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Who got more money from Freddie Mac & Freddie Mae; McCain or Obama?; Dems guilty for Freddie Mac and Fannie Mae; and the lack of oversight
Topic Started: Sep 17 2008, 08:49 AM (316 Views)
Dwayne
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Quote:
 
Wall Street Blues Hit the Presidential Race

September 17, 2008 - by Stephen Green

As our financial markets enter a near-meltdown the likes of which we haven’t seen since the Great Depression, two questions need to be asked: “Who is to blame?” and “What will our next president do?”

Investor’s Business Daily thinks they know who the culprit is — the president. The ex-President Bill Clinton, to be exact. From a [1] recent editorial:

But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.

For his part President Bush has done little to deepen the crisis, and his Federal Reserve Chairman, Ben Bernanke, has done much to alleviate the problem. Some would say he’s done too much — the Fed’s seemingly endless injections of liquidity have maimed the dollar and spiked inflation. Monica Lewinski and Hillary Clinton, it would seem, aren’t the only ones still paying for Clinton’s sins.

But what about our next president?

When it comes to Lehman Brothers in particular, both candidates have taken lots of donations. [2] Obama has received almost $400,000 from Lehman employees in his three-plus years in the Senate. McCain has gotten less than $150,000 from them since 1989. Certainly both have benefited from Lehman’s largess, and simply taking donations doesn’t prove any kind of corruption. But a hundred k a year certainly cuts into Obama’s message of “change.” “Hope,” too.

In fact, of the nearly three million dollars Lehman employees and PAC distributed in the last 19 years, just two senators — Obama and Clinton — received more than a quarter of the total, split nearly evenly. McCain got about five percent.

Nevertheless, McCain isn’t exactly jumping on board the free market bandwagon.

VodkaPundit co-blogger [3] Will Collier noted that McCain [4] said

that the U.S. needs to strengthen its oversight of markets while remaining aware of the “risk of overregulation.” The Republican senator said regulators also need to “do a better job in reining in short sellers.”

In other words, when Congressional oversight of banks forces banks into taking risks they can’t afford, the solution is more Congressional oversight of banks. To put it more plainly: When the boat is taking on water, open up the taps.

And what’s the Obama Plan? In his own words:

This country can’t afford another four years of this failed philosophy. For years, I have consistently called for modernizing the rules of the road to suit a 21st century market - rules that would protect American investors and consumers. And I’ve called for policies that grow our economy and our middle-class together. That is the change I am calling for in this campaign, and that is the change I will bring as President.

If there’s been an actual governing philosophy these last four years — other than encouraging Republicans to spend like Democrats — I can’t find it. The Atlantic’s Megan McArdle calls Obama’s response “[5] high-test hooey.” She continues:

This was not some criminal activity that the Bush administration should have been investigating more thoroughly; it was a thorough, massive, systemic mispricing of the risk attendant on lending to people with bad credit. (These are, mind you, the same people that five years ago the Democrats wanted to help enjoy the many booms of homeownership.) Lehman, Bear, Merrill and so forth did not sneakily lend these people money in the hope of putting one over on the American taxpayer while ruining their shareholders and getting the senior executives fired. They got it wrong. Badly wrong. So did everyone else.

Maybe McCain’s solution fails the sniff test, because economic populism is what the public wants when things go wrong — even though the cure is worse than the disease. And even though the “cure” caused the disease in the first place.

Maybe Obama isn’t being too specific, because he doesn’t want anyone to look too closely. They might find there’s more — and less — there than meets the eye.

Finally, [6] Brett Arends warns, “Taxes are going up sooner or later anyway, no matter who wins the election, because of our gigantic federal deficits. (If you think Lehman Brothers was bad, you should look at Uncle Sam).”

Indeed. When it comes to large-scale theft, even the most politically-connected Wall Street boys are pikers compared to Congress.


