Thread: OOPS! Obama Cant Blame McCain For The Economy!

McCain Co Sponsers A Bill And Predicts Foul Play At Fannie Mae And Freddie Mac (IN 2005) :

S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005 (GovTrack.us)
S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005

Sponsor: Sen. Charles Hagel [R-NE]
Cosponsors [as of 2007-01-08]
Sen. Elizabeth Dole [R-NC]
Sen. John McCain [R-AZ]
Sen. John Sununu [R-NH]

Bill Text: Summary | Full Text
Status: Introduced Jan 26, 2005
Scheduled for Debate -
Voted on in Senate -
Voted on in House -
Signed by President -

This bill never became law. This bill was proposed in a previous session of Congress. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven't passed are cleared from the books.

Last Action: Jul 28, 2005: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.
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John McCain's Speech In Support Of Federal Housing Enterprise Regulatory Reform Act of 2005

GovTrack: Senate Record: FEDERAL HOUSING ENTERPRISE REGULATORY REFORM... (109-s20060525-16)
Sen. John McCain [R-AZ]: 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.


Concludsion:

If The Democrats (Who Were Getting Paid Off By Fannie And Freddie) Didnt Block The Bill, We Could Have Avoided The Economic Down Turn We See Today! John McCain Saw This Coming! So Much For Barack Obama's Asertion That McCain Doesent Know Anything About The Economy!
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Fannie Mae and Freddie Mac Invest in Lawmakers
OpenSecrets | Update: Fannie Mae and Freddie Mac Invest in Lawmakers - Capital Eye

Published by Lindsay Renick Mayer on September 11, 2008 11:26 AM | Permalink | Comments (9)
When the federal government announced two months ago that it would prop up mortgage buyers Fannie Mae and Freddie Mac, CRP looked at how much money members of Congress had collected since 1989 from the companies. On Sunday the government completely took over the two government-sponsored enterprises, and we've returned to our data to bring you the updates, this time providing a list of all 354 lawmakers who have gotten money from Fannie Mae and Freddie Mac (in July we posted the top 25). These totals are based on data released electronically from the FEC on Sept. 2 and include contributions to lawmakers' leadership PACs and candidate committees from the floundering companies' PACs and employees. Current members of Congress have received a total of $4.8 million from Fannie Mae and Freddie Mac, with Democrats collecting 57 percent of that. This week we also wrote about how much money lawmakers had invested of their own money in the companies last year--a total of up to $1.7 million.

All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008

Name ....................... Grand Total .Total from PACs..Total from Individuals

Dodd, Christopher J D $165,400 ........ $48,500 ............. $116,900
Obama, Barack D ...... $126,349 ........ $6,000 ............... $120,349
Kerry, John D ........... $111,000 ........ $2,000 ............... $109,000
Bennett, Robert F R .. $107,999 ........ $71,499 .............. $36,500
Bachus, Spencer R ... $103,300 ........ $70,500 .............. $32,800
Blunt, Roy R ............ $96,950 .......... $78,500 ............. $18,450
Kanjorski, Paul E D .... $96,000 .......... $57,500 ............... $38,500
Bond, Christopher S R $95,400 .......... $64,000 .............. $31,400
Shelby, Richard C R .. $80,000 .......... $23,000 .............. $57,000
Reed, Jack D ........... $78,250 .......... $43,500 .............. $34,750
Reid, Harry D ........... $77,000 ......... $60,500 ............... $16,500
Clinton, Hillary D ........ $76,050 ......... $8,000 ............... $68,050
Davis, Tom R ............ $75,499 ......... $13,999 .............. $61,500
Boehner, John R ........ $67,750 ........ $60,500 .............. $7,250
Conrad, Kent D .......... $64,491 ........ $22,000 .............. $42,491
Reynolds, Tom R ....... $62,200 ........ $53,000 .............. $9,200
Johnson, Tim D ......... $61,000 ........ $20,000 .............. $41,000
Pelosi, Nancy D ......... $56,250 ........ $47,000 .............. $9,250
Carper, Tom D .......... $55,889 ........ $31,350 .............. $24,539
Hoyer, Steny H D ...... $55,500 ........ $51,500 ............... $4,000




McCain, John S R .... $21,550 .......... $0 ....................... $21,550

Concludsion:

Barack Obama Recieved $126,349 In Influence Money From Freddie and Fannie in 3 Years. Thats $42,116 per year in office! More Than Any Other Politition!!!!

