Despite Claims Today He Warned of this Crisis, McCain in 2007 Said He Didn’t See This Crisis Coming

By Natalie Gewargis

Sep 17, 2008 12:24pm

"Two years ago, I warned that the oversight of Fannie and Freddie was terrible, that we were facing a crisis because of it, or certainly serious problems," Sen. John McCain, R-Ariz., told CBS this morning. "The influence that Fannie and Freddie had in the inside the Beltway, old boy network, which led to this kind of corruption is unacceptable and I warned about it a couple of years ago.”

How does this claim of foresight square with this interview that McCain gave to the Keene (NH) Sentinel, discussing the subprime mortgage crisis, in December 2007?

Q: “Well the dimension of this problem may be surprising to a lot of people, but to many people, to many others there were feelings that there was something amiss, something was going too fast, something was a little too hot.  Going back several years.  Were you one of them? Or, I mean you’re a busy guy, you’re looking at a lot of things, maybe subprime mortgages wasn’t something you focused on every day.  Were you surprised? 

McCain:  “Yeah. And I was surprised at the dot-com collapse and I was surprised at other times in our history.  I don’t know if surprised is the word, but…

Q: “S&Ls?”

McCain: “I don’t — what did you say?”

Q: “The S&Ls."

McCain: "Yeah, the S&Ls."

Q: "Is this bigger than that?

McCain: “I don’t know the dimensions of this.  It’s hard to know what the dimensions are.  As I say, I never thought I’d pick up the paper and see a city in Norway is somehow dramatically impacted by it.  When I say ‘surprised’ I’m not surprised when in capitalist systems that there’s greed and excess. I think it was Teddy Roosevelt who said ‘unfettered capitalism leads to corruption’ or something like that, that people have disputed for years. 

“But so, in this whole new derivative stuff, and SIBs and all of this kind of new ways of packaging mortgages together and all that is something that frankly I don’t know a lot about.

"But I do rely on a lot of smart people that I have that are both in my employ and acquaintances of mine.  And most of them did not anticipate this.  Most of them, I mean I can find some that did.  But, a guy that’s on my staff named Doug Holtz-Eakin, who was once the head of the Office of Management and Budget, said that there was nervousness out there.  There’s nervousness.  There was nervousness that we had such a long period of prosperity without a downturn because of the history of our economy.  But I don’t know of hardly anybody, with the exception of a handful, that said ‘wait a minute, this thing is getting completely out of hand and is overheating.’

"So, I’d like to tell you that I did anticipate it, but I have to give you straight talk, I did not.” 

(Watch the whole thing HERE.)

– jpt

UPDATE: Again, people hear the word "claim" and assume I’m implying something that the word "claim" does not mean. (It means to assert as fact. It does not mean to FALSELY assert as fact.) McCain did indeed deliver a speech on the Senate floor in 2006 in which he warned of a problem with Fannie Mae and Freddie Mac and the risks they posed to the housing market and the economy as a whole. But that said, any attempt to paint him as the Paul Revere of this current crisis doesn’t seem to square with his "straight talk" from November 2007.

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