There is a long 20^th century history of Wall Street protests in America.  After all, Wall Street is the financial center of the country. Today, we’re in a financial crisis so Wall Street (or its financial center equivalent in other cities) is the logical place to protest, right?

Actually, we think it’s a poor second to Lafayette Park across from the White House — where the current crisis was hatched and nurtured.  No, this isn’t an anti Obama screed.  His predecessors (several of them) are far more to blame for the current economic disarray in which we find ourselves, although we think his proposed remedies are anything but remedial.

“Occupy Wall Street” and “Wall Street Greed” are great memes.  They are highly memorable and easily passed on as a rallying cry. Unsurprisingly, President Obama and the left has sought to adopt them.  Of course, the protestors are an outgrowth of the wider sense of entitlement many young people have developed (including quotas disguised under the term “diversity”).  As George Will stated in his column in The Washington Post on October 13, 2011:

“Demands posted in [Occupy Wall Street’s] name include a ‘guaranteed living wage income regardless of employment’; a $20‑an‑hour minimum wage (above the $16.00 entry wage the UAW just negotiated with GM); ending ‘the fossil fuel economy’; ‘open borders’ so ‘anyone can travel anywhere to work and live’; $1 trillion dollars for infrastructure; $1 trillion dollars for ‘ecological restoration’; ‘free college education’, and forgiveness of ‘all debt on the entire planet.”

But abuses by Wall Street are an affect, not the cause of the current economic disarray. As anyone who has read our essays knows, we carry no brief for Wall Street excesses or those of the various Government Sponsored Enterprises (GSE’s) that are the real culprits. But Wall Street was simply the vehicle by which the White House, Congress, the Fed and the Washington bureaucracy carried out very ill advised objectives. As is well known by now, the seeds of our current discontent were sowed a quarter century ago when President Jimmy Carter signed the Community Reinvestment Act (CRA).  This legislation and the regulatory policies that it set in motion may have been well intentioned, but as history teaches, roads paved merely with good intentions often lead where no one wants to go.

The government, whether controlled by Republicans or Democrats, has for a quarter century pursued the altruistic but terribly flawed policy that every American should own his or her home.  It seemed a win/win for every politician and every voting homeowner.  How noble.  How naïve.

As is so often the case when government promotes a central-planning-agenda-driven initiative, sooner or later it winds up distorting the marketplace to the general detriment of the people. That’s why we consume outrageous acreage of arable land growing food to burn for fuel.  Welcome to modernity. That’s why farmers are paid not to grow crops, and that’s why banks were rewarded not to concern themselves with creditworthiness when considering mortgage applications.  Unlike ethanol and farm subsidies, however, increasing the percentage of home ownership in America seemed like a no brainer.  What could be possibly wrong with that?  Well, as it turns out, plenty. It was a very dangerous objective to pursue.  Economic growth produces the household income that enables people to own rather than rent their own homes.  Pushing people into home ownership in the absence of their ability to afford to buy a home is an exercise in very expensive futility.

Sam Zell, one of America’s most astute real estate investors observed in a recent interview that the economy performs best when homeownership, as a percentage of all households, falls with within a range of 62 to 64 percent.

Zell writes:

“The political system encourages a much higher level, without regard to affordability. This time, we took home ownership to 69 percent, which means that people who simply cannot afford houses were able to buy them. Every time we go above that 62 to 64 percent range, there are economic consequences, and this time was no different.

There was also another political element to the residential market collapse. In 2000, Fannie and Freddie carried no subprime loans, and they carried very few subprime loans until the financial steamboat in 2004, whereupon Barney Frank told us to encourage affordable housing and he would protect us from defaults. So, Fannie Mae went from 0 in subprime loans to 40 percent. These political drivers of the financial crisis are overlooked.”

Isn’t it ironic that this is the same Barney Frank who co-authored the Dodd-Frank bill, which now forms the basis of all bank and financial regulation.  Is this a great country or what?

The mischief promulgated by Freddie and Fannie cannot be overstated.  These government-sponsored enterprises take a back seat to no one when it comes to abuse, and, let’s face it, greed. While Wall Street deserves its share of criticism, let’s dwell for a moment on government as an instigator and an enabler at the very center of the housing crisis.

