MCCAIN LIES ABOUT THE CAUSE OF THE FINANCIAL CRISIS.

I should have sat down and read McCain's speech from this morning earlier. It's frankly insane.

There are certainly plenty of places to point fingers, and it may be hard to pinpoint the original event that set it all in motion. But let me give you an educated guess. The financial crisis we're living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.These quasi-public corporations lead our housing system down a path where quick profit was placed before sound finance. They institutionalized a system that rewarded forcing mortgages on people who couldn't afford them, while turning around and selling those bad mortgages to the banks that are now going bankrupt. Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington's failure.

At the center of the crisis were Fannie Mae and Freddie Mac!? Folks might recall the words "subprime loans" being bandied about rather frequently during this crisis. A subprime loan, in essence, is a loan that doesn't meet requirements for Fannie Mae and Freddie Mac. They were totally separate from the subprime market. [Whoops -- see correction.] But they held lots of other types of mortgage assets. When the subprime market tanked, and investors grew restless, all related real estate assets plummeted as well, and Fannie Mae and Freddie Mac didn't have the liquid capital to cover their debts. They were caught in the liquidity crisis caused by the subprime collapse. But to the blame for the crisis on Fannie Mae and Freddie Mac is like blaming an Orthodox Rabbi for a food shortage that started in the pork market. He may be hungry too, but it sure as hell isn't his fault. Of course, McCain doesn't really blame Fannie Mae and Freddie Mac either. This isn't an "educated guess." It's a political assault.

Two years ago, I called for reform of this corruption at Fannie Mae and Freddie Mac. Congress did nothing. The Administration did nothing. Senator Obama did nothing, and actually profited from this system of abuse and scandal. While Fannie and Freddie were working to keep Congress away from their house of cards, Senator Obama was taking their money. He got more, in fact, than any other member of Congress, except for the Democratic chairmen of the committee that oversees them. And while Fannie Mae was betraying the public trust, somehow its former CEO had managed to gain my opponent's trust to the point that Senator Obama actually put him in charge of his vice presidential search.

There it is. Obama can conceivably be tied to Fannie Mae and Freddie Mac, and thus Fannie Mae and Freddie Mac must be elevated to causal triggers of the financial meltdown (Merrill Lynch, conversely, gave the lion's share of its money to McCain). It's rather amazing: McCain is so far gone that he'll even lie about the causes of the greatest economic crisis the country has faced since the Depression. What's weird is it's not even a good lie. As the Obama campaign will happily tell you, McCain has 26 advisers who are current or former Freddie Mae and Fannie Mac lobbyists. They include his National Finance Chair, his Senate chief of staff, and his transition director. The full list is below the fold for those who are interested. But it's really not very interesting. We've got a real problem here. Not just a political problem. We're facing the possibility of a global finance collapse. We're looking at a potential $1 trillion in taxpayer money. But McCain has a political problem. Most all observers agree the subprime market suffered from insufficient regulation, and the byzantine financial instruments detonating across Wall Street were a product of the same. McCain has been, throughout his career, a proud and constant deregulator. But rather than renounce that history, or use his record to argue for a Nixon-goes-to-China style credibility, he's trying to grasp a resonant message by simply lying. In the only detailed speech he's given on the topic, he's lying about the causal factors of the crisis, or, in a more charitable interpretation, doesn't know what they are and has been misinformed by political advisers who are lying to him about the causes of the crisis. In any case, at this juncture, it's a shameful performance. I'd long ago tossed "country first" atop the pile of hoary political slogans, but as of late, it's becoming much worse than that: A cruel joke, a mocking reminder of what McCain once was, or at least aspired to be.