Shot In The Fannie Mae – The History of a Financial Disaster
1997
- Fannie Mae is a GSE (Gov’t Sponored Entity) regulated by Congress
- Fannie Mae buys mortages from other companies
- It is backed by the taxpayers for all losses, but keeps all profits
- President Clinton loosens Home Loan Requirements
1998
- Banks begin making thousands of bad loans, 0 down, no documentation, for 120% (1998 – 2008)
- Executives at Fannie recieve huge bonuses if loan targets are met.
- Franklin Raines and Jamie Garlick from the Clinton Administration are appointed to run Fannie Mae.
2003
- President Bush proposes a new oversight committee to clean up Fannie Mae, but Democrats derail the effort
Rep. Melvin Watt (D-NC) Committee on Financial Institutions and Consumer Credit, stated, “I don’t see much other than weakening the bargaining power poorer families to get affordable housing.”
1999 – 2004
- Raines earns $100 million in bonuses!
- Garelick earns $75 million in bonuses!
- In 2004, Enron collapses, congress investigates, Executives Skilling & Lay go to jail, for fraudulent bookkeeping
- Congress responds with the Sorbanes-Oxley Act, more heavy regulation of corporations.
2004
- An OMB investigation finds massive fraudulent bookkeeping at Fannie Mae
- False numbers triggered executive bonuses every year
- Congress holds NO hearings, NO one goes to jail, or is punished
- WHY NOT?
1995 – 2005
- Fannie Mae gives millions to Democratis causes, examples: Jesse Jackson & ACORN.
- Fannie Mae pays millions to 354 congressman and senators, from both parties.
- Who got the most money?
Top 4 Recipients
- #1 Senator Christopher Dodd, (D-CT). Chairman of the Banking, Housing & Urban Affairs Committee
- #2 Senator Barack Obama, (D-IL) Federal Financial Management Committee
- #3 Senator Chuck Schumer (D-NY) Chairman of the Finance Committee
- #4 Rep. Barney Frank (D-MA) Chairman of the House Financial Services Committee
2005
- Franklin Raines & top execs are forced to resign from Fannie Mae
- They do not go to jail
- There is no media “perp walk”
- They keep all of their bonuses
- They finally pay $31.4 million in civil fines
2005
- The Federal Housing Enterprise Regulatory Reform Act is sponsored by #325 Sen. John McCain (R-AZ), Armed Services, & Commerce, Science & Transportation.
- “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.”
2005
- NONE of the top 4 recipients support the legislation
- The reform act is blocked by Democrats never even making it out of committee
- NONE of the politicians return any of the money tainted by fraud.
2008
- Fannie Mae & Freddie Mac go bankrupt and the govt. takes them over completely
- Lehman Brothers, goes bankrupt from investing in bad mortgages
- AIG get $85 million in loan guarantees, after insuring bad loans & projects
- Taxpayer will ultimately pay BILLIONS
- Franklin Raines is now an advisor to the Obama Campaign which wants the govt. to take over more of the economy!
- Did government involvement in the mortgage market work out?
- How will even MORE government invovlement make it better? Do you want to be Sweden?
- McCain favors revising regulations & loan standards, selling off Fannie & Freddie.
Sources: Congressional Record, 5/25/06; Herald Tribune, 4/18/08, New York Times, 9/13/03, www.govtrack.com, 9/17/08, “Hannity & Comes,” Fox News 9/16-9/17/08
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The cloak of immortality will be placed upon Fannie and Freddie.
I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.
Nice font for the article, but I have some questions.
#1: What does he mean by Housing Loan Requirements? It’s as if capitalization Makes Things Official.
He must be referring to the Community Reinvestment Act (CRA) of 1977. If he isn’t, then I must be from Mars, because that’s what Fannie Mae is attached to–and what Clinton had a hand in deregulating. Observe:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Problematically for the argument, the author is correct in his first point:
“Fannie Mae is a GSE (Gov’t Sponored Entity) regulated by Congress”
Here is the amendment that a Republican congress gave to the President to sign:
SEC. 809. SMALL BANK REGULATORY RELIEF.