During the Clinton years, the President appointed some of his Administration’s top people to senior executive positions at Fannie Mae. For example, he placed his former budget director, Franklin Raines, into the CEO slot at Fannie Mae. Jamie Gorelick, a Clinton Administration senior lawyer was handed the Vice Chairmanship at Fannie Mae.  Clinton then went on to appoint others to board positions at Fannie.  Executives’ compensation formulas were quickly restructured in order to incentivize them to maximize the number of mortgages Fannie Mae purchased.

Compensation wasn’t the only thing Fannie Mae and Freddie Mac restructured. They showed they could work the political system with contributions as effectively as any Wall Street banker. They specifically targeted those who they knew would make strong allies.  Chris Dodd who chaired the Senate Committee with oversight responsibility for Fannie and Freddie’s operations was the largest recipient of the GSE’s largess. Democratic heavyweight, John Kerry was next in the handout recipient line and none other than Democratic Senate newcomer Barack Obama quickly shot up to third place in the campaign piggyback sweepstakes.  On the House side, oversight heavyweight Barney Frank was a regular recipient of the GSEs’ handouts and extolled the virtues of these houses of cards up until the time they came tumbling down.

Given that Fannie’s earnings are a function of the spread between its cost of borrowing (to buy these mortgages) and the fees it receives from the mortgages it purchases, they enjoyed a license to, shall we say, do very well as long as homeowners made their mortgage payments. Fannie Mae was, in effect, living off of the illusion that the government backed it, so its cost of borrowing was rock bottom.

So what drove the GSE’s rush into subprime mortgages? The key, of course, is that the restructured senior executive compensation was based on the profitability of the enterprises (the spread between the GSE’s rock-bottom borrowing costs and the interest paid on the mortgages they held).  So in the ten years from 1994 to 2004, Raines earned $90 million in salary and bonuses.  Gorelick who was appointed by Clinton in 1997 to her post at Fannie Mae (having had no prior financial experience) pocketed, in short order, another $26 million.  All the while, Fannie Mae’s top twenty-one executives averaged $1 million each.

Well, with that kind of juice swirling around, Fannie Mae, which became the single greatest market for so many of the lousy mortgages the banks were writing (pursuant to government policy and pressure) wasn’t above bending an accounting rule here and there.  By the time the SEC finally lowered the boom on Fannie Mae, it had found that they had misstated earnings by about $10.6 billion from 1998 through 2004.  The result was a company (of sorts) whose managers engaged in one questionable maneuver after another, including two transactions with investment banking firm, Goldman Sachs Group Inc. that improperly pushed $107 million of Fannie Mae earnings into future years. The aim, the Office of Housing Enterprise Oversight said, was always the same: To shape Fannie Mae’s books, not in response to accepted accounting rules, but in a way that made it appear that the company had reached earnings targets, thus triggering the maximum possible payout for Raines and other top executives.

While the housing crash that triggered the current economic crisis cannot be laid at President Obama’s feet, it is disingenuous of him to try to paint, at every opportunity, President Bush with that odious stain.  Bush, in September 2003, according to the New York Times (yes you read that correctly) pushed for the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade earlier.

From the NYT:

“Under the Bush Administration plan, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry,

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies.  It would exercise authority over any new lines of business.  And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken.  A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.”

Yes, Wall Street hopped onto the mortgage gravy train and, in the process, mortgaged themselves to the hilt.  When the system crashed under the weight of all the shameful mortgages that were written, the American taxpayer came to the rescue and received a loud raspberry in return.  That’s surely worth a protest.  But all of this is the result of horrid policy, developed, pampered and nurtured in Washington. All things considered, Zuccotti Park in New York isn’t a bad place to protest, but it doesn’t hold a candle to Lafayette Park in Washington.

The relationship between the federal government and Hollywood is corrupt and dirty.  In essence, Hollywood liberals go easy on liberal politicians – in fact, their entertainment routinely stumps for liberal causes — and in return, the politicians give handouts to Hollywood.  Government has been particularly beneficent to the television industry – from the days of Paley, Goldenson, and Sarnoff onward, warm relations between the industry and those who regulate it have been the norm.

