Hello:

Did you know there was greed on Wall Street? I think you knew it, but John McCain just found out, and he doesn't like it. Since when did a Republican think greed was bad?

Did you know that there were overpaid CEO's in our nations boardrooms?? I think you knew it, but John McCain just found out, and he doesn't like it? Where has THIS John McCain been?? Since when did huge CEO salary's bother a Republican?? Aren't huge salary's the American way??

Do you know that the DE-regulator McCain has morphed into a regulating madman?? He's going to "reform" Wall Street. What happened to the Republican mantra of letting the market reform Wall Street?

McCain thinks the "market fundamentals" are in "GOOD SHAPE". I think you know they're not, but John McCain just found out they're not. So as not to sound TOO foolish, he changed (flipfloped?? ) what he said into the following gobbeldygook: The "market fundamentals" that are in good shape according to McCain, AREN'T the charts showing employment down. They AREN'T the charts showing prices up. They AREN'T the charts showing your home values plummet.

Noooooo, THOSE AREN'T "market fundamentals", according to McCain. Market fundamentals HE was talking about are the American workers, and of course, they're good. What??

I don't think anybody is fooled by him anymore - not even the wingers here. Who is he going to be next week?

excon

I don't think it is any secret that McCain has a certain contempt for American big business. It is one of the reasons he was not my 1st choice.

However , while the Dems were raking in the grease from the Execs at Fannie and Freddie (word to Chris Dodd and Charlie Rangel we are on to your game.) It was McCain who proposed regulatory reform long before a crisis began.

Here was his comments to the Senate in 2005 :

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. 1 90, 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.
GovTrack: Senate Record: FEDERAL HOUSING ENTERPRISE REGULATORY REFORM... (109-s20060525-16) (http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190)

Meanwhile Obama wasted no time sticking his fingers in the cookie jar. In his couple of years in the Senate he managed to become the 3rd largest beneficiary of largess from Fannie next to Dodd and JF Kerry .

Ooooppppppsssss.

You mean that excon was wrong? That McCain was indeed in favor of regulation long before anyone heard that Fannie and Freddie were in trouble? That he actually tried to pass legislation to regulate Fannie and Freddie?

Nahhhh. Can't be. Excon's never wrong. Just ask him.

Oh, excon, still waiting for that butt-whoopin' you promised. You, know.. the one you said you've been giving to all the Conservatives here while I was gone? Still waiting to see any evidence of it.

Elliot :)

To go even further... President Bush proposed reforms to Freddie and Fannie Sept. 11, 2003 (this from the undisputed paper of record the NY Slimes).


New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON

Spetember 11, 2003

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 More supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress,
To set one of the two capital-reserve requirements for the companies.
It would exercise authority over any new lines of business. And it
Would determine whether the two are adequately managing the risks of
Their ballooning portfolios.

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. A report by outside
investigators in July concluded that Freddie Mac manipulated its
accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

''There is a general recognition that the supervisory system for
Housing-related government-sponsored enterprises neither has the tools,
Nor the stature, to deal effectively with the current size, complexity
And importance of these enterprises,'' Treasury Secretary John W. Snow
Told the House Financial Services Committee in an appearance with
Housing Secretary Mel Martinez, who also backed the plan.

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 administration's proposal, which was endorsed in large part today
By Fannie Mae and Freddie Mac, would not repeal the significant
Government subsidies granted to the two companies. And it does not
Alter the implicit guarantee that Washington will bail the companies
Out if they run into financial difficulty; that perception enables them
To issue debt at significantly lower rates than their competitors. Nor
Would it remove the companies' exemptions from taxes and antifraud
Provisions of federal securities laws.

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

After the hearing, Representative Michael G. Oxley, chairman of the
Financial Services Committee, and Senator Richard Shelby, chairman of
The Senate Banking Committee, announced their intention to draft
Legislation based on the administration's proposal. Industry executives
Said Congress could complete action on legislation before leaving for
Recess in the fall.

''The current regulator does not have the tools, or the mandate, to
Adequately regulate these enterprises,'' Mr. Oxley said at the hearing.
''We have seen in recent months that mismanagement and questionable
Accounting practices went largely unnoticed by the Office of Federal
Housing Enterprise Oversight,'' the independent agency that now
Regulates the companies.

