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Pin the Credit Crisis tail on the Donkey

Submitted by Rensen on Wed, 09/17/2008 - 11:45
in

Why is this info not in every stump speech McCain makes? The democrats scuttled GOP congressional efforts to regulate these organizations!! and they have the gall to call us the responsible party for this mess??

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

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.

 

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.

 

And the democratic response??

 

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.

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Obama, the Senator from Fannie mae

Submitted by Freedoms Truth on Wed, 09/17/2008 - 22:00.

On this theme, of the fact that Democrats, including Obama, were in bed with the corrupt Fannie Mae CEOs who skimmed millions while the risks mounted, I posted the below on Travis Monitor blog. NOTE THAT MCCAIN WAS AS RIGHT IN 2006 ABOUT THE FANNIE MAE ISSUE AS HE WAS ABOUT IRAQ:

http://travismonitor.blogspot.com/2008/09/obama-senator-from-fannie-mae.html

Open Secrets shows that Barack Obama was the second highest benefactor of donations from Fannie Mae and Freddie Mac, at $126,000. The only politician with more was Senator Chris Dodd. That is just the tip of the iceberg.

Obama's top advisors and money-raisers were from Fannie Mae:

"You look at Obama's economic advisers, the guys he has counted on from day one and who have raised him a ton -- and I mean a ton -- of money: Franklin Raines and Jim Johnson, both of them are waist to neck deep in the mortgage debacle."

Both Raines and Johnson have served as CEO of Fannie Mae, with Raines taking over from Johnson. Both are key political and economic advisers to Obama.

"How can Obama go out with a straight face and saw it was Republicans who made this mess, when it is his key advisers who ran the agencies that made the big mess what it is?" says a Democrat House member who supported Sen. Hillary Rodham Clinton. "It's his people who are responsible for what may well be the single largest government bailout in history. And every single one of them made millions off the collapse that are lining Obama's campaign coffers."

In such matters, there is always the factor that money was spread around to both sides, but McCain had according to Open Secrets a smaller level of contributions. The real question is: Who has the judgment to do the right thing based on their previous actions regarding these institutions and who who lead them?

  • John McCain attempted to control Fannie Mae and warned about the potential costs to taxpayers. He said in 2006: "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." - John McCain, May 25 2006
  • Barack Obama has been advised in his Presidential bid by two ex-Fannie Mae CEOs, both having left in scandal. In the case of Raines, it was reported in 2004: "Although Fannie Mae chief Franklin Raines was fired for bungling its books, he’ll get a $26 million parachute — not counting a monthly pension of $116,300 for life. The 55-year-old Washington, D.C. insider and his CFO J. Timothy Howard left their jobs last week under a cloud of suspicion that the execs undermined the financial soundness of Fannie Mae, creating losses of up to $9 billion." NY Post, Dec 28, 2004
  • Obama said and did nothing to point out the malfeasance of these Obama supporters and advisors, and he's had the intention of leaning on these men who created this mess to somehow advise him on how to fix it.
  • Obama and Jack Reed of RI held up any serious reform of Fannie Mae in order to cut out a “low income trust fund” that Fannie had to pay money into to offer loans to bad credit risks. The NILCH (National Institute for low income housing) had a press release that featured Reed and Obama talking about what a wonderful program that was, in May of this year. They were buying votes with Fannie Mae all the while McCain was calling for divesture of some loans in order to shore up Capital Reserves.
  • Obama was not the only Democrat in the tank for Fannie Mae: ‘’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.’’
  • The bailout of Fannie Mae will cost taxpayers more than $250 billion

Obama has been the Senator from Fannie Mae, a say-nothing do-nothing guy when it comes to this GSE. McCain proposed a way to fix the situation. He was rebuffed, in part because of these Democrats who were in the thrall of Fannie Mae's corrupt contribution gravy train.

That is a pity.

McCain was right about the Iraq surge, the President listened and turned that around. To the discredit of those in Washington, McCain was not listened to on this matter and we are paying the price now. One thing is for certain. Senator Obama, the Senator from Fannie Mae, does not have the right answer to this crisis any more than he had the right answer in Iraq.