During the 1990s, the Democratic Party raised $8 million per campaign cycle from the Hollywood contingent.  By the way, that’s three campaign cycles every year.  Some of the biggest Hollywood donors included David Geffen, at $200,000 per year; Jeffrey Katzenberg, who clocked in at $125,000 per year; ABC Family network head Haim Saban, who coughed up $250,000 per year.  Organizationally, Disney led the way with $1 million per year, and AOL Time Warner followed suit with $500,000 per year.  According to one estimate, Hollywood gave the Democratic Party “contributions roughly equivalent to what Republicans received from their friends in the oil and gas industries.”  In return, Hollywood got what it wanted: favors.  The 1996 Telecommunications Act got rid of restrictions on cable pricing without doing anything about local government-created monopolies, leading to skyrocketing cable prices and profits. Meanwhile, President Clinton instituted a “research and development tax credit,” according to film scholar Ben Dickenson, worth $1.7 billion to the industry.

Such warmth continues today.  As of June 2010, 73 percent of entertainment industry donations during the 2010 election cycle had gone to Democrats. Comcast – a supposedly conservative company — had given approximately $1.3 million to Democrats and $756,000 to Republicans, a 64-to- 35 percent advantage to the Democrats. Senator Chuck Schumer (D-NY) grabbed $329,800 in Hollywood donations. Not surprisingly, Representative Henry Waxman (D-CA), who chairs the House Commerce and Energy Committee, which has jurisdiction over communications issues, gathered $82,500 from the industry.

Things just got worse.  Now, the Motion Picture Association of America has selected former Senator Chris Dodd (D-CT) to head up its lobbying effort in Washington D.C.  Dodd follows in the footsteps of former Clinton Secretary of Agriculture Dan Glickman.  But Dodd makes Glickman look like a piker when it comes to graft.  Dodd is the same man who regulated the mortgage industry while receiving sweetheart mortgage deals from Countrywide.  Countrywide CEO Angelo Mozilo took points off of Dodd’s mortgage and lowered his fees.  Meanwhile, Dodd was supposed to ensure that Fannie Mae and Freddie Mac didn’t assume too much risk.  As we all know, Fannie and Freddie ate up all the risk, forcing them into nationalization.  Dodd should have been impeached from the Senate.  Instead, he’s going to be the chief lobbyist for the movie industry.

“Senator Dodd is a battle-tested leader whose reputation as a strong leader on major issues facing this country has prepared him to serve as the ambassador for the movie business,” cheered Fox Filmed Entertainment Chairman Jim Gianopolous.  By the way, Dodd will receive $1.2 million per year to help relieve taxpayers of their money.

The movie industry is in trouble right now because, like too many other American businesses, it has lived off of government bloat, kowtowed to unions, and expected consumers to pick up the slack.  Despite rising ticket costs and a decent slate of movies, Hollywood’s revenue dropped this year; its attendance was down more than 5 percent from last year.  Fewer and fewer movies are produced because production costs are so high.  The industry’s solution: go to the government for help.

In the short term, it will probably work.  In the long term, it’s doomed to fail.  Over the next ten years, watch as the American movie industry – as iconic as the American automobile industry, only with more cultural power – fades into oblivion with the help of people like Chris Dodd.

Obama and his allies have been big promoters of Warren, who is the left-wing patron saint of so-called consumer protection.

There’s only one problem. In the dubious tradition of Obama czars, Warren is a leftist radical with a “penchant for provocative statements” and has very little chance of being confirmed by even a Democratic Senate. How anti-business? Well, in a blog she crafted for TPMCafe.com in 2005, Warren said: “…big corporate interests, led by the consumer finance industry, are devouring families and spitting out the bones.”

And that’s just one example.

Even Democrat Senator Chris Dodd, Chairman of the Senate Banking Committee, sees the writing on the wall on a Warren appointment. Dodd has publicly stated that he doubts Warren could muster the votes for confirmation. Many others in Congress agree, even if they won’t say it publicly.

So, how do you think this President plans to “move forward” with this appointment in light of a looming confirmation war? By ignoring the Senate confirmation process! The Obama White House had Warren post a propaganda item today announcing her appointment:

The President asked me, and I enthusiastically agreed, to serve as an Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. He has also asked me to take on the job to get the new CFPB started—right now.

Warren goes on in her statement to push the socialist trope of “leveling the playing field” in the consumer credit market. Obama White House officials are spinning this as an “interim appointment.” But we all know the strategy: Get Warren in the back door, and have her put her stamp on the “creation” of this powerful new agency, while really running it. (Obama calls this an “interim appointment.” We call it a “czar.”) Indeed, Obama’s statement today about the Warren appointment shows that he is essentially giving her the keys to the kingdom of the new government agency.

