Presidential Inheritance

President Barack Obama is fond of reminding the public that he “inherited” the current financial crisis in this country. He’d like everyone to believe that he inherited it from President George W. Bush, but that simply isn’t true. The current financial crisis did have its start during the Bush administration. But it was the Democrat party in Congress that exacerbated the problem.

In April, 2001, President Bush warned Congress that Fannie Mae and Freddie Mac policies could cause substantial repercussions in financial markets.

Again, in 2003, the White House warned Congress that Fannie and Freddie policies were a potential threat to the economy which could spread far beyond the housing market.

In the fall of 2003, the Bush administration pressed Congress to create an agency to oversee the policies of Fannie and Freddie. Treasury Secretary John Snow testified before Congress that a strong regulatory agency was needed to maintain better control over the GSE (namely Freddie and Fannie).

Democrat Congressman Barney Frank denied that Fannie Mae and Freddie Mac were in a crisis and scoffed at the notion that greater controls were needed. Conversely, he said that the GSE should work harder to qualify low income families as homeowners.

In February, 2005, Alan Greenspan, Chairman of the Federal Reserve, testified before Congress that Fannie and Freddie were “placing the financial system of the future at a substantial risk”. In April of that same year, Democrat Congressman Charles Schumer dismissed Greenspan’s comments, claiming that the GSE was doing a “very, very good job.”

In May of 2006, Senator John McCain co-sponsored legislation in an attempt to establish stronger controls over the GSE. The bill made it through the Senate banking committee, but was pigeon holed for lack of bi-partisan support on the floor of the Senate. During that period, the then "Senator" Obama showed no interest in the proposed legislation or the need for better control over the GSE.

Barack Obama did inherit the financial crisis, but he didn’t inherit it from George Bush. He inherited it from members of his own party in Congress who ignored the early warning signs. So much for the value of “liberal thinking” (an oxymoron) and partisan politics.