In 2006 McCain created a bill to reform these organizations that were operating with little regulation. He said,
“For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac… and the sheer magnitude of these companies and the role they play in the housing market… they need to be reformed without delay.” Sen. John McCain, Senate Floor, May 25, 2006.
Here is a video from Fox News yesterday:
Calling For More Regulations
Some people have suggested that the problem that led to our current financial crisis was lax lending regulations. But, that is not the case because Fannie and Freddie were sheltered from the current regulations and allowed to operate under their own monopolistic power. Their regulation standard were the foundation that the entire housing bubble was built on top of.
The answer is not more regulation, because each regulation we add reduces the profits of our financial industry and the entire economy. The real problem was that Freddie and Fannie should not have been allows to operate outside of our existing regulations.
The question is why and who sheltered Freddie and Fannie from the regulation? And the answer is congress did in an attempt to plan the economy by reducing the costs of home loans and increase home ownership, which had the unintended consequences of artificially inflating housing prices.
Apparently Sen. John McCain understood the increasing risks to the housing market years ago, but was unable to get enough support to pass a bill to change the structure of these organizations that have now led us to the largest financial crisis in history.