Senator John McCain tried to reform Fannie Mae and Freddie Mac several years ago. Senators Dole, Hagel, McCain, and Sunnunu sponsored "The Federal Housing Enterprise Regulatory Reform Act of 2005". This bill would have created a new oversight board for the agencies that would have had more authority to investigate and discipline them. Naturally the Democrats blocked this bill in committee as they did everything they could for years to prevent Fannie and Freddie from being held accountable for their mismanagement and fraud.
McCain made the following remarks in 2005 as he urged passage of this bill:
"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."
While McCain was trying to save the housing industry and the American taxpayers from the current crisis THREE YEARS ago, what was Barack Obama doing? Taking $126,349 in contributions from Fannie Mae and Freddie Mac. (Link)
When asked about the housing crisis now, Obama says, "Republicans and Democrats I think in Congress did not pay enough attention to the structural problem with Fannie Mae and Freddie Mac which was, they are quasi public, quasi private institutions." Gee Barack, where were you in 2005 when McCain was fighting for "change" in the housing industry? Why didn't he stand up to his Fannie Mae masters? In fact, when has he ever bucked his own party or campaign donors in a major fight? (Link)
McCain fought to reform Fannie and Freddie while Obama took $126,349 from them. That is all you need to know.
By the way, want to guess which candidate is making the most noise about the financial crisis and blaming the other party for it?
2006 OFHEO report on abuses at Fannie and Freddie:
Earlier post on Fannie/Freddie problems and how OFEO tried to alert Congress:
Wednesday, September 17, 2008
McCain tried to reform Fannie Mae 3 years ago. Obama was AWOL as he took $126,349 from Fannie Mae
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6 comments:
Kingfish. I really enjoy these posts. I wish there were more people inclined to discuss them here in Jackson. But there aren't. That is scary.
Let's see. In 2005, the Republicans were in charge of Congress and could veto anything a Democrat proposed so McCain couldn't get this by his fellow reform minded Republicans?
Ever heard of a filibuster? Ever think there was a reason Fannie gave so much money to SENATE democrats?
Fannie Mae was created as part of the New Deal in 1938; Republicans have been trying to get rid of it ("reforming" it in the same way they try to "reform" Amtrak and the NEA), and Democrats trying to defend it, ever since.
Tom, Amtrak is as much of a joke as Jatran.
That is not true Tom. Not true at all. I defy you to show me where the Republicans have tried to get rid of it for all of these years, the WSJ editorial page excepted.
If Treasury had not taken over, the Democrats had fixed it to where the taxpayers covered ALL of the risk and liabilities while the shareholders and bondholders kept their profits and lost nothing and the agencies were still allowed to lobby Congress. By the way, Raines and Johnson are two of Obama's advisers and I don't see him calling for them to be prosecuted at all. Bernie Ebbers is thinking he is in jail because he worked for the wrong company.
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