''These irregularities, which have been going on for several years,
Should have been detected earlier by the regulator,'' he added.

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. Supporters of the
Companies said efforts to regulate the lenders tightly under those
Agencies might diminish their ability to finance loans for lower-income
Families. This year, however, the chances of passing legislation to
Tighten the oversight are better than in the past.

Reflecting the changing political climate, both Fannie Mae and its
Leading rivals applauded the administration's package. The support from
Fannie Mae came after a round of discussions between it and the
Administration and assurances from the Treasury that it would not seek
To change the company's mission.

After those assurances, Franklin D. Raines, Fannie Mae's chief
Executive, endorsed the shift of regulatory oversight to the Treasury
Department, as well as other elements of the plan.

''We welcome the administration's approach outlined today,'' Mr. Raines
Said. The company opposes some smaller elements of the package, like
One that eliminates the authority of the president to appoint 5 of the
Company's 18 board members.

Company executives said that the company preferred having the president
Select some directors. The company is also likely to lobby against the
Efforts that give regulators too much authority to approve its products.

Freddie Mac, whose accounting is under investigation by the Securities
And Exchange Commission and a United States attorney in Virginia,
Issued a statement calling the administration plan a ''responsible
Proposal.''

The stocks of Freddie Mac and Fannie Mae fell while the prices of their
Bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent,
To $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74.
The price of a Fannie Mae bond due in March 2013 rose to 97.337 from
96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.

Fannie Mae, which was previously known as the Federal National Mortgage
Association, and Freddie Mac, which was the Federal Home Loan Mortgage
Corporation, have been criticized by rivals for exerting too much
Influence over their regulators.

''The regulator has not only been outmanned, it has been outlobbied,''
Said Representative Richard H. Baker, the Louisiana Republican who has
Proposed legislation similar to the administration proposal and who
Leads a subcommittee that oversees the companies. ''Being underfunded
Does not explain how a glowing report of Freddie's operations was
Released only hours before the managerial upheaval that followed. This
Is not world-class regulatory work.''

Significant details must still be worked out before Congress can
Approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''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.

Great post Tom.


''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.


These guys keep talking about "affordable housing" for the poor. But it turns out that the housing WASN'T affordable. They couldn't actually afford it, despite all the gimmicks that Fannie and Freddie came up with. All they managed to do was saddle poor folks with UNAFORDABLE housing.

Republican Congress Talked About Financial Reform, But Did Nothing (http://uspolitics.about.com/b/2008/09/18/republican-congress-talked-about-financial-reform-but-did-nothing.htm)

Thursday September 18, 2008

"According to the New York Times, in September 2003 the Bush Administration "recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." (tip)

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. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates...

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

The President's call came after "a Freddie Mac accounting scandal" in July.

"It seems that Congress doesn't have the stomach to do anything substantial,'' said Marshall Front, president of Front Barnett Associates LLC, which manages $1.5 billion in Chicago, including shares of Fannie Mae. (quote from July 2003)
It seems Mr. Front was correct.

In 2003, Republicans controlled both branches of Congress (108th) and the White House. What happened to Fannie Mae and Freddie Mac regulatory reform under Republican leadership? Nothing.

Here's what I found when I searched THOMAS for the phrase Fannie Mae for the 108th Congress (2003-2004): eight bills .... but only six appear to relate to this topic, per their title. Of those six, only one was introduced after the White House weighed in (at least rhetorically) in September ... and the prime sponsor of that bill was a Democrat. The other bills seem to have resulted from the July scandal. No bill moved out of committee.

H.R.2022 introduced on 7 May 2003 by Rep. Christopher Shays (R-CT,4).
Title: To extend the registration and reporting requirements of the Federal securities laws to certain housing-related Government-sponsored enterprises, and for other purposes. Latest Major Action: 5/23/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

H.R.2117 introduced 23 May 2003 by Rep. Pete Fortney (D-CA,13).
Title: To amend the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to remove certain competitive advantages granted to the housing-related government-sponsored enterprises relative to other secondary mortgage market enterprises, and for other purposes. Latest Major Action: 5/23/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

H.R.2575 introduced on 24 June 2003 by Rep. Richard H Baker (R-LA,6).
Title: To reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes. Latest Major Action: 9/25/2003 House committee/subcommittee actions. Status: Committee Hearings Held.