But our Constitutional Professor-in-Chief needs to heed the Appointments Clause of the US Constitution (Article II, Section 2) states that “officers” of the United States must be appointed by the President with the advice and consent of the Senate. As the Justice Department explained in 2007: A position is an office of the United States if it is “(1) invested by legal authority with a portion of the sovereign powers of the federal Government, and (2) it is ‘continuing.’” Such “sovereign powers” generally involve “binding the Government or third parties for the benefit of the public, such as by administering, executing, or authoritatively interpreting laws.”

It sure seems to me like Ms. Warren is set to act as an officer of the United States. Except her legal authority, since she’s unconfirmed by the U.S. Senate, is null. But, according to Businessweek, Warren will have a “$400 million budget and the power to impose federal rules on mortgages, credit cards, layaway plans and other consumer credit products.”

With this much money and this much power at Warren’s disposal, don’t you think her record ought to be thoroughly examined by Congress? We do. Most Americans do. And the Constitution certainly mandates it. But none of this is of concern to President Obama as he continues to preside over the massive and unprecedented expansion of federal government.

Even the Left has raised hackles about this lawlessness. The notoriously radical Internet site Daily Kos posted an article that highlights the legally dubious nature of Obama’s new czar appointment. The piece, by a supporter of Warren’s, suggests that Obama has no authority to install her.

Judicial Watch has an ongoing, thorough investigation of Obama’s czars. You can read all about it by clicking here. By our count, Obama has appointed 42 czars, with Warren’s appointment perhaps being the most striking example of Obama’s abuse of office, his contempt for Congress, and his disrespect for our republican form of government.

This is not unexpected. As I wrote about this creeping “livability” agenda in Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America:

Team Obama’s efforts to “fundamentally transform” the United States of America” were immediate, widespread, and sweeping. The National Journal featured a debate about “livability” after someone there noticed that “the Obama administration and leading congressional Democrats appear to be making the creation of ‘livable communities’…a central transportation policy goal.” However, the “livability” and “happiness” indexes fetishized by the Left are code for coerced inconvenience, discomfort, or merely sameness, trading off individuals’ liberties to remove distinctions brought about by unfair quirks such as differences in ingenuity or hard work. But our superiors know that these differences are really only the product of a world in which the successful have won life’s lottery, so the spoils need to be spread around a bit.

Livability and the like serve as the rationale for all manner of intrusions. Innovation Newsbriefs in October 2009 noted that it was “the Administration’s intent to increase the federal role in shaping local development patterns and influencing travel behavior. ‘Smart growth’ planning and shifting more automobile travel to public transportation have been long-standing goals of progressive planners and assorted anti-sprawl activists, but these goals may now become a matter of federal policy under the Administration’s ‘livability’ initiative.”

Secretary of Transportation Ray LaHood did Obama no favors by candidly defending against inquiries about this, stressing that it’s no big deal. In fact, he pointed out, “about everything we do around here is government intrusion in peoples’ lives.” (House Majority Whip James Clyburn helpfully added soon thereafter, “There’s nothing in the Constitution that says that the federal government has anything to do with most of the stuff we do.” (What a team.) (citations omitted)

Dodd’s bill isn’t going anywhere, one would assume. Except that it has been reported out for full Senate consideration by the Banking Committee he still somehow chairs. It is one lame-duck tantrum away from being reality (two, if you count the House where the numbers make most things possible until January).

The party passing APC’s “action alert” along to me asserts that this is just a latest move to enforce the UN’s “Agenda 21″ in the U.S. Maybe. On a rather related note I do know, after meeting this summer with (and receiving some internal memos from) a negotiator for a fairly important nation, that there is a new “sustainability” treaty in the works (among the cobblers they’re actually calling it a “green economy” treaty, thinking you’ll be fooled by their line that more central planning is just the cure the economy needs). This Spring saw its first round of negotiations. The third round will conclude three weeks before the Johannesburg “Rio-Plus 20″ conference, or World Environment Summit III.

The “sustainability” or “green economy” treaty will be presented for agreement in Jo-burg, where the global greens hope to recreate the magic of the Rio Summit, which saw a posturing young bootlick from Tennessee fly down to preen before his soon-to-be-followers and ended with U.S. politicians misplaying each note and committing us to all sorts of mischief. Including the parent treaty of the Kyoto Protocol, work on which began immediately after our federal officials had dignified the enterprise.

