The GOP's 1st Commandment: Blame The Victim

As I outlined in my previous post, "Mission Accomplished", the politicization of the U.S. Justice Department allowed Bush and his cronies to assume extra-constitutional powers in order to rape and steal with impunity. As James Galbraith explains in his most recent book, The Predator State, during the last decade, the neoconservatives in Washington and on Wall Street have conspired to steal elections and occupy the most powerful political and financial institutions in the land so that they might abuse that power. And while it is true that Cheney and Bush could not have achieved so much without the complicity of the courts and Congress, it cannot be overstated that a crucial role continues to be played by the corporate right-wing media.

In psychology the term "projection" is described as belonging to one who perceives in others the motive he denies having himself. Thus the cheat is sure that everyone else is dishonest. It is a characteristic increasingly on display now that the neocons have had their greed and lies exposed.

Take the latest talking points being spouted on Fox News and by CNN commentators like Glenn Beck and Lou Dobbs. First they blamed the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods. Now that the public is onto their game the right-wing's strident mouthpieces have turned to braying that everything would have been rosy were it not for "those white liberals" and their "need to appease" those unworthy blacks and latinos.

Blaming the CRA has been peddled by Charles Krauthammer, Fox News, the Wall Street Journal, Washington Times, and the National Review. But as the global markets continue to tumble and the truthtellers finally get a hearing, it is clear that their dog won't hunt.

Take the recent conservative claim that it was the government's push to make housing more affordable to lower-class Americans that precipitated the current crisis. Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked it from early last March:

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans. The CRA has increased the volume of responsible lending to low- and moderate-income households."

In fact, Federal Reserve Board data show that:

-More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

-Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

-Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

When their racist smear did not catch on the right-wing pundits shifted to claim it was those government sponsored entities like Fannie Mae and Freddie Mac that created the financial meltdown. In reality, Fannie and Freddie don't lend money, to minorities or anyone else. They purchase loans from private lenders who actually underwrite those loans. And it was Bush's deliberate expansion of these security transactions made possible by the Gramm/Bliley Act that repealed Glass/Steagall that led Wall Street to indulge in their decriminalized shenanigans.

As the McClatchy Papers explain: Fannie and Freddie didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

As the late Federal Reserve Governor Ed Gramlich wrote back in 2007 "only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, 'that this new lending is good business.'"

It is crucial to note that it was Angela Merkel's promise to back her own German banks that put pressure on the rest of the Europeans who (at least for the moment) have successfully averted the neocons' $780 billion swindle. It is also encouraging to see Barack Obama finally finding the courage to lead the way: he now proposes that "government buy ownership in the major banks to keep them afloat while cutting capital gains taxes for investments in small business"

It's a start but as president Obama will have to ignore the right-wing noise machine and take more drastic action, such as the Nation's William Greider has previously proposed:
First, he should take due bills from any financial firms providing there is a hard contract that repays taxpayers from any future profits. Second, Wall Street must be prohibited from exercising their usual manipulations of the political system. They must call off their lobbyists, bar them from the bribery disguised as campaign contributions. Any contact or conversations between the assisted bankers and financial houses with government agencies or elected politicians must be promptly reported to the public, just as regulated industries are required to do when they call on government regulars.

To get out of this financial mess at the very minimum we need a Second New Deal. One that allows government to lend directly to established businesses, solvent banks, as well as the consumer markets. Only time will tell if Obama and/or the American public have the savvy and guts to demand it.

Covering (for) John McCain

At least up until yesterday, John McCain has had no greater friend than the NYTimes. Despite its hilarious claim that the Times is cheering for Obama, McCain's own campaign has sent out scores of emails quoting the NYTimes to support their political attacks. Note that this is the same Barack Obama who can't get the Times to whisper the words "Keating Five" even as the S&L scandal redux 'squared' is playing out before our eyes.

Look, I don't blame the NYTimes for secretly backing McCain, knowing his zeal for deregulation... the paper is trying to swim as close as it can down the middle in an age of global-anti-state corporatism. But if you're assuming the mantle as the "Paper of Record" it's hard to keep shying from printing the whole truth while resorting to token jabs and innuendo.

Take this latest brouhaha over the influence of lobbyists. The NYTimes ran the story that mortgage giant Freddie Mac paid @ $345,000 to the lobbying and consulting firm of John McCain's campaign manager Rick Davis. In response the McCain camp howled that the NYTimes is in the "tank" for Obama. But the Times had not disclosed the whole story. As Newsweek reports: Davis's lobbying firm, Davis Manafort, based in Washington, D.C., continued to receive $15,000 a month from Freddie Mac until last month—long after the Homeownership Alliance had been terminated. One can only hope that, now that they've been slammed for trying to limit the damage, the NYTimes will deign to revisit their own reporting on the "Keating 5":

"to excuse Senators McCain and Glenn now would ignore actions in which all five Senators took part... [ N] otably, all five participated in two extraordinary meetings in April 1987, when four and later all five summoned the Federal Home Loan Bank Board chairman and key officials of the board's San Francisco office to Capitol Hill. The Senators cross-examined the regulators about their proposed tough actions against Mr. Keating, who made large campaign contributions to each Senator.

Insiders know how hard it is to get five senators together for any business, sometimes even for hearings. Charles Keating mustered five. This show of force was not lost on the regulators. They backed off, even as Mr. Keating's institution headed toward a collapse that will cost taxpayers $2 billion."

Now we learn that McCain's campaign manager and later that campaign manager's firm were being kept on retainer while Freddie Mac was under an ethics cloud, and being tied to the current financial meltdown. Step back and think about what the "paper of record" would have to say had that campaign manager been representing Barack Obama. But it shouldn't be surprising. Consider how the NYtimes reported on the campaign during the crisis in Georgia.

As "BeyondTimes" points out: "Many of [the Times'] stories seem lifted from the Republican playbook. [ ] on August 15, the Times ran a major story that was so inaccurate, and so counter to the prevailing media frame, that its reporter appeared to have become seriously detached from reality. In “McCain Displays Credentials as Obama Relaxes,” reporter Michael Falcone argued that while “Obama’s voice seems muted,” McCain handled the Russia-Georgia crisis with “fluency,” lending the Republican “an aura of commander in chief.”

[In fact] the story makes no mention of the Georgia lobbyist on the McCain payroll. Instead, the paper withheld this critical fact from readers while touting McCain’s alleged “fluency” with which he discussed Georgia.

So tell us, John McCain, what exactly do you have to whine about with the NYTimes?

Or is this the Bush Political Doctrine of a preventive first strike? Hello, FBI?