H.R.2803 introduced on 21 July 2003 by Rep. Edward R Royce (R-CA,40).
Title: To establish the Office of Housing Finance Oversight in the Department of the Treasury to ensure the financial safety and soundness of Fannie Mae, Freddie Mac, and the Federal home loan banks. Latest Major Action: 8/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

H.R.2897 introduced on 25 July 2003 by Rep. Julia Carson (D-IN,7)
Title: To end homelessness in the United States. Latest Major Action: 8/25/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Housing and Community Opportunity.

S.1508, introduced 31 July 2003 by Sen Chuck Hagel (R-NE).
Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes. Latest Major Action: 4/1/2004 Senate committee/subcommittee actions. Status: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.

S.1656, introduced 23 September 2003 by Sen Jon S. Corzine (D-NJ).
Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes. Latest Major Action: 9/25/2003 Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

H.R.3507 introduced 18 November 2003 by Rep. Brad Sherman (D-CA,27).
Title: To expand homeownership opportunities in States having high housing costs.
Latest Major Action: 1/2/2004 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

Clearly, in 2003 and 2004 the issue of finance reform was not a priority of the White House or Congressional Republicans.

In the 109th Congress (2005-2006), the House overwhelmingly approved (331 to 90) HR 1461, The Federal Housing Finance Reform Act, designed "to create a stronger regulator for Fannie Mae and Freddie Mac." The Senate, still controlled by Republicans lagged the House in taking action. It is not clear if this was a lack of Republican leadership or blockage by Democratic leadership (filibuster threats). (Shout if you have links to illustrate this impasse.)

HR 1461 remained stalled in the Senate: last action, 31 October 2005, referred to the Committee on Banking, Housing, and Urban Affairs.

On 31 July 2007, after the Democrats obtained control of the Congress in the November 2006 election, House Speaker Nancy Pelosi introduced HR 3221, a "bill to provide needed housing reform and for other purposes." Among other things, the bill granted the newly formed Federal Housing Finance Agency "supervisory and regulatory authority over Fannie Mae, Freddie Mac, and the federal home loan banks (enterprises)" (per CRS analysis).

Pelosi's bill became Public Law 110-140 on 19 December 2007."

McCain was bought and paid for years ago. He has had a career of being against regulation of the financian markets.

The current crisis and strangulation of our financial system lies fully at his feet and the feet of all the other Republican fat cats who causes this potential bust of our economic system.

This is the worst financial crisis in the history of our Republic... worse than the Crash of 1929.

The solution to save our economy? SOCIALIZE Corporate debt.

McCain was bought and paid for years ago. He has had a career of being against regulation of the financian markets.

Bought and paid for by whom? This sounds a bit like conspiracy theory to me.


The current crisis and strangulation of our financial system lies fully at his feet and the feet of all the other Republican fat cats who causes this potential bust of our economic system.

Republican fat cats?

You mean like Johnson and Raines, the former executives of Fannie who are now members of the Obama campaign? Or perhaps you mean Jamie Gurelick, who was a Clinton appointee and a member of Hillary's campaign?


This is the worst financial crisis in the history of our Republic... worse than the Crash of 1929.

That is ridiculous. The crash of 29 caused the Great Depression, which lasted for nearly a decade, and that is NOT what is happening here. It caused a worldwide-run on gold, which is not happening here. And the government in 1929 tried to fix the problems in 1929 by raising taxes, resulting in a decrease in liquidity and spending in the markets. THat is also not happening here...

... unless Obama gets elected and raises taxes as he said he would. Obama would be a disaster for the economy if you want to see us recover from this any time in the next 4 years.

Elliot



The solution to save our economy? SOCIALIZE Corporate debt.[/quote]

Oh, crap, I forgot to put my McCain sign in my yard... running to do so now (seriously)

That is ridiculous. The crash of 29 caused the Great Depression, which lasted for nearly a decade, and that is NOT what is happening here. I salute your confidence and I hope you're right, but it's a little too soon to know for sure, I think.

The net results of the week :
the Dow was down about 34 points. For the month it is up 40 pts
For the past 5 years to Dow is up 18 %
In the past 10 years to Dow is up 44%.
This past week was not as bad as either the 1987 crash or the tech stock bubble.
I'd call it closer to the S&L collapse and the solution proposed similar the Resolution Trust Corp.;which actually turned a small profit for the government when everything panned out.Simularily it could be that the assets the government has taken on will have a higher value when divested .

