[tomder55]

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.

[ETWolverine]

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.

All Recipients of Fannie and Freddie $$$.xls

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

[ETWolverine]

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

[tomder55]

He sure was . I linked to a Village Voice editorial abour Cuomo's contribution to the mess on this thred
https://www.askmehelpdesk.com/curren...-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.

[tomder55]

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

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/..._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.

[speechlesstx]

From Gateway Pundit:

Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... 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.

[BABRAM]

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

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."