--------------------------------------------------------------------------------

Article printed from Pajamas Media: http://pajamasmedia.com

URL to article: http://pajamasmedia.com/blog/wall-street-blues-hit-the-presidential-race/

URLs in this post:
[1] recent editorial: http://www.ibdeditorial.com/IBDArticles.aspx?id=306370789279709
[2] Obama has received almost $400,000: http://www.opensecrets.org/news/2008/09/brothers-grim-is-lehman-next.html
[3] Will Collier noted: http://pajamasmedia.com”Just
[4] said: http://pajamasmedia.com”http://www.marketwatch.com/news/story/mccain-calls-more-regulation-curbing/story.aspx?guid={7CA1329F-B0F9-444C-B23B-91384EAF2251}&dist=hpmp”
[5] high-test hooey: http://meganmcardle.theatlantic.com/archives/2008/09/obama_goes_for_the_jungular.php
[6] Brett Arends warns: http://finance.yahoo.com/banking-budgeting/article/105753/10-Ways-to-Protect-Your-Finances-From-the-Crisis


Obama is an empty suit and a sellout.
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Dwayne
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Just to show who had the financial incentive to maintain the status quo with Freddie Mac and Fannie Mae...
Quote:
 
Top Recipients of Fannie Mae and Freddie Mac
Campaign Contributions, 1989-2008

Name | Office | Party/State | Total

1. Dodd, Christopher J | S | D-CT | $133,900

2. Kerry, John | S | D-MA | $111,000

3. Obama, Barack | S | D-IL | $105,849

4. Clinton, Hillary | S | D-NY | $75,550

5. Kanjorski, Paul E | H | D-PA | $65,500

http://www.opensecrets.org/news/2008/07/top-senate-recipients-of-fanni.html


Which shows why President Bush couldn't get this passed in 2003...
Quote:
 
September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.

The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.

At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.

Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.

After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.

''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.

Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.

Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''

The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.

Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.

''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=


Democrats!!!
Edited by Dwayne, Sep 18 2008, 07:32 PM.
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Dwayne
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Here is the interim CEO of the Federal National Mortgage Association, Daniel Mudd, touting the past support for democrats from Fannie Mae the need for future support from democrat ...
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Hoss
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I combined these as they are nearly the same topic.

-Hoss
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Dwayne
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ok... I thought two separate, because one is talking about Obama specifically and the other about democrats in general.
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RTW
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Dwayne
Sep 18 2008, 06:37 PM
Of the 25 listed,

16 Democrats received $966,778

9 Republicans received $364,348

I'm not a big fan of "less guilty". If these were bribes specifically to allow Freddie and Fannie to continue to operate without oversight, then they're all guilty.

Some contributions may be bribes, others may be legitimate. Who knows which is which.


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Dwayne
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^^^

Whoever... D or R, I don't care... If any elected official was taking money and then looking the other way, they need to go NOW.
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Hoss
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Especially Senator Marvin K. Mooney.

(sorry, I have been drinking.)
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Dwayne
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How the Democrats Created the Financial Crisis: Kevin Hassett

Commentary by Kevin Hassett

Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

To contact the writer of this column: Kevin Hassett at khassett@aei.org

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0


Democrats disgust me.
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Hoss
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Don't make me use my bare hands on you.
Listening to and reading the news this morning, I found something that scared me worse that the present financial crisis: listening to Nancy Pelosi, Harry Reid, Barney Frank, Chuch Schumer talk about how the plan to fix it and realizing that they are running things in Washington.
Edited by Hoss, Sep 22 2008, 04:57 PM.
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Dwayne
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^^^

What scares me worse than that, is that they're going to try to fix it now.
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Dwayne
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Quote:
 
America Beyond The Point Of No Return
By Doug Patton
September 23, 2008

"Liberty means responsibility. That is why most men dread it." - George Bernard Shaw

A half century ago, Russian-born writer Ayn Rand warned about the creeping socialism she saw in America even then. In her thousand-page tome, "Atlas Shrugged," Rand told the story of John Galt, a shadowy figure who is so fed up with high taxes, burdensome regulations and interference from government, he secretly recruits the best and brightest of American capitalism - the captains of industry - to withdraw from society to the mountains of Colorado, leaving the growing welfare state without any visible means of support.

Imagine what Ayn Rand would say about the federal government coughing up quantities of cash even career bureaucrats didn't talk about in the 1950s; all to bail out quasi-government entities whose overseers were complicit in the failures of those very institutions.

