“The evidence is overwhelming. This crisis is a direct consequence of years of regulatory failures by government officials” said Senator Christopher Dodd (D-Conn.) Dodd continued, “the dominant players were not Fannie and Freddie, but the Wall Street firms and their other private sector partners; the mortgage brokers and the unregulated lenders”. At the U.S. Senate Committee on Banking, Housing, and Urban Affairs hearing on “The Genesis of the Current Economic Crisis”, the overall consensus of Senators and panel members was that government regulation failures and Wall Street investors were to blame.

Dodd said, “no one can say that the nation’s financial regulators were not aware of the threats posed by reckless sub-prime lending to homeowners, communities, and indeed the entire country. That threat had already been recognized by Congress”. Senator Robert Casey (D-Pa.) said he was troubled by the fact the Treasury Department wants to commit $250 billion to aid banks without “planning to modify a single loan”. Casey suspects that banks are now holding back on modifying loans because they’re waiting to see if they can sell them to the Treasury Department first, which he believes is the worst things that can happen right now.

The Honorable Marc H. Morial, President and CEO of the National Urban League, said that he wanted to, “set the record straight about what I call the Financial Weapon of Mass Deception: the ugly and insidious and concerted effort to blame minority borrowers for the nation’s current economic straits”. Morial blamed a few conservative reporters such as Fox News’ Neil Cavuto and the Washington Post’s Charles Krauthammer for, “telling the world that this crisis in not the result of a failure of regulation, but the fault of minority borrowers who bit off more than they could chew”. Morial said, “while minorities and low-income borrowers received a disproportionate share of sub-prime loans, the vast majority of sub-prime loans went to white and middle and upper income borrowers.”

The campaign of Senator John McCain (R-Ariz.) says they have an answer to the current housing crisis. This answer comes in the form of the “American Homeownership Resurgence Plan”. Doug Holtz-Eakin, McCain-Palin 2008 senior policy adviser, held a teleconference to outline this new plan. Holtz-Eakin said the plan would provide direct help to home owners, allowing them to stay in their homes and avoid foreclosures that would damage he property values in their neighborhoods. The plan would also provide to the housing market lower interest rates, around five percent.

Holtz-Eakin said, “Starting with the home owner and moving up, you accomplish some of the objectives of the financial stabilization plan that we’ve seen come out of congress and proposed by the administration in recent weeks. Senator McCain believes this is exactly the right kind of policy, providing direct help to homeowners, at the same time supporting the financial markets and keeping them from further damaging the availability of credit to mainstream America, one of the real threats to the economy at this time.” Funding for the initiative would come from authorities, including the $300 billion worth of refinance capacity provided by the Federal Housing Administration (FHA) and the $700 billion provided by the Treasury Department to Congress.

Even though the FHA and the Treasury Department already have the authority pursue this plan, the McCain campaign believes stabilizing the housing markets haven’t really been publicly targeted, and were originally only geared to help four-hundred or five-hundred thousand homeowners. The new plan proposes to aid homeowners on a larger-scale than the FHA and Treasury Department have planned, and therefore be a more effective supplement to the housing crisis response.

“We’re focused on the financial system as a whole,” said President Bush in a statement today at the Rose Garden. His statement was in response to a bad weekend on Wall Street which included investment bank Lehman Brothers filing for bankruptcy on Monday and financial firm Merrill Lynch getting bought by Bank of America to save itself from bankruptcy.

He added that the short term adjustments might be painful, but “in the long run, I’m confident our capital markets are flexible and resilient.”

Bush said he appreciated the job of the Treasury Department, the Federal Reserve, and the Securities and Exchange Commission. He added that financial institutions in the United States and abroad would allow for “stability in the financial systems.”

President Bush said that Americans can be assured that his administration is working hard to solve current “adjustments” in the job markets. He also said that this administration would try to improve “the broader economy.”

Treasury Secretary Henry Paulson said that the root of the problem lies in the current housing prices. That, he says, is the reason the administration is adamant about bailing out mortgage lenders Fannie Mae and Freddie Mac.

Paulson added that the American people can be “very confident in the federal banking system.” He echoed the president’s claim that despite some “rough spots along the road,” the US economy is favorable compared to that of any developed country in the world.

Paulson would not speculate as to whether this country’s economic problems were the fault of the Bush administration, but Paulson said he was “playing the hand that was dealt me.”

Treasury Secretary Henry M. Paulson, Jr. states that in this necessary contraction of the housing market and the associated economic crisis, firms must accept their losses and move on to building up capital. (1:00)

 

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Senator Sanders says that repealing the estate tax will exclusively benefit the the top one-third of one percent of the wealthiest people in the U.S.

 

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At the hearing today, Bunning said that China is manipulating WTO rules and worries that the Treasury Department is doing nothing to enforce trade laws enacted by Congress

 

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