The Thought Refuse

A Virtual Repository for the Mind

Reexamining The Presidential Debate Lead Question #1: The Bail Out Package

with 7 comments

Following my initial examination of the Presidential Debate lead question #1 on the proposed bail out package, I came across an eye popping video on the ChenZhen blog comments section.  Considering that a large amount of talk was devoted to deregulation during the debate, I researched the subject prior to making my analysis.  I came across the Community Reinvestment Act.  I made note of the support Democrats put behind the CRA.  However, I did not push my research far enough.

In 2003, President Bush proposed an overhaul of the regulatory standards governed by the CRA that would increase oversite of Freddie Mac and Fannie Mae.  Democrats opposed the bill arguing the two institutions “are not facing any kind of financial crisis.”  While a change in regulation practices proposed in 2003 would not have been a guarantee to reverse the impending housing crash(much less effect it in any appreciable way), it raises serious credibility issues and that the finger pointing should be making it’s rounds – Obama included.

A sizable portion of knowing where to point the finger is in understanding to what degree the CRA fueled the explosion of subprime loans and a coinciding explosion in home values.  I will research that topic a bit more when time permits, and depending may have to severely adjust my analysis on the debate bail out package.  If the CRA shares considerable blame then Obama’s claim that the market crash is a result of ill conceived Republican economic policies turns into a point of hypocrisy.  Without having dug deeper, I want to pass this off as more political finger pointing and lean on my previous research that the crisis was fundamentally caused by the internal operating practices of independent lending institutions.  But I’ll save judgement until after I’ve looked farther into the oppositions claims.

Below is the video that brought additional information to light.  It is, no doubt, pro-McCain.  Despite it’s advertisement tilt, it contains information worth exploring, specifically in answering the question I posed above.  I urge you to watch it, digest it, and do your own research to test the accuracy of the data it presents.


Written by huxbux

September 28, 2008 at 1:51 am

7 Responses

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  1. Do you do blogroll exchanging? If you want to exchange links let me know.

    Email me back if you’re interested.

    Jamie Holts

    September 28, 2008 at 2:57 am

  2. Eye-opening post. Thanks. I posted a “heads-up” post, of sorts, on my blog, and referenced this one. Hope you don’t mind.


    September 28, 2008 at 2:07 pm

  3. @ Jamie

    I’ll send you an email soon.


    While I had previously had a light understanding of the regulatory practices effecting lending institutions, I’ve no doubt been looking deeper recently.

    There’s plenty of stuff out there concerning the CRA and other regulation practices. The further research I do, I’m finding it’s more complex then just the “failed economic policies” of the Bush adminstration.

    Thanks for the comment and the link.


    September 28, 2008 at 2:34 pm

  4. Hux: Yeah, that’s just it. It’s not the failed policies of any one administration. It’s capitalism, pure and simple. There was a buck to be made, and many a company exploited federal law and made a killing on loans that were bad from the word go. At least that’s what it sounds like to me, a guy who really doesn’t know thing one about Wall Street.

    That said, I want to be clear that I don’t think market fluctuations are due to outright greed. But let’s face it, we’re nation hungry for power, sex, and money, and when there’s money to me had, there are plenty in positions of power that are willing to take it.


    September 28, 2008 at 6:37 pm

  5. @Anthony

    Sure greed is a component. It enters into the equation somewhere along the line. I do place the majority of the blame on the financial sector and their operational methods, specifically their risk management models. But there’s an inherent, unavoidable flaw in trying to manage risk which I attempted to detail in a previous blog post.


    September 28, 2008 at 7:31 pm

  6. Huxbux, this post and your original analysis of the debate are both very interesting. Always refreshing to read an independent perspective on stuff like this. If you’re interested, my own analysis views the debate through a realpolitik worldview, examining whether the overall campaigns did what they needed to do:


    Tom Prete

    September 28, 2008 at 9:06 pm

  7. @ Tom

    Thanks for taking the time to read my analysis and the comment.

    And I have to admit I’m a registered Democrat. I just lean more towards critical thinking over dogmatic agreement when it comes to politics. But don’t tell anyone. :)


    September 28, 2008 at 9:32 pm

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