Housing Reform
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| Mon, 09-22-2008 - 8:08pm |
From a statement made in Congress in 2006 (taken from the Library of Congress http://thomas.loc.gov/cgi-bin/query/D?r109:1:./temp/~r109SgQZDe:: )
Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were ``illusions deliberately and systematically created'' by the company's senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S . 190 , to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation. :
That was John McCain. A certain Jr. Sen. from Illinois voted against the legislation. Is it any wonder Freddie and Fannie gave a significantly greater campaign contribution to Obama?



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mmm, just to clarify: http://www.politifact.com/truth-o-meter/statements/727/
On the Freddie and Fannie question, it as McCain said: Obama is
Another interesting perspective.
That analysis found Fannie and Freddie-related contributors gave $116,000 to John McCain and his related committees, compared with $16,000 to Obama and his related committees.
Exactly!
John McCain's involvement in the Keating Five, which deregulated the savings and loan institutions, helped create the savings and loan crisis, mentioned in the article below. So, when he spoke out about Fannie and Freddie, his guilty conscience was leading the cry. It's great that he tried to intervene, but was it too little too late when the taxpayers paid 3.4 BILLION dollars then?
September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
((http://sweetness-light.com/archive/bush-mccain-tried-to-reform-housing-finance
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 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......))