Democratic presidential nominee Barack Obama laid the blame for the government takeover of mortgage lenders Fannie Mae and Freddie Mac at the feet of Democrats and Republicans alike Monday, saying his own party was complicit in mistakes that led to the companies’ loss of more than $14 billion in the past year.
“I have to be fair on this one,” Obama, a U.S. senator from Illinois, said in an interview on MSNBC’s “Countdown With Keith Olbermann.” “Republicans and Democrats, I think, in Congress did not pay enough attention to the structural problem with Fannie Mae and Freddie Mac.”
The Bush administration announced Sunday that it was seizing the troubled mortgage giants to help reverse the prolonged housing and credit crisis. The companies, which own or guarantee about $5 trillion in home loans — about half the nation’s total — have lost $14 billion in the past year and are likely to pile up billions more in losses until the housing market begins to recover, analysts said.
“They are making big profits and their CEOs are taking in big bonuses when times are good. But there is this implicit federal guarantee when times are bad,” Obama said. “And that was a structural problem that needs to be fixed” by both parties.
But he specifically blamed the Bush administration for failing to keep a closer eye on the overall housing market, which he said allowed Fannie Mae and Freddie Mac to sink deeper into debt before the scope of their difficulties was recognized.
The view of the Bush administration “is basically anything goes, and the government just has to stay out of the way,” Obama said. “That has ironically hurt the market, and one of the things we have got to rediscover is [that] a little bit of well-applied regulation and transparency and accountability actually helps the market, helps the economy grow.”
Obama held out hope that the financial hit from the federal takeover would be limited, saying: “A lot of those are good mortgages. People are paying them. ...
“Taxpayers are going to take a hit,” he added, but “how big it is, we don’t yet know.”
Iraq surge a ‘legitimate surprise’
Obama also acknowledged that he had misread the impact of the “surge” of tens of thousand of new U.S. troops last year, which he said had significantly reduced violence in Iraq.
“It is a legitimate surprise,” he said. “I think our troops deserve all the credit in the world for that happening, along with the Sunni awakening that occurred, the Shia militias standing down.”
He insisted, however, that the U.S. invasion of Iraq was a “huge strategic blunder that strengthened Iran, took our eye off the ball in Afghanistan [and] let al-Qaida off the hook.”
Obama also criticized the government of Iraqi Prime Minister Nouri al-Maliki for not taking more control of its own affairs, saying a clear signal that U.S. forces would be removed would pressure al-Maliki and his government into “getting their act together.”
“They aren’t spending their own oil revenues,” he said. “They’ve got $80 billion parked in New York banks while we’re spending $10 billion a month.”
“It is important for us to understand that, unless we start putting more responsibility in the hands of the Iraqis, we are going to be hamstrung in dealing with the larger battle against terror that is so critical to our long-term security,” he said.
Palin’s ‘résumé’ not an issue
While criticizing the Iraq policy of his Republican opponent, Sen. John McCain of Arizona, Obama declined to question McCain’s choice of Sarah Palin as his vice presidential running mate. Other Democrats have contended that Palin, who has been governor of Alaska for 20 months, is too inexperienced for the job.
“Rather than focus on a résumé, I just want to focus on where she wants to take the country,” Obama said. “As far as I can tell, there has not been any area — economic policy or foreign policy — in which she is different from John McCain or George Bush.”
“The thrust of our argument is going to be that the McCain-Palin ticket is offering the same stuff that has resulted in the middle class struggling, not seeing their incomes go up, seeing their costs go up, falling deeper into debt, at risk of losing their homes to foreclosure, unable to save or retire,” he said.
Olbermann’s interview with Obama was scheduled to air in two parts. The second part is to air on “Countdown” at 8 p.m. ET Tuesday.
By Alex Johnson of msnbc.com.