John McCain Recieved $21,550 From Freddie And Fannie In 19 Years. Thats A Total Of $1,134 Per Year.

Freddie And Fannie Bought Influence From Polititions Like Barack Obama In Order To Keep An Investigation And Regulation Off Of Their Back While They Gave Out Bad Loans! Note that There Still Hasent Been An Investigation!

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Fannie Mae Big Shots (Democrats):

James A. Johnson, former chairman and CEO: Aide to Vice President Walter Mondale; recently led Sen. Barack Obama's vice-presidential search team.

Obama Has The Former CEO Of Fannie Mae On VP Search Team!!!

Jamie Gorelick, former vice chairwoman: Deputy attorney general under President Bill Clinton; former Defense Department general counsel; member of 9/11 Commission

Franklin D. Raines: former chairman and CEO: Budget director under Clinton

Thomas E. Donilonformer executive vice president: Former assistant secretary of state under Clinton; senior adviser to Michael Dukakis' presidential campaign; national campaign coordinator for Walter Mondale's presidential campaign; congressional liaison for President Jimmy Carter.

Louis J. Freeh, board member: Director of the FBI under Clinton;

Steve Ricchetti, outside lobbyist: Deputy chief-of-staff to Clinton

Barney Frank : The House Financial Services Committee chairman and Democratic congressman from Massachusetts has long been a proponent of both Fannie and Freddie, assuring the public that their mission to encourage home ownership outweighed the distortive risks they brought to the market, and that the federal government was not, in fact, on the hook for their liabilities.

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Franklin Raines - Wikipedia, the free encyclopedia
Franklin Raines Former CEO OF FANNIE MAE

Franklin Delano Raines (born January 14, 1949 in Seattle, Washington) is the former chairman and chief executive officer of Fannie Mae who served as White House budget director under President Bill Clinton.

The son of a Seattle janitor [1], Raines graduated from Harvard University, Harvard Law School; and Magdalen College, Oxford University as a Rhodes Scholar. He served in the Carter Administration as associate director for economics and government in the Office of Management and Budget and assistant director of the White House Domestic Policy Staff from 1977 to 1979. Then he joined Lazard Freres and Co., where he worked for 11 years and became a general partner. In 1991 he became Fannie's Mae's Vice Chairman, a post he left in 1996 in order to join the Clinton Administration as the Director of the U.S. Office of Management and Budget, where he served until 1998. In 1999, he returned to Fannie Mae as CEO, "the first black man to head a Fortune 500 company."[1]

On December 21, 2004 Raines accepted what he called "early retirement" [2] from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities. He is accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses [3].

In 2006, the OFHEO announced a suit against Raines in order to recover some or all of the $50 million in payments made to Raines based on the overstated earnings [4] initially estimated to be $9 billion but have been announced as 6.3 billion.[2].

Civil charges were filed against Raines and two other former executives by the OFHEO in which the OFHEO sought $110 million in penalties and $115 million in returned bonuses from the three accused.[5] On April 18, 2008, the government announced a settlement with Raines together with J. Timothy Howard, Fannie's former chief financial officer, and Leanne G. Spencer, Fannie's former controller. The three executives agreed to pay fines totaling about $3 million, which will be paid by Fannie's insurance policies. Raines also agreed to donate the proceeds from the sale of $1.8 million of his Fannie stock and to give up stock options. The stock options however have no value. Raines also gave up an estimated $5.3 million of "other benefits" said to be related to his pension and forgone bonuses.[6]

