Over the weekend, I
discovered there might have been more to that decision than
initially met the eye. There was chatter on the beltway that we
may have been the victim of economic terrorism, a coordinated
short raid that originated in London and Dubai.

While the legitimacy of that
remains to be seen, my source is well respected. Further, as the
goals of terrorism are economic destruction and social upheaval,
it makes intuitive sense. The stock market is the world’s largest
thermometer and breaking the capital market construct-as some
would say they did last week-would effectively achieve both goals.

The clear gravity of the
situation pushed the legislation forward. Some might say the
current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told
Congress how urgent it was for it to act in the clearest possible
terms: If Fannie and Freddie “continue to grow, continue to have
the low capital that they have, continue to engage in the dynamic
hedging of their portfolios, which they need to do for interest
rate risk aversion, they potentially create ever-growing potential
systemic risk down the road,” he said. “We are placing the total
financial system of the future at a substantial risk.”

What happened next was
extraordinary. For the first time in history, a serious Fannie and
Freddie reform bill was passed by the Senate Banking Committee.
The bill gave a regulator power to crack down, and would have
required the companies to eliminate their investments in risky
assets.

Different World

If that bill had become law,
then the world today would be different. In 2005, 2006 and 2007, a
blizzard of terrible mortgage paper fluttered out of the Fannie
and Freddie clouds, burying many of our oldest and most venerable
institutions. Without their checkbooks keeping the market liquid
and buying up excess supply, the market would likely have not
existed.

But the bill didn’t become
law, for a simple reason: Democrats opposed it on a party-line
vote in the committee, signaling that this would be a partisan
issue. Republicans, tied in knots by the tight Democratic
opposition, couldn’t even get the Senate to vote on the matter.

That such a reckless
political stand could have been taken by the Democrats was obscene
even then. Wallison wrote at the time: “It is a classic case of
socializing the risk while privatizing the profit. The Democrats
and the few Republicans who oppose portfolio limitations could not
possibly do so if their constituents understood what they were
doing.”

Mounds of Materials

Now that the collapse has
occurred, the roadblock built by Senate Democrats in 2005 is
unforgivable. Many who opposed the bill doubtlessly did so for
honorable reasons. Fannie and Freddie provided mounds of materials
defending their practices. Perhaps some found their propaganda
convincing.

But we now know that many of
the senators who protected Fannie and Freddie, including Barack
Obama, Hillary Clinton and Christopher Dodd, have received
mind-boggling levels of financial support from them over the
years.

Throughout his political
career, Obama has gotten more than $125,000 in campaign
contributions from employees and political action committees of
Fannie Mae and Freddie Mac, second only to Dodd, the Senate
Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked
recipient of Fannie and Freddie PAC and employee contributions,
has received more than $75,000 from the two enterprises and their
employees. The private profit found its way back to the senators
who killed the fix.

There has been a lot of talk
about who is to blame for this crisis. A look back at the story of
2005 makes the answer pretty clear.

Oh, and there is one little
footnote to the story that’s worth keeping in mind while Democrats
point fingers between now and Nov. 4: Senator John McCain was one
of the three cosponsors of S.190, the bill that would have averted
this mess.

On the first leg of the
"McCain Street USA" tour — which will take the
Republican presidential nominee and his running mate, Alaska Gov.
Sarah Palin, to small towns across the heartland — the 30 or so
reporters and crew were walking back to their buses to join the
McCain motorcade when hundreds of townspeople started yelling.

"Stop lying! You are
all liars! Tell the truth!" one woman yelled from the front
of the pack.

The crowd was not menacing
or threatening, but was clearly angry.

"You’re telling lies!
Stop the lies!" one man yelled. Asked why the crowd was so
angry, Linda J. Green of Mequon, Wisc., said: "I’m thinking
the press is very biased."

An estimated 123 people were
shot and killed over the summer. That’s nearly double the number
of soldiers killed in Iraq over the same time period.

In May, cbs2chicago.com
began tracking city shootings and posting them on Google maps.
Information compiled from our reporters, wire service reports and
the Chicago Police Major Incidents log indicated that 123 people
were shot and killed throughout the city between the start of
Memorial Day weekend on May 26, and the end of Labor Day on Sept.
1.

According to the Defense
Department, 65 soldiers were killed in combat in Iraq. About the
same number were killed in Afghanistan over that same period.

In the same time period, an
estimated 245 people were shot and wounded in the city.