GOP ignores Wall Street's role in economic woe

Story highlights

  • Roland Martin: GOP debaters gave Wall Street a pass on economic troubles
  • He says they placed all the blame on government, for encouraging home ownership
  • The reality is that consumers overspent but were enabled by Wall Street's credit
  • Martin: Republicans are peddling a distorted view of the economy
All of the post-mortems on the CNBC Republican debate have focused on the sad, but hilarious, senior moment Gov. Rick Perry suffered when he couldn't remember the third federal agency he wants to eliminate.
There is no doubt it was near the top of the list of the most embarrassing debate moments in history. But what also stood out as perplexing -- and stunning -- was how all of the candidates were unwilling to hold Wall Street accountable for the deplorable economic condition the nation continues to find itself in.
When the housing crisis was raised, Mitt Romney and most of the others chose to unleash their rage on the consumers and the financial reform bill that was passed after the crisis hit, instead of on the shady practices of Wall Street.
"And the reason we have the housing crises we have is that the federal government played too heavy a role in our markets," Romney said. "The federal government came in with Fannie Mae and Freddie Mac, and Barney Frank and Chris Dodd told banks they had to give loans to people who couldn't afford to pay them back."
See, the favorite GOP bogeyman is Fannie Mae and Freddie Mac, the government-backed housing lenders. Yet anyone with half a brain knows that those institutions brought on Democrats and Republicans on their payroll in order to ensure that Congress would let them continue practices as usual.
During the debate, Newt Gingrich was asked about the $300,000 he was paid by Freddie Mac in 2006, which he said was for "advice." He was quick to say he did no lobbying on behalf of Freddie Mac, but we all know that his presence, along with other former politicians and political strategists from both parties, greatly helped the company prevent congressional scrutiny.
"And my advice as a historian, when they walked in and said to me, 'We are now making loans to people who have no credit history and have no record of paying back anything, but that's what the government wants us to do,' as I said to them at the time, 'this is a bubble. This is insane. This is impossible,'" he said.
What Gingrich and the other candidates absolutely refused to do was tell the public that one of the biggest proponents of an aggressive home ownership plan in America was President George W. Bush.
Take the time to research many of President Bush's speeches on the economy. He often talked about the American Dream and how home ownership rates were at record levels.
So if we are to be honest, trying to assess what led to our economic problems goes far beyond just blaming Fannie Mae and Freddie Mac. That's called subterfuge.
It is beyond clear that we got into this huge mess because we were too lax in holding banks accountable. Getting rid of the Glass-Steagall Act, thus allowing commercial banks and investment banks to merge, was a disaster.
Not a single GOP candidate said we should put the provision separating those activities back in place.
So what did we hear?
Cain: "You get the regulators off of the backs of the banks like someone mentioned. Get the regulators out of the way, such that the small banks and the medium-sized banks aren't being forced out of the business."
Perry: "Pull back all of those regulations. Everybody on this stage understands it's the regulatory world that is killing America."
Romney: "The reason we have the housing crisis we have is that the federal government played too heavy a role in our markets."
Thank goodness there was some sanity coming out of the mouths of Jon Huntsman and Rep. Ron Paul, who were the only two candidates who would honestly attack the problem.
Huntsman: "With respect to the banks that are too big to fail, you know today we've got, as I mentioned earlier, six institutions that are equal to 60, 65 percent of our GDP, $9.4 trillion...I say we need to right-size them."
Paul: "The banks have invested in Europe, they've invested in Fannie Mae and Freddie Mac, and these credit defaults swaps. They're in big trouble, and that is why they're getting bailed out. And that's why they are not allowing these mortgages to go down, and that is why we will most likely bail out Europe, which will be a real tragedy."
This nation is in trouble because of Americans' insatiable desire to buy what they couldn't afford, which was made possible by the cheap credit extended to them by big business, which reaped huge profits off of the high interest payments, thus driving up stock prices, which investors feasted on, and that bolstered 401(k)s.
It was a cycle where everyone benefited short-term, but in the long run, it has screwed this nation for years to come.
In no way can I remove the role the consumer played in the economic debacle, but for the GOP candidates to act like we had too many regulations, and that's why Wall Street bankers lost their minds, is deplorable.
The problem with Dodd-Frank is that it didn't go far enough in right-sizing our financial industry. We continue to see the risky actions driven by big bonuses as a reward, and don't think for a second we may be facing another economic Armageddon.
The GOP (and some Democrats), at the behest of the banking industry's big money lobbyists, oppose the Consumer Financial Protection Bureau, and don't want it to see the light of day.
How in the world can we trust that any of these candidates will care about the Average Joe, Jane, Jose, Jimmy, Janice or Jamila if they are elected president, when they won't even hold Wall Street accountable in a debate?