How Soon They Forget, If They Ever Knew

I find it interesting that two different groups have somehow managed to forget history, either through selective amnesia or outright ignorance.

The first group is Congress. A number of members who are responsible for the Fannie Mae and Freddie Mac debacles have conveniently forgotten that they are the ones responsible for those failures, and not George W. Bush. But don't try to tell them that.

Mythmaking is in full swing as the Bush administration prepares to leave town. Among the more prominent is the assertion that the housing meltdown resulted from unbridled capitalism under a president opposed to all regulation.

Like most myths, this is entertaining but fictional. In reality, Fannie Mae and Freddie Mac were among the principal culprits of the housing crisis, and Mr. Bush wanted to rein them in before things got out of hand.

Fannie and Freddie are "government-sponsored enterprises" (GSEs), chartered by Congress. As such, they had an implicit promise of taxpayer backing and could borrow money at rates well below competitors.

Because of this, the Bush administration warned in the budget it issued in April 2001 that Fannie and Freddie were too large and overleveraged. Their failure "could cause strong repercussions in financial markets, affecting federally insured entities and economic activity" well beyond housing.

But Congresscritters like Barney Frank (D-MA) and Chris Dodd (D-CT) fought tooth and nail against such oversight, saying both entities were fiscally sound and needed no such regulation or restructuring. They were wrong.

And now that the Bush administration's predictions have come true, it's somehow all President Bush's fault. Both Frank and Dodd denied either one of them had spoken out against any attempt to rein in Fannie Mae and Freddie Mac...that is, until video of them doing just that surfaced. Now they try to act as if their actions and words never happened. Unfortunately for them no one is buying it.

The second group would like to repeat one of the bad mistakes of the past, one that helped usher in the Great Depression. For some reason the steel companies have decided it might be a good idea to force some kind of “Buy American” clause into any stimulus or bailout legislation, forcing American customers to pay higher prices for steel by curtailing imports of less expensive foreign steel.

There's a few problems with that idea: it will cost American jobs and possibly ignite a trade war that will only deepen the economic problems we and the rest of the world is facing. And in case the proponents of such an idea have forgotten, something like that has been tried before. It was called the Smoot-Hawley Tariff Act. It failed miserably by causing international trade to slow to a trickle and drove American unemployment rates through the roof. Yet these morons want to do it again.

Some folks just never learn.