization by Fannie and Freddie allows mortgage originators to separate themselves from almost all aspects of risk associated with mortgage lending." And separate themselves they did, ceasing to perform any kind of due diligence as to the ability of borrowers to pay for the homes they were buying.

Now retired from his role as the nation's monetary conscience, Greenspan continues to espouse his, er, theories on the financial crisis through editorials in which he denies any culpability for the events of the past three years. He is also applying his experience and insight as an advisor for Paulson & Company, a hedge fund which cashed in on billions of dollars by calling the collapse of the subprime mortgage market that Greenspan helped create.

An ignominious list To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

 

 

To reiterate: Bush has demonstrated the ability to provide leadership when he believes in a course of action. Clearly, he used none of these skills to this particularly dangerous circumstance as it developed. Pontificating from the sidelines is not leadership in my view and W didn't dig in and make this a priority.

 

What really happened here? Okay, I will take a W.A.G. Bush knew he had a limited ability to leverage his electoral equity. His priority was Iraq. In return for looking the other way on Iraq he sold out: health care (socializing the Pharmaceutical industry), enviormental issues (his turn around on the global warming farce), education (the lovely partnership with Ted Kennedy to feed the education industrial complex for another 100 years), and now clearly the socializing of the great staple of private property ownership!

 

Leadership.

 

Check Six

 

Rocky

Basically, Bush pushed for reforms from Congress and could not get them enacted.  This is what happens when you don't have a majority in the legislature. 

 

The problem is different with the war powers act allowing Bush to pursue terrorists and knock Saddam out.  That stuff is easy in comparison to trying to get regulations and laws passed by Shumer, Dodd, Obama and Barney Frank.  One can mobilize the military with a single call - action happens and bad guys get the chopper. 

 

Inside the Beltwar - the war is very different.  As we are watching now - the libs in Congress are trying to tag as much as they can onto the bail out - so it can be distributed to their favorite causes (e.g. Acorn).

The disaster that was Fannie and Freddie was already under way and nothing was going to be allowed to stop the train to social reform through housing.  If Congress does not allow your legislation to reform pass - then the only option is to veto, jawbone, stall and prevent as much as possible according to the powers and laws given to the Executive branch.  The samples of what Bush did do that I provided were outside of Congress - directing the oversight agency to not allow what the Dems wanted - more waste, fraud and abuse.

 

Heaven knows that Bush deserves a beating over lots of things but this is simply not one of them.  The MSM is pushing this fiction of its all Bush's fault and it was greedy Republican bankers - when you look at it you find exactly the opposite.  Congress blocking, taking money from lobbyists for Fannie, social reform laws enacted to prevent bankers from denying loans to people who could not pay them back, Raines using fake accounting to inflate the assets so he would get overpaid by millions etc....  All I see here are dem, dem, dem.

 

Our respectful disagreement here is in the degrees of separation between the Bush Administration and today's events. You seem to contend that the Bush Administration simply could have done nothing else here. You assert that they did everything humanly possible, exhausted all measures at their disposal, and nothing else could reasonably have been expected. I strongly disagree.  (in this I do not wish to place words in your mouth here so please let me know the extent to which you are willing to concede Bush & Co. could have reasonably been expected to improve upon their performance, in hindsight if you wish.)

First, this isn't a small thing. It affects the bedrock of our economy. No item represents a greater danger to US. No otherpriority can be placed ahead of this. Given the gravity of the situation, who wishes to argue that the response up until today has been adequate? I have carefully examined the responses by this administration and I will argue with anyone who says the Bush administration is demonstrating an understanding of the unfolding events and where they want to lead US.Given that reality, I am lead to an inescapable conclusion that the Bush administration was surprised by these events. If they were surprised, they were clueless and your assertion that they were strongly leading the charge for reform starts to look pretty thin. I never said they didn't respond to some of the symptoms I say here that their response was woefully, evenpitifully, inadequate.

 

Tragedies like this don't just happen. A series of events occurred beginning before Bush was even in office. These events continued to pile upon each other until the train is almost running off of the track. Today, I believe firmly that the Bush Administration did not properly prioritize their leadership and a preventable disaster is on the cusp of becoming a reality. To make this gross error worse they are about to committ the US taxpayer to an even worse dereliction of leadership with this reckless $700 billion bail-out (who would argue that the bail-out will cost US less than about 1.5-2 Trillion? Any takers on that bet? huh?).

 

With the greatest respect for you Sofwar, I'd like to be convinced my conclusions are mistaken, but I think I'm right on this one.

 

Check Six

 

Rocky

 

The "Buck Stops Here" is the correct attitude to take.  There is no "that is above my pay grade" in the oval office.

 

Rocky , I actually agree with you. The current bailout proposal is very scary in its present form. Probably the biggest shift of power to executive branch since the PATRIOT act.

 

....and it's ALL  George W Bush's fault!

The term "Bailout" is somewhat misleading. The plan is not for the US Government to pour money into failing companies to sustain them but buy currently undervalued assets, at perhaps 20 to 40 cents to the dollar, to free up market capital and getting the mortgaged houses as collateral. Over time and the US unlike businesses can have a long term view, can hold the mortgage backed securities to maturity or sell at anytime in the future for a profit if advantageous but in the meantime collect the interest and principal that accrues. It is more likely to produce a profit than a loss but if a loss certainly not $700,000,000,000 because of the deep discounts the securities are bought at.

