President Barack Obama is heading to New York’s Cooper Union to excoriate New York’s life blood (a.k.a Wall Street) and attempt to endear New Yorkers to his party’s new financial regulatory reforms. Some wonder if Mr. Obama and his fellow Democrats are damaging their own cozy relationship with Wall Street. The president made it clear he would not return an almost $1 million campaign donation from Goldman Sachs. CNN reports:
“An OpenSecrets.org analysis found that in the 2008 election cycle, $89,221,944 was given to Democrats; $68,022,536 for Republicans.
As the 2010 midterm election season heats up, Democrats — as of the end of March — have received $21,513,828; $12,867,315 has gone to Republicans.”
Republicans on Wednesday went after Democrats for excluding government sponsored entities Fannie Mae and Freddie Mac from being scrutinized in the Democratic financial regulatory reform bills. Congressman Jeb Hensarling, a Texas Republican. told reporters “In Barney Frank’s bill, he actually exempts them [GSE’s] from the regulatory regime as they continue to hemorrhage tax payer money.”
The Senate bill sets up a $50 billion fund to pay for “orderly liquidation” process for large firms in financial peril, while the House version looks to set up a $200 billion dollar fund.
“Clearly the Democratic bill doesn’t go to the root cause of the problem. And that is federal policy that mandated and cajoled financial institutions to loan money to people to buy homes that they ultimately could not afford. The Democratic bill as the ranking member pointed out is absolutely stone called silent on the government sponsored enterprises,” said Mr. Hensarling
“The Democrats still believe in ‘too big to fail,’ thus they build a bailout fund. If you build it they will come,” said Mr. Hensarling. “Both Democratic bills have bailout funds, and even if they didn’t, they still designate funds that are too big to fail, and if they fail, they get bailed out.”
Republicans also explained the majority of tax payer money goes to GSE’s like Fannie and Freddie.
“So far, the Administration’s answer has been to lift the caps on the bailout, guarantee all the GSE debt, pay their executives multi-million dollar salaries, and hide the costs,” said Mr. Bachus. “And so far, the American people have contributed more than $127 billion to the bailout of the GSEs, own at least 80 percent of Fannie Mae and Freddie Mac and have explicitly guaranteed more than $1.7 trillion of their debt and more than $5 trillion in mortgages.
Mr. Hensarling also noted an office for a “credit czar” that would ban and ration forms of credit. Such an office could further strain the already battered economy starving for credit and jobs.
“Households are finding their own credit opportunities are foreclosed, put together a new expensive bureaucracy somehow substitute the judgment of the federal government and for that the competitive market again will hamper job creation by about 4.3 percent. Its going to make credit less available, more expensive at a time when small businesses definitely need this credit to expand jobs,” Congressman Hensarling said.