Republicans and Democrats alike share the blame for this mess. It was largely created out of a misguided need (mostly by Democrats) to feel as though America was actually doing something to help the poor own their own homes. This may be a worthwhile goal, but when people who have absolutely no hope of paying back loans are approved to buy a home, one has to ask, "Who is going to pick up the tab for all this?" Answer: You are, to the tune of at least a trillion dollars, a sum most of us cannot even fathom.

Over the last decade, Democrats like U.S. Rep. Barney Frank, D-MA, chairman of the House Financial Services Committee, and U.S. Sen. Christopher Dodd, D-CN, chairman of the Senate Banking Committee, have insisted that these ridiculous loans be made. Former Attorney General Janet Reno, carrying out the wishes of her boss, threatened legal action against any institution that discriminated or "redlined." I was very disappointed to hear John McCain say on CBS's "60 Minutes" that he admired New York State Attorney General Andrew Cuomo and would consider him to head up the Securities and Exchange Commission. As Bill Clinton's Secretary of Housing and Urban Development (HUD), Cuomo was up to his eyeballs pushing the sub-prime mortgages that started these dominoes tipping in the first place.

And where were Newt Gingrich and the Republicans in the 1990s when Clinton and his cronies were building this house of cards? The GOP held the House and the Senate during most of Clinton's tenure. After 2000, they also held the White House. Why did this situation continue?

The rule in Washington seems to be this: If you squander your money and fail to provide for yourself, the government will take care of you. If you save, invest wisely and prepare for your retirement, you will be penalized in order to pay for those who did not. A perfect example was the tax increase passed by Clinton and the Democrats who still controlled Congress during the first two years of his administration. Seniors who had saved and invested for retirement, and who made more than $34,000 ($44,000 per couple) received a tax increase under that plan.

The frightening thing about the trillion dollar bailout is that everyone seems so willing to go along with it. It is as though we have finally accepted the idea that government is the one entity that has the resources to pull off such a plan. Well, guess what. Government doesn't have a nickel. Government is in the hole to the tune of ten trillion dollars. (Put that number in your pipe and fathom it!) But government has two things no one else has. Government has the power to print money and the power to raise taxes.

Alternatives may yet see the light of day in Congress. Perhaps in this hour of crisis, our representatives will see that the private sector could probably pull itself out of this with some very favorable tax policy. At least try repealing the capital gains tax to see if private firms wouldn't consider buying up these companies.

Or better yet, how about the Fair Tax, so that the billions in offshore accounts can come flooding back into the economy without fear of being sacked by the feds?

Those who for years have predicted America's slide into the cesspool of collectivism have been vindicated by the taxpayer-financed bailout of the mortgage and insurance industry. In essence and in fact, the United States government has nationalized these industries. Hugo Chavez no doubt is amused.

http://www.gopusa.com/commentary/dpatton/2008/dp_09231.shtml


The fact that the media is not all over this story about the democrats complicity, nah, dare I say responsibility for this meltdown is just more proof that the media is in the backpockets of the democrats.
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Dwayne
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More evidence showing democrats to blame for the Fannie Mae and Freddie Mac mess.
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Dwayne
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Just the Facts: The Administration's Unheeded Warnings About the Systemic Risk Posed by the GSEs

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

2001

April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."

2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004

February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)

2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)

2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

"Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)

"[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

"Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

http://www.whitehouse.gov/news/releases/2008/09/20080919-15.html


Don't expect the alphabet soup of news networks to cover this.
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Hoss
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Don't make me use my bare hands on you.
I will echo your artical. Where were the Republicans, who controlled congress a great deal of this time, during all of this???

And now I'll answer my rhetorical question: they were focusing on guarding their own house and senate seats rather than doing anything useful.

There is a comedian, can't remember his name and don't really like him, but anyway, he refers to our two parties as "The Party of Bad Ideas" and "The Party of No Ideas". I somewhat agree. I would have to place the Republican Party in the latter category with few exceptions.
Edited by Hoss, Sep 24 2008, 08:43 AM.
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