(a) IN GENERAL.–Except as provided in subsections (b) and (c), any regulated financial institution with aggregate assets of not more than $250,000,000 shall be subject to routine examination under this title–
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(1) not more than once every 60 months for an institution that has achieved a rating of “outstanding record of meeting community credit needs” at its most recent examination under section 804;
(2) not more than once every 48 months for an institution that has received a rating of “satisfactory record of meeting community credit needs” at its most recent examination under section 804; and
(3) as deemed necessary by the appropriate Federal financial supervisory agency, for an institution that has received a rating of less than “satisfactory record of meeting community credit needs” at its most recent examination under section 804.
(b) No Exception From CRA Examinations in Connection With Applications for Deposit Facilities.–A regulated financial institution described in subsection (a) shall remain subject to examination under this title in connection with an application for a deposit facility.
(c) DISCRETION.–A regulated financial institution described in subsection (a) may be subject to more frequent or less frequent examinations for reasonable cause under such circumstances as may be determined by the appropriate Federal financial supervisory agency.
[Codified to 12 U.S.C. 2908]
[Source: Section 809 of title VIII of the Act of October 12, 1977 (Pub. L. No. 95-128; 91 Stat. 1147), effective October 12, 1997, as added by section 712 of the Act of November 12, 1997 (Pub. L. No. 106-102; 113 Stat. 1469), effective November 12, 1999]
#2: Who deregulated the CRA? sounds like it would take an act of congress to do that! Oh wait. It did.
http://en.wikipedia.org/wiki/Republican_Revolution
#3: What level of logical skill does it take to destroy your own argument with your first proposition?
And don’t forget your boy Mccain:
“McCain should look first to his campaign staffers as the cause of that debacle. One of them was Fannie Mae’s head of lobbying, and spread tens of millions of dollars around Washington in the form of lobbying contracts. A number of McCain staffers were on the receiving end of those contracts, collecting hundreds of thousands of dollars each from the lenders to rep their interests. And McCain’s campaign manager served as president of a lobbying association that fought to protect Freddie Mac and Fannie Mae from the sort of regulation that McCain is now proposing.”
http://www.motherjones.com/mojoblog/archives/2008/09/9663_mccain_fannie_freddie.html
WHAT IS THE EXCAT NAME OF THIS WEB-SITE? I CAN’T FIND IT!! YOU ARE FANASTIC!!
MCCAIN GOT MORE CONTRIBUTIONS FROM FREDDIE AND FANNIE THAN OBAMA!!! Obama got his contributions from Freddie and Fannie EMPLOYEES while McCain got his from Freddie and Fannie boards of directors and lobbyists!!
From Politifact.com:
“On the Freddie and Fannie question, it as McCain said: Obama is No. 2 on the list, with $126,349, right after Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, who had $165,400.
But the list requires a few notes of explanation.
Corporations cannot give to candidates, so the center’s list adds up contributions from Fannie and Freddie employees and their families. Obama has received a lot of money during his presidential campaign, though, and Fannie and Freddie don’t make his list of top 20 companies. (The top three companies with employees donating to Obama are Goldman Sachs, University of California, and Citigroup, according to the center.)
The New York Times looked at contributions from Fannie and Freddie’s boards of directors and lobbyists, who are technically not employees. That analysis found Fannie and Freddie-related contributors gave $169,000 to John McCain and his related committees, compared with $16,000 to Obama and his related committees.”
Just a note – I’m a Republican, I own a gun, I drive a pick up truck. I believe in state’s rights and smaller gov’t – 2 ideas that the Republican party has squashed in the last 8 years! My party has been hijacked by this group of money-hungry, corporate-loving, hate-mongering, lying, religious zealots and I’m tired of them…
Have a nice day, remember to vote and CHECK YOUR FACTS – that how we got in the messes we’re in!!!!!
I’m sure you won’t have the guts top print this but I had to try…
I think this madness is not all true. Please read the piece that Republican guy just above this wrote. Its more true.
People should also note, that enterprises pay contributions to both parties just to hope that they will have support for them when. Its actual bribing the advisors and party people from the candidates to influence the President.
Corporate rule #1. Never look a given horse in the mouth.
Apparently two key points are not in dispute. Raines is a cheat and advises Obama. McCain understood the scam and at least tried to stop it. Does more need to be said?