The Gun Counter

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

Here is potentially the largest financial disaster in American history. The American taxpayer stands to lose billions; Democratic insiders have extracted tens of millions. If Enron was a party scandal … what is this?

Andrew Cuomo and Fannie and Freddie
How the youngest Housing and Urban Development secretary in history gave birth to the mortgage crisis
By Wayne Barrett
The Village Voice
Tuesday, August 5th (2008)

…Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

Fannie and Freddie chose to fight legislation in the Senate Banking Committee that embodied the administration’s minimum requirements, particularly the receivership provision, in the late spring of 2004. The companies called in their chits and managed to obtain solid Democratic opposition to the bill crafted by the committee’s chairman, Richard Shelby (R-Ala.). The committee also watered down the receivership provision. The partisan nature of the vote to send the bill to the floor virtually assured that it would not be taken up in the Senate unless Fannie and Freddie relented in their opposition … but Fannie and Freddie would not budge. It may be that the [Fan&Fred] were banking on the defeat of President George W. Bush and on the assumption that a Democratic president would abandon the effort to pass tougher regulation. If that was their thinking, it was an exceedingly costly error.

Senator McCain Speaks in Support of
The FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005
The United States Senate
May 25, 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 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.

• Dodd, Christopher J
  Obama, Barack
  Kerry, John
  Bennett, Robert F
  Bachus, Spencer H
  Blunt, Roy H
  Kanjorski, Paul E
  Bond, Christopher S 'Kit'
  Shelby, Richard C
  Reed, Jack S
  Reid, Harry S
  Clinton, Hillary
  Davis, Tom H
  Boehner, John
  Conrad, Kent
  Reynolds, Tom
  Johnson, Tim
  Pelosi, Nancy
  Carper, Tom
  Hoyer, Steny H
  Pryce, Deborah
  Emanuel, Rahm
  Isakson, Johnny
  Cantor, Eric
  Crapo, Mike

Worse than ENRON

The fraudulent accounting that allowed Enron executives to enrich themselves and led the company to bankruptcy and the loss of $68 billion in employee and investor assets is dwarfed by that at Fannie Mae and Freddie Mac whose loses to investors will top $103 billion. Fannie Mae’s accounting fraud was $11 billion, 19 times larger than Enron’s $567 million accounting restatement.

Enron ’s CEO Jeff Skilling went to jail and Chairman Ken Lay died, probably as a result of the stress from prosecution. Both Franklin Raines and James Johnson , CEO’s of Fannie Mae, who played key roles in previous Democrat administrations were fired, but later went to work for the Obama campaign. Clinton Deputy Attorney General Jamie Gorelick also was a highly paid executive at Fannie Mae but left to join the 9/11 Commission (she was chiefly responsible for the wall that prevented law enforcement and intelligence agencies from sharing information). Gorelick is considered as a possible Attorney General in an Obama Administration.

News organizations which ran daily stories linking the Bush Administration to Enron executives have been nearly silent on the direct, long term political connections between the Fannie Mae disaster and Democrats.

chrisb wrote:Now McCain just has to get this out in front of the public, and it could be bye bye Obama.

DougWojtowicz wrote:PLEASE Senator McCain, drop this like a load of pain on those assholes!

McCain Needs to Cut This Commercial, Immediately
...but I don't think he needs us telling him that. I'm sure it's in the works.

And include this too -- Fannie Mae CEO calling Obama a member of the "family."