The net results of the week :
the Dow was down about 34 points. For the month it is up 40 pts
For the past 5 years to Dow is up 18 %
In the past 10 years to Dow is up 44%.
This past week was not as bad as either the 1987 crash or the tech stock bubble.
I'd call it closer to the S&L collapse and the solution proposed simular the Resolution Trust Corp.;which actually turned a small profit for the government when everything panned out.Simularily it could be that the assets the government has taken on will have a higher value when divested .

It's the Alfred E. Newman ("What? Me worry?") school of international finance!

The S&L bailout cost us (taxpayers) $125 billion. This one is expected to cost six to ten times that much, that's $700 billion to $1.2 trillion. Will we tax ourselves to cover it, or keep borrowing from foreigners to stick our children and grandchildren with the bill, plus interest?

There may be better ways to do it.

A Bad Bank Rescue (http://www.washingtonpost.com/wp-dyn/content/article/2008/09/20/AR2008092001059.html?hpid=opinionsbox1)


The plan is being marketed under false pretenses. Supporters have invoked the shining success of the Resolution Trust Corporation as justification and precedent. But the RTC, which was created in 1989 to clean up the wreckage of the savings-and-loan crisis, bears little resemblance to what is being contemplated now. The RTC collected and eventually sold off loans made by thrifts that had gone bust. The administration proposes to buy up bad loans before the lenders go bust. This difference raises several questions.

The first is whether the bailout is necessary. In 1989, there was no choice. The federal government insured the thrifts, so when they failed, the feds were left holding their loans; the RTC's job was simply to get rid of them. But in buying bad loans before banks fail, the Bush administration would be signing up for a financial war of choice. It would spend billions of dollars on the theory that preemption will avert the mass destruction of banks. There are cheaper ways to stabilize the system.


In practice this means the government would make subjective choices about which bad loans to buy, and it would pay more than fair value. Billions in taxpayer money would be transferred to the shareholders and creditors of banks, and the banks from which the government bought most loans would be subsidized more than their rivals. If the government bought the most from the sickest institutions, it would be slowing the healthy process in which strong players buy up the weak, delaying an eventual recovery. The haggling over which banks got to unload the most would drag on for months. So the hope that this "systematic" plan can be a near-term substitute for ad hoc AIG-style bailouts is illusory.

Within hours of the Treasury announcement Friday, economists had proposed preferable alternatives. Their core insight is that it is better to boost the banking system by increasing its capital than by reducing its loans. Given a fatter capital cushion, banks would have time to dispose of the bad loans in an orderly fashion. Taxpayers would be spared the experience of wandering into a bad-loan bazaar and being ripped off by every merchant.

The S&L bailout cost us (taxpayers) $125 billion.


Here is what Barney Frank was saying yesterday on the talk shows;

These securities will be purchased at a steep discount, and will be worth a whole lot more after restructuring.

Perhaps he is right . That was the case with the RTC S&L bailout ;it was a net gain for the Government. Over time, a substantial proportion of the assets held by any new RTC will likely be sold at a higher price than what the agency paid for them. Provisions should be enacted that specify any profits from these transactions should go to the taxpayers to reduce the overall cost of the bailout. Under no circumstances should any profits be used to finance other public policy objectives.

Bailouts are as old as our nation. We would not have had a nation for long if the US Government had not assumed the state's debts after the Panic of 1792.

Tom,

Isn't Barney Frank the guy who said that Fannie and Freddie were fine and there was no reason to regulate them? And that regulating them would hurt their mission to provide housing to the poor?

Why would we take Frank's word on anything.

I'd much rather rely on historical evidence than the predictions of a guy who has been wrong that often and that badly. The historical evidence is that this is NOT another Great Depression, that most everyone will come out whole, and the economy will survive and thrive. I agree with you on that.

But citing Barney Frank..

Elliot

I know ;I was trying to make a point to someone who probably agrees with Frank on these issues. But regardless ;my point is sound that the RTC made money.

Just watched a news piece on Barney Frank and actually Congress wants to make certain that the homeowners have some provisional protection language in the 700 billion dollar bailout before passing so that it does not end up in the bonus pockets of CEO's at the end of the year.