As I’ve also noted in my history of these machinations:

The vaunted Kyoto pact is actually an amendment to an earlier agreement, the “Rio” treaty, or United Nations Framework Convention on Climate Change (UNFCCC), agreed during the heat of the U.S.’s 1992 general election campaign.  Then, an ambitious senator from Tennessee traveled to the World Environment Summit in Rio de Janeiro, Brazil, demanding to know “Where’s George?!” It seems that the U.S. president, inarguably not as attentive to symbolism as others presidents would prove to be, was busy dealing with actual problems and elected to stay home to work.

The idea is that this confab will pressure the U.S. political class to fall over itself like it did with that first global warming treaty which our senators hurried to ratify and thereby prove their green bona fides (only Mauritius and the Seychelles beat us to it; so much for all that “greatest deliberative body” fluff). A “green economy” treaty is viewed as the next best chance to impose the global Left’s values on America in the face of Kyoto falling apart with no successor pact likely when it expires at the end of…2012.

It is fair to say that political circumstances today are somewhat different here and are expected to remain so in 2012, despite our friends’ hopes and aspirations. Still, politicians in election years can be funny — read: expensive and reckless — creatures. Stay tuned.

At first glance, I did not recognize that the book being advertised is one for which, in a sense, I am responsible. It turns out that the “new” book is only an old (portion of a) book, now adorned by a new subtitle and two new introductory paragraphs by the Newsweek columnist Robert J. Samuelson. If I reveal that the book’s author is Joseph A. Schumpeter, many readers will recognize it immediately as Part II of that famous economist’s best-known work Capitalism, Socialism and Democracy, first published in 1942, with subsequent editions in 1947 and 1950.

The new book’s front cover has a blurb from Fortune that declares Schumpeter to have been “the most influential economist of the twentieth century . . . a major prophet.” The back cover has an embarrassingly superficial blurb by publisher Steve Forbes that, among other things, describes Schumpeter as “the twentieth century’s foremost economist.”

I do not consider Schumpeter entitled to be called the most influential economist of the past century―that distinction unfortunately belongs to John Maynard Keynes, and Milton Friedman surely deserves the second place. As for Schumpeter’s rank as a prophet or as the intellectually foremost economist, I would place him below Ludwig von Mises and F. A. Hayek.

Nevertheless, Schumpeter was unquestionably one of the most important economists of his day, and his work has continued for good reason to attract readers ever since his death in 1950.

His analysis of the historical dynamics of classic capitalism, which makes up Part II of Capitalism, Socialism, and Democracy, though contestable on various grounds, may be, all in all, the best ever written, and it certainly remains among the most thought-provoking. (My own thoughts on Schumpeter’s analysis appear briefly in my book Crisis and Leviathan, pp. 239-44.)

In the mid-1970s, having read Capitalism, Socialism and Democracy repeatedly and having used it to good effect in my teaching, I sent a proposal to Harper & Row, the publisher. I proposed that Part II of the book be published as a separate work with an introduction by me. I asked for a reasonable royalty on sales of this proposed book. Harper & Row declined my offer. The publisher liked the idea of a stand-alone publication of Part II, with my introduction, but did not want to pay me a royalty. Not long afterward, in 1978, I was surprised to find in the bookstores the very volume I had proposed, with an introduction by Robert Lekachman, who evidently had been willing to work for less than I when he was approached by the publisher. Somewhat pushed out of shape by this pilfering of my idea, I wrote a letter to Harper & Row to let their managers know how unprofessional, at best, I considered their action to be. As I recall―although my memory is foggy in this regard―Harper then sent me a nominal “finder’s fee.”

(This episode, by the way, was but one of many that led me to propound Higgs’s Law of Publishing, which states: All publishers strive to maximize losses, but by virtue of sheer stupidity, some of them screw up so royally that they earn enough income to remain in business.)

Returning from the foregoing personal digression, what are we to make of the idea that capitalism might survive, indeed, of the idea that it has survived to date, when in fact it has scarcely ever existed and, even when prevailing economic conditions and institutions verged most closely on the capitalist model, sometime between the 1830s and World War I in the United States, they suffered a variety of government interventions and distortions that made the prevailing economic order, like nearly all such orders in reality, a form of “mixed economy”?

