On the recordJune 30, 2010
I don't know why it should be a surprise to the Left that this financial system collapsed. The reason I say that is because in 1992, the GSE Act passed this Congress, under a Democratic majority passed this Congress. And the GSE Act specifically was an attempt to get every American into a home. I understand the thought behind it. But the irrationality behind it, in terms of creating these mandates on Fannie Mae and Freddie Mac, the GSEs, mandates that 50 percent of their portfolio of $1.7 trillion be in subprime and Alt-A loans. What did they expect would happen? The leverage, the political pull that went into getting the down payments down from 20 percent to 3 percent to zero. And now we have the very result that the Federal Reserve warned us about when they came to Congress in 2003 and 2004 and 2005 and warned us that if we did not take corrective action, if we did not allow the regulators to have the ability to deregulate or to regulate and deleverage these portfolios, that we were going to create systemic risk and the financial collapse could be a consequence of this.
