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McCain’s attempt to fix Fannie Mae, Freddie Mac in 2005; Update: Obama can’t get AIG rightposted at 11:45 am on September 17, 2008 by Ed Morrissey
Send to a Friend | printer-friendly With the financial sector in turmoil today, the media and the politicians have started throwing around blame with the same recklessness as lenders threw around credit to create the problem. Politically, the pertinent question is this: Which candidate foresaw the credit crisis and tried to do something about it? As it turns out, John McCain did — and partnered with three other Senate Republicans to reform the government’s involvement in lending three years ago, after an attempt by the Bush administration died in Congress two years earlier. McCain spoke forcefully on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark):
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.
In this speech, McCain managed to predict the entire collapse that has forced the government to eat Fannie Mae and Freddie Mac, along with Bear Stearns and AIG. He hammers the falsification of financial records to benefit executives, including Franklin Raines and Jim Johnson, both of whom have worked as advisers to Barack Obama this year. McCain also noted the power of their lobbying efforts to forestall oversight over their business practices. He finishes with the warning that proved all too prescient over the past few days and weeks.
What was this bill? The act would have done the following:
(1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), 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); and (2) the Federal Housing Enterprise Board.
Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting.
It never made it out of committee. Chris Dodd, then the ranking member of the Banking Committee and now its chair, was in the middle of receiving preferential loan treatment from Countrywide Mortgage, one of the companies gaming the system in the credit crisis. Meanwhile, Barack Obama took hundreds of thousands of dollars from the lobbyists McCain mentions in this speech, making him the #2 recipient of Fannie/Freddie money:

HEATHER NAUERT: Barack Obama attacking John McCain once again on the economy and the market turmoil today. Our John Gibson has new information on the Democratic presidential nominee and the mortgage mess for us now. What have you got John?
JOHN GIBSON: Alright Heather. Lehman Brothers’ collapse is traced back to Fannie Mae and Freddie Mac, the two big mortgage banks that got a federal bailout a few weeks ago. Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs. A group called the center for responsive politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. Senators getting big Fannie and Freddie political bucks were democrats and number two is Senator Barack Obama.
Now, remember, he has only been in the Senate four years but still managed to grab the number two spot ahead of John Kerry, decades in the senate, and Chris Dodd who is chairman of the senate banking committee. Fannie and Freddie have been creations of the congressional democrats and the Clinton white house, designed to make mortgages available to more people, and as it turned out, some people who couldn’t afford them. Fannie and Freddie have also been places for big Washington democrats to go to work in the semi-private sector and pocket millions. The Clinton administration’s white house budget director Franklin Raines ran Fannie and collected 50 million dollars. Jamie Gurilli, Clinton Justice Apartment Official, worked for Fannie and took home 26 million dollars. Big Democrat Jim Johnson, recently on Obama’s VP search committee has hauled in millions from his Fannie Mae C.E.O. job.
Now remember, Obama’s ads and stump speeches attack McCain and republican policies for the current financial turmoil. It is demonstrably not Republican policy and worse, it appears the man attacking McCain, Senator Obama, was at the head of the line when the piggy’s lined up at the Fannie and Freddie trough for campaign bucks. Senator Barack Obama, number two on the Fannie/Freddie list of favored politicians after just four short years in the senate. Next time you see that ad, you might notice he fails to mention that part of the Fannie and Freddie problem. Heather.
NAUERT: Wow, that’s quite a report, begs the question — where is John McCain on this?
GIBSON: John McCain is a measly $20,000 after over 20 years so he really doesn’t even come close in the political contribution department.
Open Secrets has the list of Congressmen who have benefited from Fannie Mae/Freddie Mac largesse since 1989 (inclusive). Remarkably, after only serving less than four of those 20 years, Barack Obama has vaulted to the #2 position on Capitol Hill. Only Dodd outstripped him. He took more than six times the amount that McCain received in a 20-year period.
The record shows that McCain saw the problem coming and tried to get Congress to act. In 2005, both McCain and Obama served together in the Senate. Did Obama attempt to pass this reform, sign on as a co-sponsor, or even speak out in its favor? The record is tellingly blank.

What I find to be so interesting is the amount of people who obviously are unaware of this highly debated history.