My friend Sheldon Richman has been on something of a crusade recently against the defense of capitalism by those who favor a free society, which of course includes a free-market economy. He prefers that defenders of freedom avoid the defense of something called capitalism because, first, the term derives in large part from enemies of the free society, such as the Marxists, and, second, because it has always served and continues to serve the enemies of a free society as a perennial object of misplaced responsibility, a (nonexistent) malefactor to be blamed for every economic problem the government’s countless interventions bring about.

Thus, most recently, by undertaking a series of decisive interventions stretching from the Fed‘s mismanagement of monetary policy, to Fannie and Freddie’s subsidies of unqualified home buyers, to the self-serving idiocies of Barney Frank, Chris Dodd, and Co., among other ill-fated actions, the government created the complex of interrelated disasters that includes the housing boom and bust, the financial debacle of 2008, and the economic recession since 2007. And who’s to blame? That’s right: capitalism. Which must then be “reformed” by mountains of additional government interventions laid atop the previously existing mountain, leaving, of course, Barney and Chris sitting pretty as the reformers, and the key troublemakers―the Fed, Fannie, and Freddie―smelling like roses, with the Fed being given even more power, and Fannie and Freddie being fed a diet of hundreds of billions of dollars in ongoing taxpayer-funded bailouts to continue doing the damage they do.

Perhaps, if we all frankly admitted that capitalism has been as dead as a dodo since 1914, if not even longer, then such factually absurd, ideologically inspired, politically tactical blame-casting would be precluded. It would make no more sense than blaming our economic troubles on the divine right of absolute monarchs, centuries after that doctrine has been abandoned. Perhaps.

So far, however, I have refrained from coming completely onboard Richman’s crusade ship. For many proponents of the free society, capitalism has always signified the ideal of the free-market society more than it has referred to any of its deeply compromised and distorted instantiations that have occurred historically. These people are understandably reluctant to give up still another cherished shibboleth to their enemies, as they previously surrendered their most positive and important ideological identity as liberals. So, even though I rarely use the term capitalism, and I strive to make as clear as I can the difference between the ideal free society (which I defend) and the realities of any existing or previously existing society (which I only study), for now, I decline to condemn those who continue to defend capitalism. They may be making a rhetorical mistake, as Richman insists, yet their hearts are in the right place. It will be easier to straighten out people’s rhetoric in due course than to bring about the change of heart that so many misguided people must experience, if even a shred of freedom is to be preserved.

Not only is that approach childish, but it belies the truth.  Allow me to suggest that the policies of Barney Frank had more to do with the bursting of the housing bubble, the resulting bank crisis and the “great recession,” than the policies of George Bush. Led by Frank the Democratic party brought down the banking industry by forcing banks to give loans to people who couldn’t afford them, then he   blunted the Republican attempts to regulate the industry

Frank aggressively fought reform efforts by the Bush administration. He told The New York Times on Sept. 11, 2003, Fannie Mae and Freddie Mac’s problems were “exaggerated.” Exaggerated? Thanks to Fannie and Freddie the housing market collapsed and we fell into this “great recession.”

“These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis,” Frank Opined to the Times. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

The 10/8/03  Washington Post reported that Frank opposed giving the Bush administration the approval rights over banking business activities that “could pose risk to the taxpayers.” He worried the Treasury Department “would sacrifice activities that are good for consumers in the name of lowering the companies’ market risks.”

In the video below Frank sits in a 9/10/03 House Financial Services Committee hearing and says Fannie and Freddie are sound, and there is no housing disaster coming.

Rep. Barney Frank (D., Mass.): I worry, frankly, that there’s a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios.

Two years later the United States was much closer to the bursting on the housing bubble. The Republicans in Congress introduced a bill to regulated Fannie Mae and Freddie Mac.  Led by Barney Frank and Chris Dodd the bill was killed.

On June 27, 2005 Barney Frank stood up on the floor of the House of Representatives and told America that there is undue concern about the housing market and even though prices were growing very quickly the housing market is not like the Dot.Com industry, the housing bubble will not burst.

If the Guinness Book of World records had a hypocrisy category, the winner would be Barney Frank, Chairman of the House Banking Committee. Let me revise that, Frank wouldn’t be the winner, judging by his actions the Guinness people would have to retire the category.

When the housing bubble finally burst Mr. Frank called for prosecution of the people who caused the banking crisis, he should have looked in the mirror.

Barney Frank got away with his housing bubble hypocrisy and is still getting away with it. Fannie and Freddie are still asking the public for money, the economy is still in the toilet and the Democratic Party is still blaming President Bush.