The historical evidence is that this is NOT another Great Depression, that most everyone will come out whole, and the economy will survive and thrive. I agree with you on that.What historical evidence? The "historical evidence" about what this is won't be in until these events are history. All we know at this point is that this is a convulsion on a worldwide scale, and that it is at least one order of magnitude (10x) larger than any "historical precedents" that might be at all comparable.


But citing Barney Frank..
I agree with you on that.


I was trying to make a point to someone who probably agrees with Frank on these issues. But regardless ;my point is sound that the RTC made money.
Well, I don't agree with Barney Frank, and I don't agree with your implication that because the RTC made money, so will this new undertaking. The RTC didn't have to pick what loans to buy from whom or at what price. They were dumped in its lap by institutions that had already failed. In contrast, these institutions have not yet failed, and the "assets" (read, "liabilities") they need to unload include not only bad loans, but also losing trading positions in derivatives and default insurance markets. These obligations will be "purchased" from them at negotiated rates, and in negotiated quantities. Since everybody cannot be made whole without re-inflating the bubble, the choices about who gets helped, in what way, and to what degree are a fertile breeding ground for graft, corruption, double-dealing, and influence peddling. Clearly, the ones who need help the worst are the ones that made the most bad bets. Is there a "fairness doctrine" that applies here?

Those who bray the loudest about "individual responsibility" and "getting the government out of our lives" always seem to be first in line with the biggest hat in hand begging to be rescued "for the common good". If this is what it takes for conservatives to rediscover the concept of the common good, then I'm all for it. I just hope they remember it after the money's all passed out.

Big Financiers Start Lobbying for Wider Aid (http://www.nytimes.com/2008/09/22/business/22lobby.html)

The scope of the bailout grew over the weekend. As recently as Saturday morning, the Bush administration’s proposal called for Treasury to buy residential or commercial mortgages and related securities. By that evening, the proposal was broadened to give Treasury discretion to buy “any other financial instrument.”

The lobbying became particularly intense because Congress plans to approve a package within just two weeks, without the traditional hearings and committee process.

“Of course there will be fierce lobbying,” said Bert Ely, a financial services industry consultant in Alexandria, Va. “The real question is, Who wouldn’t want to be included in the package?”

Mr. Ely said the open-ended nature of the Treasury’s plan could be interpreted to mean that the government was open to acquiring “any asset, anywhere in the world.”

“The question that I am raising — is there any limit?” Mr. Ely said.

Since everybody cannot be made whole without re-inflating the bubble, the choices about who gets helped, in what way, and to what degree are a fertile breeding ground for graft, corruption, double-dealing, and influence peddling.
Completely agree .That is why I oppose the bailout without oversight provisions.


Those who bray the loudest about "individual responsibility" and "getting the government out of our lives" always seem to be first in line with the biggest hat in hand begging to be rescued "for the common good".

What a laugh .Over the past 8 years, those who tried to fix Fannie Mae and Freddie Mac were stymied repeatedly by congressional Democrats. Fannie and Freddie became massive providers both of reliable votes among grateful low-income homeowners, and of massive giving to the Democratic Party by grateful investment bankers. They replaced capitalism with crony -capitalism .
You can't tell me that regulations were not in place. You can't do anything in this country without being subject to some regulation or tax. As has been pointed out a number of times already it is the attempt to loosen lending standards to expand the market to those who could not own homes under regular terms that created this crisis. This was a policy that the left in power ,and their "community organizers" championed.

You can't tell me that regulations were not in place. You can't do anything in this country without being subject to some regulation or tax. As has been pointed out a number of times already it is the attempt to loosen lending standards to expand the market to those who could not own homes under regular terms that created this crisis. This was a policy that the left in power ,and their "community organizers" championed.Hello again, tom:

Your analysis is hopelessly LOPSIDED. You BLAME Democrats and give Republicans a pass. That's silly on its face.

IF there was an attempt by Democrats to loosen standards, Republicans went along with it - no - even championed it, because the banks were making HUGE profits. Yes, the uncreditworthy wanted the money - shame on them. But, the banks wanted the profits - shame on them too.

