Here’s Schumer (D-NY): “I think Fannie and Freddie need some changes, but I don’t think they need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Change some of the accounting and regulatory issues, yes, but don’t undo Fannie and Freddie.”

Sounds moderate and reasonable to me.

Moreover, what you are NOT saying is that in 2005 in the House of Representatives, a bill to far more tightly regulate Fannie and Freddie was passed with the cooperation of leading Republicans, such as Bennett (who sponsored the bill) and Michael Oxley chairman of the house finance committee, who got the cooperation of Barney Frank.

So, in 2005 in the House, a bill was passed to more tightly regulate Fannie and Freddie, but it failed in the Senate. It never got out of committee. Why? Because at the time, the Bush administration wanted to go all the way and cut off Fannie and Freddie entirely.

Here’s the proof:

Former Chairman of the House Finance Committee Michael Oxley says (in the Financial Times in early September):

In the aftermath of the US Treasury’s decision to seize control of Fannie Mae and Freddie Mac, critics have hit at lax oversight of the mortgage companies. The dominant theme has been that Congress let the two government-sponsored enterprises morph into a creature that eventually threatened the US financial system.

Mike Oxley will have none of it. Instead, the Ohio Republican who headed the House financial services committee until his retirement after mid-term elections last year, blames the mess on ideologues within the White House as well as Alan Greenspan, former chairman of the Federal Reserve.

The critics have forgotten that the House passed a GSE reform bill in 2005 that could well have prevented the current crisis, says Mr Oxley, now vice-chairman of Nasdaq. He fumes about the criticism of his House colleagues.

“All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.” The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.

Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and faced hostility from the Bush administration.

Adamant that the only solution to the problems posed by Fannie and Freddie was their privatization, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all.

“We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed,” Mr Oxley says. (See: http://www.ft.com/cms/s/0/8780c35e-7e91-11dd-b1af-000077b07658.html?nclick_check=1)

End quotes:

Then what happened? Well the Democrats and moderate Republicans cut down the Republican bill, which never got out of Senate committee. McCain’s backing of a bill to more tightly regulate Fannie and Freddie has received a lot of publicity lately, but in my opinion, his bill would not have regulated any more strictly than the House bill, Federal Housing Finance Reform Act of 2005. (For confirmation, see http://www.opencongress.org/bill/109-h1461/show and click on “more” after “amends the housing”)

Moreover, most financial experts in the real estate market are now saying that Fannie and Freddie played a very small role in the vast increase in risky loans that were made in the Real Estate Bubble. By far most of the loans were made by commercial mortgage companies, who were unregulated and not subject to the Community Reinvestment Act (CRA). So, why did they make so many loans to the poor. NOT because of any government law or prodding. They made lots of loans to the poor because they almost desperate to make as many loans as possible in a boom market, and the greatest area of opportunity was in poor areas. Bush was even proud of it.

Here he is in 2003 in signing the “American Dream Downpayment Act of 2003:

“The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that’s not right, and this country needs to do something about it. We need to — (applause.) We need to close the minority homeownership gap in America so more citizens have the satisfaction and mobility that comes from owning your own home, from owning a piece of the future of America.

Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we’re making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.) And there’s more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way.

Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. So this legislation will authorize $200 million per year in down payment assistance to at least 40,000 low-income families. These funds will help American families achieve their goals, and at the same time, strengthen our communities.”

So you could say that Bush contributed to the bubble and to making risky loans.