An editorial in The Wall Street Journal called it a "paltry settlement" which allowed Raines and the other two executives to "keep the bulk of their riches." [7] In 2003 alone, Raines's compensation was over $20 million.[3]

A statement issued by Raines said of the consent order, "is consistent with my acceptance of accountability as the leader of Fannie Mae and with my strong denial of the allegations made against me by OFHEO."[4]

In a settlement with OFHEO and the Securities and Exchange Commission, Fannie paid a record $400 million civil fine. Fannie, which is the largest American financier and guarantor of home mortgages, also agreed to make changes in its corporate culture and accounting procedures and ways of managing risk. [8]

In June 2008 Wall Street Journal reported that Franklin Raines was one of several politicians who received below market rates loans at Countrywide Financial because the corporation considered the officeholders "FOA's"--"Friends of Angelo" (Countrywide Chief Executive Angelo Mozilo). He received loans for over $3 million while CEO of Fannie Mae.

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James A. Johnson (businessman - Wikipedia, the free encyclopedia)
James A. Johnson: Former CEO Of Fannie Mae

James A. Johnson is a United States Democratic Party political figure. He was the campaign manager for Walter Mondale's failed 1984 presidential bid and chaired the vice presidential selection process for the presidential campaign of John Kerry. In the 2008 election, he is a member of the vice-presidential selection process for the presumptive Democratic nominee, Senator Barack Obama.

Johnson has long been one of Washington's most prominent leaders, holding leadership positions in business, the arts, and politics.

Johnson began his career as a faculty member at Princeton University, later moving on to the United States Senate as a staff member and to the Dayton-Hudson Corporation (now Target Corp.) as director of public affairs. He was executive assistant to Vice President Walter Mondale during the entire Carter Administration (1977-1981). Later, he founded and headed Public Strategies, a private consulting firm, from 1981 to 1985 before leaving for Lehman Brothers.

From 1991 to 1998, he served as chairman and chief executive officer of the Federal National Mortgage Association (Fannie Mae), the quasi-public organization that guarantees mortgages for millions of American homeowners. Previously, he was vice chairman of Fannie Mae (1990-1991) and a managing director with Lehman Brothers (1985-1990).

As of 2006, he is a vice chairman of the private banking firm Perseus LLC, a position he has held since 2001. He is also a board member at Goldman Sachs, Gannett Company, Inc., a media holding group, KB Home, a home construction firm, Target Corporation, Temple-Inland, and UnitedHealth Group.

Johnson has also served as chairman of both the Kennedy Center for the Arts (1996-2004) and the Brookings Institution (1994-2003). He is also a member of the American Academy of Arts and Sciences, the American Friends of Bilderberg, the Council on Foreign Relations, and the Trilateral Commission.

On May 22, 2008, Democratic Party officials confidentially divulged that Obama had asked Johnson "to lead the process" for selecting Obama's running mate.[1] On June 4, 2008, Obama announced the formation of a three person committee to vet vice presidential candidates, including Johnson.[2] However, Johnson soon became a source of controversy when it was reported that he had received loans directly from Angelo Mozilo, the CEO of Countrywide Financial, a company implicated in the U.S. subprime mortgage lending crisis.[3] Although he was not accused of any wrongdoing and was initially defended by Obama on the grounds that he was simply an unpaid volunteer, Johnson announced he would step down from the vice-presidential vetting position on June 11, 2008 in order to avoid being a distraction to Obama's campaign. [4]
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Fannie Mae - Wikipedia, the free encyclopedia
History Of Fannie Mae

The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a publicly owned government sponsored enterprise (GSE). It is a stockholder-owned corporation authorized to make loans and loan guarantees. Fannie Mae is the leading participant in the U.S. secondary mortgage market, which serves to provide liquidity to the primary mortgage market to ensure that mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies have enough funds to lend to home buyers. As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) own or guarantee about half of the U.S.'s $12 trillion mortgage market. As a result, the corporations were particularly affected by the housing market downturn and credit crunch that began in 2007. On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that Fannie Mae and Freddie Mac were being placed into conservatorship of the FHFA (see Federal takeover of Fannie Mae and Freddie Mac). The action is "one of the most sweeping government interventions in private financial markets in decades".[2][3][4]

Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.