While there were plenty of problems with George Bush’s policies, this recession has more to do with the policies of the progressive Democrats, than those of the former president. In fact, if the POTUS and his progressive lemmings were to be truthful, they should be blaming Barney Frank because when you examine what happened Frank is the one blocked the regulation of Fannie and Freddie and it was Frank who kept saying over and over there is no housing crisis.

Four members of the U.S. Commission on Civil Rights have signed a letter complaining that Section 324 of the conference report titled the “Dodd-Frank Wall Street Reform and Consumer Protection Act” “includes a section on race and gender that even those who pride themselves on keeping up with national affairs may have failed to notice.” This provision, which can be found on page 172 of the conference report, may lead to unconstitutional racial and gender preferences being forced on financial institutions covered by the new law.

As the Becker-Posner blog argues, this over 2000-page long bill is “complex, disorderly, politically motivated, and not well thought out reaction to the financial crisis that erupted beginning with the panic of the fall of 2008.” One of the critiques leveled by Gary Becker and Richard Posner is that “the bill adds regulations and rules about many activities that had little or nothing to do with the crisis.” It is clear that the lack of racial and gender preferences had nothing to do with the financial meltdown in the fall of 2008. Section 342 is a special interest provision that has no relevance to financial services reform and may lead to this law being deemed unconstitutional by the courts.

The letter from members of the U.S. Commission on Civil Rights was signed by Commissioners Peter Kirsanow, Ashley Taylor, Gail Heriot, and Todd Gaziano. In the letter these experts in civil rights law explain that the legislation “requires that each covered agency establish an ‘Office of Minority and Women Inclusion’ responsible for ‘all matters of the agency relating to diversity in management, employment, and business activities.’” This law will empower federal bureaucrats to issue rules and regulations governing the financial sector of the economy, if those businesses are doing any work for the federal government.

The Commissioners further argue that these new bureaucrats will be empowered to shall “’develop standards’ for ‘assessing the diversity policies and practices of entities regulated by the agency’ and ‘develop and implement standards and procedures to ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all businesses and activities of the agency.” According to the letter, this new mandate will cover “financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants and providers of legal services.” If these institutions are doing business with the government, newly minted bureaucrats will be allowed to study the racial and gender composition of these covered entities work forces to search for companies with not enough minorities and women in a decision making capacity.

The commissioners are not the only ones to notice this offensive provision. Diana Furchtgott-Roth of the Manhattan Institute wrote for Real Clear Markets that

“I was searching the bill for a provision about derivatives. What did I find but Section 342, which declares that race and gender employment ratios, if not quotas, must be observed by private financial institutions that do business with the government. In a major power grab, the new law inserts race and gender quotas into America’s financial industry.”

The major media has ignored this important issue, yet this issue may cause some expensive litigation for companies alleged to engage in racial or gender discrimination without any court finding, but merely some bureaucrat deeming them not to be in compliance of the new law.

This legislation does not merely set up one bureaucracy, but it will be a jobs program for those who specialize in forcing racial and gender quotas on private enterprise. Furchtgott-Roth points out that “the Treasury, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the 12 Federal Reserve regional banks, the Board of Governors of the Fed, the National Credit Union Administration, the Comptroller of the Currency, the Securities and Exchange Commission, the new Consumer Financial Protection Bureau…all would get their own Office of Minority and Women Inclusion.” As the financial sector outsources to other nations and contracts without this new regulatory stranglehold known as Financial Services Reform, the federal government will have established a new jobs program to further expand the size and scope of the federal government.

The Commissioners further argue:

The potential for abuse should be obvious, but sadly sometimes it is not to those who are unfamiliar with the workings of governmental and corporate bureaucracies. All too often, when bureaucrats are charged with the worthy task of preventing race or gender discrimination, they in fact do precisely the opposite: Consciously or unconsciously, they require discrimination by setting overly optimistic goals that can only be fulfilled by discriminating in favor of the groups the goals are supposed to benefit. Those who are regulated by, or do business with, a federal agency are understandably eager to please that agency. When the agency says, “Jump!,” they know the financially smart response is, “How high?,” not “We’re concerned that your diversity goals cannot be achieved without tilting the playing field in favor of one group or another—something we believe the law and the Constitution forbid.”

At a minimum, President Obama needs to pause before signing this massive new regulatory regime for the financial sector to make sure that he is not violating his oath to the Constitution of the United States.