Barack Obama has claimed that he foresaw the subprime mortgage collapse and took steps to warn the Treasury — by writing a letter. That claim has come in two presidential debates. Peter Wallison reminds Wall Street Journal readers of the obvious in pointing out that Obama serves as a Senator and had the power to draft legislation, not letters, to prevent the collapse. Instead, Obama voted present:

Finally, on the matter of deregulation and the financial crisis, Sen. Obama should consider his own complicity in the failure of Congress to adopt legislation that might have prevented the subprime meltdown. In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward. Instead, by his own account, Mr. Obama wrote a letter to the Treasury Secretary, allegedly putting himself on record that subprime loans were dangerous and had to be dealt with. This is revealing; if true, it indicates Sen. Obama knew there was a problem with subprime lending — but was unwilling to confront his own party by pressing for legislation to control it. As a demonstration of character and leadership capacity, it bears a strong resemblance to something else in Sen. Obama’s past: voting present.

I mentioned this in an earlier debate analysis. It demonstrates a key difference between Obama and John McCain. When McCain saw the potential for crisis, he took action by co-sponsoring Chuck Hagel’s Fannie/Freddie reform bill that would have increased regulation on the two GSEs. He spoke in the Senate for its passage.

What did Barack Obama do? He wrote a letter. He didn’t bother to co-sponsor the bill that could have prevented this year’s financial collapse, or to even allow it to come to a vote. Obama talked (allegedly — we have yet to see this letter) while McCain took action.

Now Obama and the same Democrats who pushed Fannie and Freddie to buy a trillion dollars in bad loans want to blame “deregulation” for the crisis. It wasn’t deregulation, and as Wallison points out, the industry didn’t get deregulated at all. Congress created this crisis by pushing Fannie and Freddie into not just buying subprime paper but into transforming it into securities that infected the entire financial system.

Read all of Wallison’s column to see how intellectually dishonest the “deregulation” argument truly is. That’s all Obama has left, however, to distract people from his inaction and his support of government distortion of the lending market to achieve artificial social-policy goals. That’s what makes his alliance with former Fannie Mae chief Jim Johnson such a revealing data point about Obama and the Democrats in general.