In 1968, to remove the activity of Fannie Mae from the annual balance sheet of the federal budget, it was converted into a private corporation.[5] Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae).
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WHY Fannie And Freddie Gave Bad Loans To People Who Could Not Afford Them!
Clinton Proposes New Goals for Fannie Mae, Freddie Mac
Clinton Proposes New Goals for Fannie Mae, Freddie Mac | Journal Record, The (Oklahoma City) | Find Articles at BNET

WASHINGTON (AP) _ The Clinton administration is proposing new goals for the nation's two largest investors in home mortgages that are designed to increase the supply of affordable housing.

The companies are the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. Known respectively as Fannie Mae and Freddie Mac, both are congressionally chartered, shareholder-owned companies.

The Department of Housing and Urban Development said Monday the goals call for 38 percent of mortgage purchases by the investors this year to support low- and moderate-income housing.

The low- and moderate-income goals, which have been 30 percent, would increase to 40 percent next year.

The department also proposed setting goals of 11 percent in 1995 and 12 percent in 1996 to support housing opportunities for very low-income families.

A third goal would require the two companies to focus 18 percent of their business this year in urban and rural communities underserved by the mortgage industry. The goal would be 12 percent in 1996.

The goals would become effective after a public-comment period ending May 2.

Fannie Mae and Freddie Mac purchase about 70 percent of the nation's conventional mortgages from lenders, such as banks, and package them into securities, which they sell to investors.

By purchasing mortgages, the companies make more money available for new housing loans.

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More About The Clinton Administration And fannie Mae/Fannie Mac

Examining Fannie Mae - washingtonpost.com
YID With LID: Bill Clinton's Role In the Sub-Prime Bankruptcies

YouTube - Democrats Created The Housing Crisis

The Mortgage Crisis

Originally Posted by Commissioner

The Mortgage Crisis

Thats Great! Please Feal free To Post That In This Thread! And leave the link!

Whose policies led to the credit crisis?

Hot Air Blog Archive Whose policies led to the credit crisis?

The credit crisis and the lack of oversight over government-subsidized lenders like Fannie Mae and Freddie Mac occurred on the watch of George Bush, and many blame his economic team for their lack of oversight in the collapse. Barack Obama has made this point one of his major campaign themes, arguing that John McCain would provide more of the same failures that Bush did. However, what many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices — and Democrats blocked it.

The New York Times reported this five years ago: New Agency Proposed to Oversee Freddie Mac and Fannie Mae - New York Times

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.

This should have been a no-brainer, right? With hindsight, we can see that the Bush administration had accurately diagnosed the problem in the lending market and had a plan to address it. Fannie Mae and Freddie Mac reluctantly supported the plan. However, Democrats objected (emphases mine):

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.

Sounds a little like the Democratic denial of problems in Social Security, doesn’t it? Nothing to see here, no crisis on the horizon. Everybody just move along, now. The Democrats had forced lenders to assume more risk at lower interest rates in the 1990s, as IBD points out today IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- The Real Culprits In This Meltdown , and they didn’t want to countenance an end to their populist policies:

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.Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.
And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.

It was the Bush administration that wanted to rein in the madness in the credit markets, and the Democrats who wanted to extend the Clinton policies that created the crisis we have now. After the fit hit the shan, as Michelle says, these same Democrats want to shift blame back to the administration that wanted to increase oversight and curtail risk in lending practices while reducing patronage at the giant GSEs.
The Bush administration isn’t blameless in letting this get out of hand, but clearly the origins of the disaster and the efforts to keep bad policies in place fall on the Democrats in this case.

