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Murtha's Freddie/Fannie Distortions

3:21 PM, Oct 16, 2008 • By BRIAN FAUGHNAN
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John Murtha has taken some pretty stiff criticism for slandering his constituents as racists -- and deservedly so. But it's worth looking at the rest of his recent interview to get a sense of how he views the credit crunch. Here's how Murtha describes how we got into this financial mess:

Six months ago they said to me... Paul Kanjorski - who's on the Banking Committee said 'Fannie Mae and Freddie Mac aren't going to make it. A hundred banks are going to go bankrupt.' I said 'well what the hell are we doing about it? What do you mean?' I could hardly believe that. Finally the president kept saying things are all right. Well the president has no credibility. When he says something nobody believes that.

And so finally Bernanke and Paulson came over. Scared the hell out of us. I mean, scared us... made us... convinced us that we had to do something. And of course they sent a 3 pages thing over -- an open door.'

It's amazing that even after all the discussion about this crisis over the last few weeks, Murtha is either so oblivious to current events, or so non-plussed about not telling the truth. In September, 2003, the president proposed a new agency to oversee Fannie and Freddie because they were extended too far. In May, 2005, John McCain warned of the threat faced by the two GSEs. There were literally dozens of warnings from the White House. And John Murtha takes so little interest in the issue that the first inkling he had of trouble was when Paul Kanjorski told him 6 months ago? Murtha paints a picture that does not reflect reality. He is either foolish or dishonest--or both.

And what of Kanjorski? Murtha says that Kanjorski knew 6 months ago that Fannie Mae and Freddie Mac were going under. That was well before the severity of the problem became fully apparent.

Where were Kanjorski's warnings, and call for an immediate response? There's nothing on his website to indicate that he warned of the coming trouble. There's nothing in the Congressional Record from the period. No alarmed letters to the Treasury Secretary. No television interviews where he warned of impending trouble. As far as can be discerned from the public record, Kanjorski saw what was coming and did...nothing.

Of course, Kanjorski had a good reason to avoid being seen as a critic of FNMA and FMAC. But if he knew the trouble that was coming -- as Murtha asserts -- and still did nothing, then Kanjorski has more questions to answer.