I kind of share the same view, if the term "investment" were used instead of "bailout",  would the public still share the same resentment?  There are private companies that make a living off of buying bad debts  for  a fraction of there original amounts and recover  enough to turn a profit, and thats with no collateral  at all. Here we are talking  about the best form of collateral, REALestate.  Sure prices are down now but will that be the case in 10 years? 

I think if done properly this could actually work out well and even bring back a profit. Like so many failing companies that get bought out by larger corps. to be turned around, it takes a player with major finances and clear motivation. I can see how such a situation COULD be possible, however faint that possibility may be.

I really liked McCain's idea of a panel headed by NYC mayor Bloomberg himself to oversee the whole affair.

The more I read and hear of this bailout, the more it should be canned outright.

 

From the horses mouth.

 

"Its not based on any particular datapoint," a treasury spokeswoman told Forbes.com Tuesday.  "We just wanted to choose a really large number."

 

These people really dont understand its real money do they?  Our congresscritters are showing more backbone than they have been as of late.  There is significant bipartisan resistance to this thing and they are, shockingly, actually asking good questions.  Maybe there is hope.

 

And I would like to apologize to whoever I pissed off two days ago when I first read of the bailout plan.  I completely flipped out.  Rocky managed to politely and effectively state in this thread what I wanted to say but was too angry to do so. 

Sen. Dodd is the #1 taker of Fannie Mae money - followed by Barack Obama.  Dodd, Obama, Frank and other Dems have opposed ANY reforms - including McCain's 1995 bill which would have prevented this whole mess.  I have repeatedly posted the gruesome details published by such leading right wing rag sheets such as the Washington Post and the Chicago Sun.

As usual Xylene - you would pin a solar flare as George Bush's fault.

1)  That the Gramm-Leach-Bliley act WAS passed in 1999 is true.  There were two votes however.  The first vote cleared the Senate along party lines.  It went to the house where provisions were made within it and THEN it passed the senate 90-8-1-1.  Even if Clinton had wanted to veto it there was no way he could.  Of course he is on the record of saying he was for it so that wouldnt have happened anyway.  The point I am making was that this act, which enabled this crisis, was GOP legislation originally.  Of course, the Democrats got their stuff in and voted for it anyway, so the origination matters little

MEANING: Both parties are at fault

2)  The GOP had control of Congress and the Executive for Eight of the last ten years.  Six of those they controlled everything but the bloody judicial branch.  Saying they couldnt have done anything then is disengenuous.  The legislation never should have been shown and the problem really took off when we should have had a recession starting in 2002 and used the housing market as a crutch.  Hello Bubble.

MEANING: No real effort was made by EITHER party to fix this issue.  It was either ignored, not seen, or they simply didnt care enough.  Six years is plenty of time to ram something through if you control everything, eight is still ample time if you control one of the two areas necessary to push something through.

 

3) Fannie and Freddy are the symptom of the problem, not the thing that caused it.  The same thing doomed Goldman Sachs, AIG, and the other 4 major Investment Banks in the U.S. as well as tanking WaMu and the other banks that failed are taking hits.  What is the relevance of repeatedly posting stats for Fannie and Freddy Donations?  Why not include donations from the other investment firms that did the exact same thing. 

MEANING:  The Republican Party and Bush ARE responsible for this, just like the Democrats are.  There is ample blame to be spread around and continually posting stats which could be construed as bribes for the Democrats is disenguous since the origination of those stats is not known (private citizens, lobbyists, the company, etc.)  It is made even more so by not posting stats on who received money from the 6 investment banks that benefited hugely until their debts were called. 

The term "Bailout" is somewhat misleading. The plan is not for the US Government to pour money into failing companies to sustain them but buy currently undervalued assets, at perhaps 20 to 40 cents to the dollar, to free up market capital and getting the mortgaged houses as collateral. Over time and the US unlike businesses can have a long term view, can hold the mortgage backed securities to maturity or sell at anytime in the future for a profit if advantageous but in the meantime collect the interest and principal that accrues. It is more likely to produce a profit than a loss but if a loss certainly not $700,000,000,000 because of the deep discounts the securities are bought at.

I do understand that some sources within the media and the financial industry have expressed your view of the "bailout".Secretary Paulson himself has sort of danced around your explaination of how this process might work. My question to you is to look at the legislation recreated above in total (sourced from the NYT). Where in that three page legislative proposal is your explanation? Your view is one possible interpretation of this legislation. There could just as easily be alternative interpretations where the entire home mortgage market is nationalized within this. That represents a $12 Trillion absorption of private assetts into the USG. Take very careful note that the Bush Administration may have the very best of intentions with this piece of legislation but Barry Hussein will most certainly use it to advance an agenda that is very different from what this is supposed to be today. Be scared.

 

Regarding Bush. Softwar is at least partly correct in that this has shaken into a very Democrat Party dominated scandal. Bush's failure is in not resolving it in the first 7 years of his Presidency.

 

Check Six

 

Rocky