UPDATE: Obama #2 in Lehman Brothers Contributions! OpenSecrets | Brothers Grim: Is Lehman Next? - Capital Eye


John Rhea - (over $500,000) Co-Head of Lehman Bros. Global Investment Banking
Mark Gilbert - (over $500,000) Lehman Brothers Senior Executive
Christine Forester - (over $500,000) Lehman Brothers Senior Executive
Theodore Janulis – Bundler (over $100,000) & Lehman Brothers Head of Global Mortgages
Nadja Fidelia – Bundler (over $50,000) & Managing Director of Lehman Brothers

............................Grand Total ... Total from PACs .. Total from Individuals
Clinton, Hillary D .... $409,980 .......... $3,000 ..............$406,980
Obama, Barack D ... $395,574 ........... $0 .................. $395,574

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Politically Drunk On Power!: Obama's Sub-Prime Buddies! Lehman Brothers, Merrill Lynch, & More

As Senator Obama and his Democratic colleagues attempt to tie this weeks financial meltdown to John McCain, perhaps we need to re-examine the candidate who has benefited the most from the very Wall Street Executives who have brought us this financial crisis. Obama’s campaign has undergone little scrutiny on his long-standing ties to the financial and banking community. In Obama’s speeches across the country he has repeatedly criticized the Bush administration for allowing “evil” subprime mortgage lenders and investment banks to lead this county into our current mortgage meltdown. Obama’s rhetoric on the mortgage crisis has been pointed and blunt, as stated on his own campaign website, “Obama will crack down on fraudulent brokers and lenders…Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices”.

Throughout the campaign season Obama has attacked Wall Street’s financial sector and run a campaign based largely upon his “good judgment”. The problem with Obama’s rhetoric rests in the fact that tucked away in his database of 2.5 million donors is the approximately 180,000 power brokers that have funded nearly 60% of his campaign. Included in this list are the more than 594 campaign bundlers including 15 lobbyist bundlers who have accounted for over $140 million in contributions. Included in this list are just 36 bundlers accounting for over $18 million dollars, with two bundlers raising over $1 million, and one over $2 million. These amounts are impressive considering that just 552 individuals have accounted for nearly 1/3 of his total campaign contributions. Of course determining the occupation can be tricky considering the Obama campaign lists nearly 100 bundlers as having unknown occupations, nearly 100 who are listed as "self-employed", and dozens of "homemakers" and "retired" individuals.

Among Obama's campaign contributors are many Lehman Brothers Executives, such as CEO Richard Fuld ($2,300), President Joseph Gregory ($4,600) and dozens of other top Lehman Executives. On June 19th, Lehman shareholders filed suit against Fuld and Gregory for the company’s exposure in the subprime market. In addition to dozens of Lehman executives are Obama's bundlers from Lehman Borthers who have raised top dollar for the campaign. Direct contributions from Lehman Brothers have exceeded $395,000 for Senator Obama.

John Rhea - (over $500,000) Co-Head of Lehman Bros. Global Investment Banking
Mark Gilbert - (over $500,000) Lehman Brothers Senior Executive
Christine Forester - (over $500,000) Lehman Brothers Senior Executive
Theodore Janulis – Bundler (over $100,000) & Lehman Brothers Head of Global Mortgages
Nadja Fidelia – Bundler (over $50,000) & Managing Director of Lehman Brothers

Where have all the libs gone?

Originally Posted by kgpoolerev

Where have all the libs gone?

Liberals dont understand economics nor do they understand what to do in an economic crisis. Now that we are in one they use that lack of understanding to blame the crisis on Bush and McCain. This thread puts that wild rumor to rest. Therefore they are not only illequipt to post in this thread but they know that it is a losing arguement as well! Thus the scilence!

UPDATE: Just the Facts: The Administration's Unheeded Warnings About the Systemic Risk Posed by the GSEs

Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... Dems Ignored Warnings

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.

The White House Just the Facts: The Administration's Unheeded Warnings About the Systemic Risk Posed by the GSEs released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001.
Unfortunately, Congress did not act on the president's warnings:


** 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)