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Fannie and Freddie

September 16, 2008

Ok, I think that it seems that I will probably end up voting with my wallet first this particular election.  Looking into the tax proposals as they are written and filtering out all the fluff.  That (I think) is going to be very difficult.

I am guessing that the majority of you out there know that in my title I am not referring to friends, family, distant acquaintances.

If you listen to the news or watch it today you know that the Obama campaign (in what I assume is an effort to be “sharper” in its responses to events as they happen) has made some statements that would suggest he is the one who can change this economy for the better.  He made the assessment today that there is no call for a congressional hearing on this subject because “we all know how we got here” <insert wild applause from the audience here>.

However, in doing some reading and checking up on some very interesting links provided to me by wonderful women on my various boards.   I think that after reading remarks that it most definately calls for some looking into.

I’d really like you to read the full entry as to save some space I’m going to post just a portion of remarks.

Im going to start with McCain and where he has been on this issue– not just over the last couple of days but over the years.  He co-sponsored a bill called “FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005″. The statements recorded were made May 2006

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 six 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.

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.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac – known as government sponsored entities or GSEs

OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

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.

That looks to me as though McCain saw what was happening, co-sponsored a bill to act as a preventive measure, then defended his position.  This bill was introduced THREE YEARS ago.  What happened last week and yesterday shouldn’t have happened and I think those who aren’t calling for investigation as well as those who voted to not take action should be held accountable to the American people.  I mean, we are the ones who are bailing out these companies.

Two Years Prior to that the New York Times reported (again please click on the link to read the article in it’s entirety as it is too long to place here):

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 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.

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 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

The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.

”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.

Again— that is not the article in it’s entirety.  I cut and pasted what I thought were interesting points.

I hope you guys don’t mind but the whole situation pisses me off.  Ok back to business– I had to step away for a minute.

So Obama talks about how McCain is funded by lobbyists right.  On the way to the Municiple Court (which is located right next to the Library–yay–but another story for another post) I caught something on the radio the donations of Fannie and Freddie so I made a mental note to check OpenSecrets.org when I got home.  It didn’t take me too long to almost blow a blood vessel… especially in light of these accusations on Lobbyist funding.The time frame here is from 1989-2008.

Dodd, Christopher J S CT D $165,400 $48,500 $116,900
Obama, Barack S IL D $126,349 $6,000 $120,349
Kerry, John S MA D $111,000 $2,000 $109,00

Those are the top three benefactors.  If you look at years in the Senate- I think it is rather telling that Sen. Obama made it into the top three inside of three years (taking into consideration that he has been on the campaign trail for the last 19 months- as he continues to remind the public).

If you don’t want to look at the link provided let me just continue to the top 10 recipients:

Bennett, Robert F S UT R $107,999 $71,499 $36,500
Bachus, Spencer H AL R $103,300 $70,500 $32,800
Blunt, Roy H MO R $96,950 $78,500 $18,450
Kanjorski, Paul E H PA D $96,000 $57,500 $38,500
Bond, Christopher S ‘Kit’ S MO R $95,400 $64,000 $31,400
Shelby, Richard C S AL R $80,000 $23,000 $57,000
Reed, Jack S RI D $78,250 $43,500 $34,750
Reid, Harry S NV D $77,000 $60,500 $16,500

And for the top 20:

Clinton, Hillary S NY D $76,050 $8,000 $68,050
Davis, Tom H VA R $75,499 $13,999 $61,500
Boehner, John H OH R $67,750 $60,500 $7,250
Conrad, Kent S ND D $64,491 $22,000 $42,491
Reynolds, Tom H NY R $62,200 $53,000 $9,200
Johnson, Tim S SD D $61,000 $20,000 $41,000
Pelosi, Nancy H CA D $56,250 $47,000 $9,250
Carper, Tom S DE D $55,889 $31,350 $24,539
Hoyer, Steny H H MD D $55,500 $51,500 $4,000
Pryce, Deborah H OH R $55,500 $45,000 $10,500

I went and did a bit of research to see what I could find in Obama’s voting record during the 109th Congress- which is when McCain’s Act was on the floor.  I invite any who would care to- please double check me.  I searched from the end of May 2006 (based off the date of McCain’s Congressional Notes) to the beginning of the Second Session.  I didn’t find anything directly refering to the act but I did find some interesting votes (and in more than just this issue- and I will try and get to in a seperate post).

Obama:

There was Bill S.2349–29 May 06– which was to provide greater transparency in the legislative process. He voted “nay”.  The motion passed 90-8

Then I found this S.Amendment 2962 to the bill stated above (S.2349)- this was a motion to table that was to clarify the application of the gift rule to lobbyists.  He voted “nay”. The motion Passed 68-30.

I don’t know where I would be able to go to view all Y,N, and NV (yay, nay, no vote/not present) for the particular bill.  I’d also like to know what the reason was that for the over all bill he was one of 8 to be against it. I’d also like to know who the other 7 are.

There is so much more out there but I gotta go make my hubby dinner (and I am pretty hungry myself).  Feel free to drop me links that may help in the comments section.  Any comments (so long as they are respectful of course) will be approved.

Tomorrow is gonna be a long day of finding and reading.

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One Comment leave one →
  1. Gerry Hartsoe permalink
    September 18, 2008 4:34 pm

    I loved your article.

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