The other fact that you seem to miss, is that, while it's true, there WERE regulations in place, the REGULATORS didn't believe in REGULATION. Why didn't they believe in regulation?? Because they were appointed by the dufus in chief. These are people who believed, with all their hearts, that government IMPINGED the marketplace - it didn't HELP it. They believed that until their recent incarnation as regulators. They're capitalists on the way up, and socialists on the way down. They disgust me, as they should you.

excon

PS> Uhhh, by the way, show me the regulations on Over The Counter Derivatives?? Do you even know what a derivative is? I don't. Or, show me the regs about Credit Swaps. You can't because they were brand new inventions of Wall Street. THESE assets were bought and sold in an UNREGULATED market. THESE assets are the ones we're now going to buy. Who was asleep at the switch?? Everybody, as long as the profits were rolling in.

Why do you think I keep on going back to accountability ? That to me was what was lacking . I don't buy that Bush's regulators are at fault. The laxing of the rules happened inside HUD and the quasi-independent Fannie and Freddie in the 90s ,and as I have pointed out Bush and McCain were making a clarion call about the danger of the current rules . It was the Democrats ;and yes some of the Republicans in Congress that blocked meaningful reform.

Excon,

A LOT of people are responsible for this mess. As I explained in another post, this mess goes all the way back to 1938, with the creation of Fannie Mae by FDR as part of the New Deal. (Or as I like to call it, the "Raw Deal".) The very creation of a government entity to mess with the mortgage market to make lending more desirable created this mess. After all, if a particular loan wasn't desirable, it must be for a reason... as in it was an unsafe loan. So the very act of making less safe loans more desirable created this mess. It INCENTIVIZED bad lending practices.

It was exacerbated by things like the Community Reinvestment Act, which forced banks to make a certain percentage of their loans to poor neighborhoods. This law MANDATED bad lending practices. In the late 90s, the CRA requirements were drastically increased so that a much larger portion of loans were REQUIRED to be to poor neighborhoods, further mandating bad lending practices.

Then Congress passed Gramm-Leach-Bliley which allowed banks and investment companies to merge, which in turn made it very profitable for investment companies to make, buy and sell bad loans. This was a further incentive.

The deregulation of Fannie and Freddie led to Fannie and Freddie "cooking the books" to show non-existant profits and growth through the purchase of bad loans in order to justify huge bonuses. More incentive to make bad loans.

Fannie and Freddie made huge campaign contributions to members of Congress, who then supported Fannie and Freddie's push for deregulation. There were over 350 legislators who took money from Fannie and Freddie between 1989 and 2008. These legislators were from BOTH parties. This was further incentive for deregulation. And I don't doubt that many members of Congress had mortgage-backed securities or financial company stocks in their personal investment portfolios, which was further incentive for deregulation.

So yes, excon, both parties are guilty.

But you are saying that Tom is giving the Republicans a free pass? Obama seems to be giving the Democrats a free pass.

It was the Democrats who created Fannie and Freddie. It was the Democrats who initiated the deregulation of Fannie and Freddie (though many Republicans voted for it too). It was Democrat appointees to Fannie and Freddie who cooked the books and then walked away with millions and millions of dollars in bonuses (Raynes and Johnson). These same execs are now members of Obama's economic advisory panel, and one of them led his vetting team to choose a VP (though he later stepped down). It was the Dems who held up S. 190, the Federal Housing Enterprise Regulatory Reform Act of 2005 in committee, preventing it from becoming law and preventing regulation of Fannie and Freddie.

On the other hand, McCain and Bush, on at least 5 separate occasions, attempted to move legislation forward to regulate Fannie and Freddie.

So while you are right, that both Republicans and Democrats are guilty of deregulating Fannie and Freddie, only members of one party have acted to try to RE-REGULATE them.

In case you are wondering, here is the full list of members of congress who received money from Fannie and Freddie over the past 20 years.

12348

You might notice that Obama is the #2 recipient of monies from Fannie and Freddie ($126,349), despite the fact that he's been in Congress for less than 3 years. Dodd, the #1 recipient ($165,400), has at least been in Congress since 1975 (first in the House until 1981, then in the Senate). That's about an average of $4,500 per year for Dodd, compared to $42,000 per year for Obama.

By contrast, McCain, received a total of $21,550. He's been in Congress since 1982 (in the House until 1986, and then in the Senate). That equates to an average of about $800 per year from Fannie and Freddie.

