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• 1. snuss  |  September 18th, 2008 at 4:14 pm

  I’ll check it out when I have more time, but you may find this interesting.

  Lobbyists Said To Have Won Weak Oversight By OFHEO The Wall Street Journal reports this morning, “For years, Washington officialdom enabled Fannie Mae and Freddie Mac…to grow until they dominated the U.S. market. … If there’s one decision that is being second-guessed, it’s the 1992 legislation that created the companies’ regulator, the Office of Federal Housing Enterprise Oversight, or Ofheo. In the 1992 debate, Ofheo came away with fairly weak powers, and capital requirements for the companies were set very low.” According to the Journal, “Lobbyists from the companies are said to have strongly influenced the 1992 legislation, particularly in the House Banking Committee, whose chairman then was Rep. Henry Gonzalez, a Texas Democrat. Critics of the companies say that Rep. Barney Frank (D., Mass.), the current chairman of the committee, also helped put forth the companies’ arguments.”

  Source: http://www.usnews.com/usnews/politics/bulletin/bulletin_080715.htm

  1992, didn’t Democrats control Congress then?

  And later:

  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:

  NOTE!:
  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.

  Source: http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/

• 2. DingDong  |  September 18th, 2008 at 6:55 pm

  Nice work snuss. But I am sure Pat thinks that Santa Obama is better to fix the problems. Were not electing the whole Republican party, we are talking about McCain. One of the few to have any foresight on either side of the isle.

• 3. SNuss  |  September 18th, 2008 at 9:08 pm

  Ironic, isn’t it. The man who claims he will bring “change” is the one who got LOTS of change for protecting the status quo at Fannie Mae and Freddie Mac. And yet Obama derides John McCain’s economic policy, when he was one of the few who saw this mess coming THREE YEARS AGO, tried to fix it, but only to have the needed legislation bottled up in committee by DEMOCRATS. Can you say HYPOCRITE? I knew you could.

• 4. unmanager  |  September 19th, 2008 at 4:27 am

  Oh yes, let’s all rejoice in McCain’s PAST moral values…HYPOCRITES
  He has SINCE surrounded himself with the very same people (LOBBYISTS) he once held in contempt….
  http://www.motherjones.com/mojoblog/archives/2008/09/9663_mccain_fannie_freddie.html
  …”In McCain’s op-ed in the Journal, he and Palin wrote:

  For years, Congress failed to act and it is deeply troubling that what we are seeing is an exercise in crisis management rather than sound planning, and at great cost to taxpayers.
  We promise the American people that our administration will be different. We have long records of standing up to special interests…
  But McCain’s own campaign staffers are those special interests, a fact that casts doubt on both McCain’s hiring judgment and his ability to pursue tough reforms of Fannie and Freddie.

  Aquiles Suarez, listed as an economic adviser to the McCain campaign in a July 2007 McCain press release, was formerly the director of government and industry relations for Fannie Mae. The Senate Lobbying Database says Suarez oversaw the lending giant’s $47,510,000 lobbying campaign from 2003 to 2006.

  And other current McCain campaign staffers were the lobbyists receiving shares of that money. According to the Senate Lobbying Database, the lobbying firm of Charlie Black, one of McCain’s top aides, made at least $820,000 working for Freddie Mac from 1999 to 2004. The McCain campaign’s vice-chair Wayne Berman and its congressional liaison John Green made $1.14 million working on behalf of Fannie Mae for lobbying firm Ogilvy Government Relations. Green made an additional $180,000 from Freddie Mac. Arther B. Culvahouse Jr., the VP vetter who helped John McCain select Sarah Palin, earned $80,000 from Fannie Mae in 2003 and 2004, while working for lobbying and law firm O’Melveny & Myers LLP. In addition, Politico reports that at least 20 McCain fundraisers have lobbied for Fannie Mae and Freddie Mac, pocketing at least $12.3 million over the last nine years.

  For years McCain campaign manager Rick Davis was head of the Homeownership Alliance, a lobbying association that included Fannie Mae, Freddie Mac, real estate agents, homebuilders, and non-profits. According to Politico, the organization opposed congressional attempts at regulation of Fannie and Freddie, along the lines of what John McCain is currently proposing. In his capacity of president of the group, Davis went on record in 2003 and insisted that no further reform of the lenders was necessary, in contradiction to his current boss’s sentiments. “[Fannie and Freddie] are subject to an innovative and stringent risk-based capital stress test,” Davis wrote. “The toughest in the financial services industry.”

  At a campaign rally Wednesday morning in Fairfax, Virginia, John McCain said that the heads of Fannie Mae and Freddie Mac ought to give back the millions of dollars they’ve earned. What about the lobbyists who helped Fannie and Freddie game the system? Maybe McCain can ask them — at the next campaign strategy meeting.”

  Someone needs to remind Mcain,”when you lie down with dogs…”

• 5. SNuss  |  September 19th, 2008 at 7:08 am

  Unmanager, before you start feeling TOO smug, just remember that Franklin Raines and Jim Johnson, former CEO’s of Fannie May (and current Obama financial advisors), made TENS OF MILLIONS of dollars by buying these problem loans, that made these bailouts necessary.
  And don’t forget Democrats Barney Frank and Chris Dodd also had significant parts in this mess.

• 6. Henry  |  September 19th, 2008 at 8:54 am

  SNuss -
  How about the Republican’s who chaired those committees during the years they controlled Congress?

• 7. unmanager  |  September 19th, 2008 at 11:24 am

  SNuss, I’m not getting smug, I am only pointing out that the “maverick” so many see in McCain, (heck,I USED to respect him) has sold his soul to the same corrupting influences he ONE TIME fought against…(see also “agents of intolerance”)….
  His campaign slogan OUGHT to be…
  “If you can’t beat’em…”

• 8. snuss  |  September 19th, 2008 at 2:37 pm

  “SNuss -
  How about the Republican’s who chaired those committees during the years they controlled Congress?”

  At that time, everything was going smoothly, so few realized the long-term consequences. McCain, to his credit was one of those few who foresaw the problem.

  BTW, what happened in these last two years of DEMOCRATIC control of Congress? At least they were able to give names to dozens of post offices.

• 9. Henry  |  September 19th, 2008 at 8:32 pm

  This started prior to the Democrats controlling Congress and they did nothing. You don’t make loans to people who can’t afford the payments, or to people who can’t prove their income. This is Bush’s fault. He should have had the regulators put a stop to this as soon as it became widespread.

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