Just yesterday, I was arguing with conservative friends (I am moderate and independent) who claimed that MLK was a Republican. MLK was not and is not ideologically Republican and Obama’s sentiments fall directly in line with what MLK said.

MLK believe that he helped integrate blacks into a burning house (American institutions so I assume that you guys would call him anti-American) and called for a re-ordering of the system and a “redistribution of wealth”. He outlined much of the same sentiments as Barack Obama which are historically accurate. I have argued the same point. The issue for blacks were not solely about integration and as a matter fact, black populations outside of the South had a plethora of issues (social justice, urban decay and policy, economic equality etc…) that went entirely unaddressed by the Civil Rights Movement. This is what MLK was fighting at the end of his life.

This is what Obama was speaking about.

Also, BD I assume that you are a white women whose benefited economically from being attached in some way to white male patriarchy.

Your analogies and analysis are not only completely absurd but also insensitive.

“What do you think of a man who says there have not been enough EEOC complaints under Bush and he is going to ensure people are appointed who will pursue them.”

I’d say that man was paying attention to the systematic and intentional Grover-Norquist-style defunding of the EEOC.

Allow me to quote, from 2004:
“For the past four years under President Bush, the agency’s budget has been frozen at $322 million annually and it has during that period lost some 150 discrimination-case investigators, on top of other staff lost during a years-long hiring freeze. That loss has resulted in a 40,000-case backlog. Martin said that backlog could grow to 70,000 cases by the end of 2008. Financial settlements secured by the EEOC, which increased from $295 million in fiscal 2001 to $415 million in 2004, sank to $274 million in 2006.

The administration’s answer to reducing the backlog appears to be to discourage potential complainants from filing cases. The EEOC has in recent years transferred all of its citizen calls nationwide to a privately contracted call center with “up to” 36 employees. When someone calls to file a discrimination complaint, the call center operators, working from a script as if they were selling magazine subscriptions, are instructed to merely take the complainant’s name and address and mail the person a four-page form. Once the form is filled out and returned, the wait for a preliminary response could take weeks, and a final resolution could take years.”

I’d say that

Yes, I agree that the yellow text isn’t making a contribution. That’s why I ignore it, and focus only on what Obama said, and provide links to the unedited raw audio from the Odyssey program itself.

Obama was not talking about a failure to redistribute the wealth between the time of slavery and the time of the civil rights movement, as far as I can ascertain, and even if he was, then the “problem” he saw would still exist, as that redistribution hasn’t happened between the civil rights era and today, either.

No, it isn’t. Obama uses school funding as an example of courts being reluctant (but occasionally willing) to redistribute money. The discussion is on how reparative justice can be done.

The running yellow commentary in the video is completely misleading and outright wrong at times. It’s amazing that you are all actually taking it as fact, when you can hear how off it is as you’re reading it. The best part of this Youtube clip is that the creator can’t even spell the words he or she is typing. (If your news source didn’t even take the time to use spell check on his Power Point production, he might be a little less than credible.)

What you McCain folks don’t realize is that the wealth has been “redistributed” for years. It’s being taken away from future generations in the form of loans in order to fund a war based on lies. The Bush economy has spent money at a prolific rate, almost unrivaled in the history of the modern world. The debt is now 10.5 trillion dollars, people. That’s $35,000 dollars per head. Instead of taxing you, GW has simply run your credit card up to 35k without telling you. And guess what? There’s interest! YOUR CHILDREN WILL HAVE TO PAY THIS!

http://www.brillig.com/debt_clock/

You’re funding wars with your Social Security and your children’s tax money. Why are you so angry that a small percentage of very wealthy individuals might go back to paying the same tax rates that they were paying 8 years ago? Why are you so eager to fall on your swords so that Exxon Mobile can keep huge profits while you just spend a few hundred dollars a month filling up your tank for an entire summer?

I’ve got to stop visiting these message boards. I must be as sick in the head as some of these Doomsday freaks I see up here. Please take the time to read facts instead of listening to lies and half truths spouted by people who can’t even spell at a 6th grade level.

Spread the word about this and take him down with the truth about his radical
socialist/marxist agenda!

Obama and Biden want to hide when it comes to being asked tough questions that are important to voters.