Yes, both parties have been in the pockets of Fannie and Freddie. Both parties were involved in deregulating Fannie and Freddie and the entire mortgage industry. Both parties were involved in government messing in business where it didn't belong in the first place. But Obama isn't saying that. He's blaming Bush and McCain for the mortgage crisis, and leaving himself, his advisors, and his party out of the equation, when they were the party that was the impetus for the whole "making housing affordable for the poor" thing in the first place. ANd it is that idea that the poor need to own homes they can't afford that directly led to this mess in the first place. The "affordable housing" thing certainly isn't a Republican or Conservative concept, is it?

Elliot

Why do you think I keep on going back to accountability ? That to me was what was lacking . I don't buy that Bush's regulators are at fault. The laxing of the rules happened inside HUD and the quasi-independent Fannie and Freddie in the 90s ,and as I have pointed out Bush and McCain were making a clarion call about the danger of the current rules . It was the Democrats ;and yes some of the Republicans in Congress that blocked meaningful reform.


Wasn't Andrew Cuomo the HUD Secretary during the Clinton years?

Elliot

He sure was . I linked to a Village Voice editorial abour Cuomo's contribution to the mess on this thred
https://www.askmehelpdesk.com/current-events/meltdown-part-deux-262657-2.html

Sadly and strangely ;McCain said he would like to appoint Cuomo as head of SEC because he thought Cuomo did a good job at HUD. You can't make this stuff up.

PS> Uhhh, by the way, show me the regulations on Over The Counter Derivatives?? Do you even know what a derivative is? I don't. Or, show me the regs about Credit Swaps. You can't because they were brand new inventions of Wall Street. THESE assets were bought and sold in an UNREGULATED market. THESE assets are the ones we're now going to buy. Who was asleep at the switch?? Everybody, as long as the profits were rolling in.

Ironically ;it was Chris Cox (the guy McCain would "fire "),the current chair of the SEC that gave warnings about the dangers of OTC Derivatives .
Cox described the unregulated credit default swaps market as “ripe for fraud and manipulation” because it lacked oversight.

Regulations were dropped after 2000 after then Fed. Chairman ("the maestro")Sir Alan Greenspan(party unknown but suspected Democrat) told Congress that regulation of the OTC derivatives market was not needed because:

“OTC transactions in financial derivatives are not susceptible to - that is, easily influenced by - manipulation.”
FRB: Testimony, Greenspan -- Over-the-counter derivatives -- February 10, 2000 (http://www.federalreserve.gov/boarddocs/testimony/2000/20000210.htm)

Before that ;in 1998, when the head of the Commodity Futures Trading Commission expressed concern about the massive increase in OTC derivatives, Greenspan suggested new regulation risked disrupting the capital markets.
After that the Commodity Futures Modernization Act of 2000 was passed , which, among other things, limited the ability of the federal government to regulate OTC derivatives. Note the date ;Feb. 2000... Almost a year before the Bush adm. Regulators came in they were already handcuffed on the issues of OTC derivatives.


Indeed, the SEC was specifically denied authority in the legislation that repealed Glass-Steagall over many synthetic securities and derivatives. And, finally, given the failure to assign any regulatory responsibility over the brave new world of financial services, the SEC could not have created, or by its self solved, the lack of transparency--both internal (many firms simply had no idea how leveraged they'd become) and external (counter parties and others couldn't accurately assess the levels of leverage, causing them to assume the worst, panicking themselves and our markets, to everyone's detriment).

http://www.forbes.com/opinions/2008/09/22/christopher-cox-sec-oped-cs_hp_0922pitt.html

As a side note ;
It was also Greenspan who dismissed the idea of a housing bubble;and when he saw his handywork was about to hit a brick wall ,he walked away from it all.

From Gateway Pundit:


Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone (http://gatewaypundit.blogspot.com/2008/09/bush-called-for-reform-of-fannie-mae.html)... Dems Ignored Warnings

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.

Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

The White House released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001.
Unfortunately, Congress did not act on the president's warnings:

** 2001

April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."

** 2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

** 2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

** 2004

February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

** 2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)

** 2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)

** 2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

"Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)

"[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

"Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C. 6/6/08)

July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

In 2005-- Senator John McCain partnered with three other Senate Republicans to reform the government’s involvement in lending.
Democrats blocked this reform, too.

More... Not only did democrats not act on these warnings but Barack Obama put one of the major Sub-Prime Slime players on his campaign as finance chairperson.

