(Guest Post by Bill Dyer a/k/a Beldar)

The NRCC has released an excellent campaign-season video, but unfortunately I can't manage to properly embed it here, so you'll have to follow this link to watch it.

The only improvement I could imagine for this spot would be at least a prominent mention of Senate Bill 190 in the 190th Congress, the Federal Housing Enterprise Regulatory Reform Act of 2005. First introduced on January 26, 2005, its first listed purpose was to establish "an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac)."

On May 25, 2006, Sen. John S. "Cassandra" McCain (R-AZ) — alarmed by intervening recent events — joined the original three GOP co-sponsors of S.190 and went on record predicting the exact crisis we're in now (boldface mine):

Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac — known as Government-sponsored entities or GSEs — and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

For a combination of reasons — reasons that reflect especially poorly on Democrats (who would not add bipartisan support and, as the ad shows, were vigorously denying any problems and taking contributions), but also on other Republicans (some of whom were also receiving contributions from Fannie Mae and Freddie Mac) — John McCain's call for reform was not heeded. Nor were similar calls for reform by President Bush. And the Federal Housing Enterprise Regulatory Reform Act died with the end of the 190th Congress when the GOP lost control of Congress.

Therein, friends and neighbors, lay the origins of the crap sandwich, and our last, best chance to have prevented the crisis which yesterday forced America to eat it.