As Chairman of the Senate Banking Committee Chris Dodd, along with his counterpart, Chairman of the House of Representatives Committee on Banking, Barney “Elmer Fudd” Frank of Massachusetts, led the way for Fannie Mae and Freddie Mac to enter into an unprecedented level of issuing trillions of dollars in low-risk investments that were only sustainable if real estate prices continued rising.
The problem is that real estate prices ceased to rise and started to fall. By the time this reversal took place, it was too late. The lack of liquidity that stemmed from the defaulting of the excessive overextended volume of sub-prime loans began to tighten up the lending of money throughout the entire banking and finance markets and the worldwide credit crunch and economic crisis that we face was born.
It did not have to happen.
In 2005 Alan Greenspan warned Congress of the urgent need to tighten regulations on the systemic abuse that Fannie Mae and Freddie Mac were partaking in. Before Congress he testified that “if Fannie and Freddie continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
The advice and circumstances prompted Republicans in 2006 to sponsor new regulations that would have placed the two housing lenders under strict requirements that would have severely limited their ability to take excessive risks and would have corrected illegitimate recording practices that they were participating in. They would have also averted financial ruin.
Chris Dodd rejected these corrective measures. And while refusing to adopt these regulatory measures, he was simultaneously collecting oodles of dollars from Fannie and Freddie and became the largest recipient of campaign contributions from the very entities that he refused to correct.
Another words, Dodd dodged efforts that would have helped to stem the troubling tide of the economic red ink and financial calamity that we found ourselves awash in during 2008.
You can try to put the blame on someone else. You can try to blame it on Bush and you can accuse me of falsifying the factual record on this issue but you would lying. The truth is that President G.W. Bush and his administration called for tighter regulation of government sponsored enterprises (GSEs), including Fannie Mae and Freddie Mac for a total of seventeen times.
On top of that, Republicans sponsored legislation aimed specifically at the tighter regulations and more accurate recording practices that the President and Alan Greenspan asked for. The measure, S.190, was sponsored By Republican Chuck Hagle and co-sponsored by Republican Senators Elizabeth Dole, John Sununu and Senator and former Republican nominee for President John McCain. But with Dodd at the helm of the banking committee, Republicans couldn’t even get the Senate to vote on the matter.
In the meantime while Dodd stalled efforts to avert financial ruin and campaigned for President in Iowa, Fannie and Freddie spat out a trillion dollars worth of sub-prime mortgages between 2005 and 2007 and by 2008, money stopped flowing throughout our nation.
The facts have forced some like Democrat Congressman Artur Davis of Alabama to state, “like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong.”
But the reality of the circumstances which force Dodd to shoulder the largest share of blame for the financial catastrophe that we must endure is not the only burden he must bear as he runs for a fifth term in the United States Senate.
After refusing to stem the economic crisis that Dodd and Democrats could have averted, the Connecticut Senator found himself in the key position of shaping the legislative bailout of Countrywide Financial Corp., a company that found itself needing bailout bucks after operating under the regulatory practices that Dodd refused to reform.
But this brought rise to an ugly conflict of interest. It was discovered that in two separate sweetheart deals, Dodd was the recipient of two cut-rate mortgages of nearly $800,000 from Countrywide Financial. The political favoritism that Countrywide afforded to the Chairman of the senate committee that oversees their business practices is seen as, to say the least, shady and Senator Dodd has not been forthcoming with the details of the arrangements. Instead, without remorse he has promised to refinance the Countrywide deals, which would save him at least $70,000 over the life of the mortgages.
Then in February of this year, after bailing out AIG, Dodd slipped an amendment into the stimulus bill that ensured that executives of firms bailed out by the government could still collect already contracted bonuses. When this slight of hand came to light, Dodd denied doing it. An intense barrage of outright public indignation forced a glaring spotlight on Dodd until he finally admitted to being responsible for the amendment but ultimately he claimed that President Obama made him do it.
Now after being the first Democrat to throw his Democrat President under the bus, a slew of recent improprieties and slights of hand and a prior history of questionable real estate and financing schemes extending from as far back as 1986, Dodd must confront a very leery and disgruntled Connecticut electorate.
With a negative rating for him of anywhere from 38% to 42%, voters in the Nutmeg State have Chris Dodd trailing his likely Republican opponent Rob Simmons by 9%.
A closer look at the most recent Quinnipiac poll that reveals this troubling news for Dodd shows that while the incumbent Senator has somewhat solidified his base Democrat vote with 74% of them willing to again vote for him, his support among the state’s Independent voters continues to slide and Simmons has leaped out to a 29% lead over Dodd among them. With 87% of all Connecticut Republicans declaring confidence in their likely nominee and an overwhelming preponderance of Independent voters also inclined to support him, the numbers seem to add up to an end to Dodd’s almost three decades in the Senate and his lifetime of financial scheming.
As a former Congressman Rob Simmons has a record that could, at best, be considered moderate. It certainly isn’t one that could be construed as that of a cutting edge conservative.
For those of my school of thought, that would not exactly make Rob Simmons my first choice for a senate seat but we are talking about Connecticut. This is a state that, on occassion, considers Joe Lieberman too conservative for their liking so perhaps Simmons is the closest to being a voice of sanity that we can expect out if this region of New England.
But the story here is less the fact that Simmons seems to be in a position to give Dodd a run for his money than it is the fact that Dodd has become a total dud.
In a previous post I pointed out the many instances where conservatives are mounting challenges to the Republican establishment and to the wing of moderates who have compromised away too many of the principles that make us Republicans. I also pointed out that in addition to this emergence of more traditional Republicans some successes of the G.O.P. in 2010 will be brought about by the mere ineptness of many of the Democrats that they will be challenging. The Simmons-Dodd race is just another such example of the latter as Chris Dodd proves himself to be one of the most inept Democrats of all.
So as 2010 approaches, look for Connecticut to provide one of the tremors that will lead to a political earthquake that shifts the tectonic plates of ideological influence and shapes a new landscape on Capitol Hill in the not too distant future.