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GOP Line on Financial Crisis: Blame the GSE’s

The House oversight committee is holding a hearing now on the collapse of Lehman Bros. and the financial crisis generally. This hearing-- and four others-- will

Jul 31, 2020
The House oversight committee is holding a hearing now on the collapse of Lehman Bros. and the financial crisis generally. This hearing– and four others– will likely provide hints of how Congress, post-bailout bill, will try to revamp how the government polices Wall Street.
The committee has produced internal Lehman Bros. documentsthat show Lehman CEO Richard Fuld resisted claims to limit his compensation and rejected any responsibility for the investment bank’s bankruptcy. Fuld will testify in an hour, and it could get ugly. Rep. Elijah Cumming (D-Md.) wondered how “he sleeps at night”.
But for now, House Republicans are taking turns blasting Rep. Henry Waxman, (D-Calif.) the committee chairman, for not scheduling a hearing on Fannie Mae and Freddie Mac. The committee Republicans contend that Democrats had blind faith in Fannie’s and Freddie’s plan to help low- and middle-income homeowners and ignored the government sponsored enterprises’ risky purchases of subprime mortgages.
Rep. Tom Davis (R-Va.) and Rep. John Mica (R-Fl.) keep circling back to how the Clinton administration built up Fannie and Freddie. The shady accounting practices of former Fannie CEO Franklin Raines, a Clinton appointee, are also fair game.
The Republican seem off the mark. They keep hammering Raines, who resigned in 2004. But the riskiest purchases by Fannie and Freddie happened in 2005-2007.
Democratic and Republican committee members might soon unite in bashing Wall Street’s current symbol of greed, Fuld. But they look far apart in agreeing on how the government helped cause the crisis.
Camilo Wood

Camilo Wood

Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing. Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers. Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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