The "Gateway Pundit" conventiently omitted that Congress was controlled by Republicans from 2002-2006. Trying to blame the Dems when the Pubs didn't get it done with their own party representative as President is superficial nonsense.

Republican Congress Talked About Financial Reform, But Did Nothing (http://uspolitics.about.com/b/2008/09/18/republican-congress-talked-about-financial-reform-but-did-nothing.htm)

Thursday September 18, 2008

"According to the New York Times, in September 2003 the Bush Administration "recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." (tip)

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. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates...

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

The President's call came after "a Freddie Mac accounting scandal" in July.

"It seems that Congress doesn't have the stomach to do anything substantial,'' said Marshall Front, president of Front Barnett Associates LLC, which manages $1.5 billion in Chicago, including shares of Fannie Mae. (quote from July 2003)
It seems Mr. Front was correct.

In 2003, Republicans controlled both branches of Congress (108th) and the White House. What happened to Fannie Mae and Freddie Mac regulatory reform under Republican leadership? Nothing.

Here's what I found when I searched THOMAS for the phrase Fannie Mae for the 108th Congress (2003-2004): eight bills .... but only six appear to relate to this topic, per their title. Of those six, only one was introduced after the White House weighed in (at least rhetorically) in September ... and the prime sponsor of that bill was a Democrat. The other bills seem to have resulted from the July scandal. No bill moved out of committee.

H.R.2022 introduced on 7 May 2003 by Rep. Christopher Shays (R-CT,4).
Title: To extend the registration and reporting requirements of the Federal securities laws to certain housing-related Government-sponsored enterprises, and for other purposes. Latest Major Action: 5/23/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

H.R.2117 introduced 23 May 2003 by Rep. Pete Fortney (D-CA,13).
Title: To amend the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to remove certain competitive advantages granted to the housing-related government-sponsored enterprises relative to other secondary mortgage market enterprises, and for other purposes. Latest Major Action: 5/23/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

H.R.2575 introduced on 24 June 2003 by Rep. Richard H Baker (R-LA,6).
Title: To reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes. Latest Major Action: 9/25/2003 House committee/subcommittee actions. Status: Committee Hearings Held.

H.R.2803 introduced on 21 July 2003 by Rep. Edward R Royce (R-CA,40).
Title: To establish the Office of Housing Finance Oversight in the Department of the Treasury to ensure the financial safety and soundness of Fannie Mae, Freddie Mac, and the Federal home loan banks. Latest Major Action: 8/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

H.R.2897 introduced on 25 July 2003 by Rep. Julia Carson (D-IN,7)
Title: To end homelessness in the United States. Latest Major Action: 8/25/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Housing and Community Opportunity.

S.1508, introduced 31 July 2003 by Sen Chuck Hagel (R-NE).
Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes. Latest Major Action: 4/1/2004 Senate committee/subcommittee actions. Status: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.

S.1656, introduced 23 September 2003 by Sen Jon S. Corzine (D-NJ).
Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes. Latest Major Action: 9/25/2003 Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

H.R.3507 introduced 18 November 2003 by Rep. Brad Sherman (D-CA,27).
Title: To expand homeownership opportunities in States having high housing costs.
Latest Major Action: 1/2/2004 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

Clearly, in 2003 and 2004 the issue of finance reform was not a priority of the White House or Congressional Republicans.

In the 109th Congress (2005-2006), the House overwhelmingly approved (331 to 90) HR 1461, The Federal Housing Finance Reform Act, designed "to create a stronger regulator for Fannie Mae and Freddie Mac." The Senate, still controlled by Republicans lagged the House in taking action. It is not clear if this was a lack of Republican leadership or blockage by Democratic leadership (filibuster threats). (Shout if you have links to illustrate this impasse.)

HR 1461 remained stalled in the Senate: last action, 31 October 2005, referred to the Committee on Banking, Housing, and Urban Affairs.

On 31 July 2007, after the Democrats obtained control of the Congress in the November 2006 election, House Speaker Nancy Pelosi introduced HR 3221, a "bill to provide needed housing reform and for other purposes." Among other things, the bill granted the newly formed Federal Housing Finance Agency "supervisory and regulatory authority over Fannie Mae, Freddie Mac, and the federal home loan banks (enterprises)" (per CRS analysis).

Pelosi's bill became Public Law 110-140 on 19 December 2007."