THE WEASELS ARE WATCHING THE CONGRESSIONAL HEN HOUSE

This is just the tip of the iceburg, more will come out, the FBI is now investigating the loan mess. More names, more faces to come. Oh and Congressman Frank has kept his chairmanship  of the House Financial Services Committee, which just happens to oversee Fannie and Freddie.  Is it any wonder Congress has a lower positive rating than President Bush.  Congress has around a 16% average approval rating, President Bush has around a 30% average approval rating. A long article, worth seeing how congress works.   Time for another Boston Tea Party.

 

 

Congressman Barney Frank (D-Mass)

Fannie Mae's Patron Saint

Wall Street Journal  9-9-08

http://online.wsj.com/article/SB122091796187012529.html?mod=googlenews_wsj

Taxpayers are now on the hook for as much as $200 billion (now estimated at $700 Billion) to rescue Fannie Mae and Freddie Mac, and if you want to know why, look no further than the rapid response to this bailout from House baron Barney Frank. Asked about Treasury's modest bailout condition that the companies reduce the size of their high-risk mortgage-backed securities (MBS) portfolios starting in 2010, Mr. Frank was quoted on Monday as saying, "Good luck on that," and that it would never happen.

There you have the Fannie Mae problem in profile. Rep. Frank wants you to pick up the tab for its failures, while he still vows to block a reform that might prevent the same disaster from happening again.

At least the Massachusetts Democrat is consistent. His record is close to perfect as a stalwart opponent of reforming the two companies, going back more than a decade. The first concerted push to rein in Fan and Fred in Congress came as far back as 1992, and Mr. Frank was right there, standing athwart. But things really picked up this decade, and Barney was there at every turn. Let's roll the audiotape:

In 2000, then-Rep. Richard Baker (R-LA)  proposed a bill to reform Fannie and Freddie's oversight. Rep. Frank dismissed the idea, saying concerns about the two were "overblown" and that there was "no federal liability there whatsoever."

Two years later, Rep. Frank was at it again. "I do not regard Fannie Mae and Freddie Mac as problems," he said in response to another reform push. And then: "I regard them as great assets." Great or not, we'll give Rep. Frank this: Their assets are now Uncle Sam's assets, even if those come along with $5.4 trillion in debt and other liabilities.

Again in June 2003, the favorite of the Beltway press corps assured the public that "there is no federal guarantee" of Fan and Fred obligations.

A month later, Freddie Mac's multibillion-dollar accounting scandal broke into the open. But Mr. Frank was sanguine. "I do not think we are facing any kind of a crisis," he said at the time.

Three months later he repeated the claim that Fannie and Freddie posed no "threat to the Treasury." Even suggesting that heresy, he added, could become "a self-fulfilling prophecy."

In April 2004, Fannie announced a multibillion-dollar financial "misstatement" of its own. (this is when Mr. Franklin Raines  had to resign but during his 5 years at Fannie he took home over $90 million including yearly bonuses, and although resigning aka "early retirement" over the "misstatement" above, he took his 19 million severance package with him)      Rep. Frank was back for the defense. Fannie and Freddie posed no risk to taxpayers, he said, adding that "I think Wall Street will get over it" if the two collapsed. Yes, they're certainly "over it" on the Street now that Uncle Sam is guaranteeing their Fannie paper, and even Fannie's subordinated debt.

By early 2007, Rep. Frank was in charge of the House Financial Services Committee, arguing that he had long favored some kind of reform. "What blocked it [reform] last year," Mr. Frank said then, "was the insistence of some economic conservative fundamentalists in the Bush Administration who, to be honest, don't think there should be a Fannie Mae or a Freddie Mac." What really blocked it was Rep. Frank's insistence that any reform be watered down and not include any reduction in their MBS holdings.

In January of last year, Rep. Frank also noted one reason he liked Fannie and Freddie so much: They were subject to his political direction. Contrasting Fan and Fred with private-sector mortgage financers, he noted, "I can ask Fannie Mae and Freddie Mac to show forbearance" in a housing crisis. That is to say, because Fannie and Freddie are political creatures, Rep. Frank believed they would do his bidding.

And this is exactly what Rep. Frank attempted to prove when the housing market started to go south. He encouraged the companies to guarantee more "affordable" mortgages, thus abetting their disastrous plunge into subprime and Alt-A loans. He also pushed for, and got, an increase in the conforming-loan limits to allow Fan and Fred to securitize and guarantee larger mortgages. And he pressured regulators to ease up on their capital requirements -- which now means taxpayers will have to make up that capital shortfall.

But the biggest payoff for Rep. Frank is the "affordable housing" trust fund he managed to push through as one political price for the recent Fannie reform bill. This fund siphons off a portion of Fannie and Freddie profits -- as much as $500 million a year each -- to a fund that politicians can then disburse to their favorite special interests.

Top Recipients of Fannie Mae and Freddie Mac
Campaign Contributions, 1989-2008
1) Chris Dodd $165,400
         2) Barack Obama $126,349 

(some lists have Sen John Kerry slightly ahead of Sen. Obama)

To be fair, according to CNN:

Sen. John McCain has received $19,000 from the two companies in the past ten years.

This is also why Rep.. Frank won't tolerate cutting the companies' MBS portfolios. He knows those portfolios (bought with debt borrowed at taxpayer-subsidized rates) were a main source of Fannie's profits before the housing crash, and he figures that once this crisis passes they can do it again. And this time, his fund will get part of the loot.

Rep. Frank has had many accomplices from both parties in his protection of Fan and Fred. But he was and is among the most vociferous and powerful. In any other area of American life, this track record would get a man run out of town. In Washington, he's hailed as a sage whose history of willful error will be forgotten faster than taxpayers can write a check for $200 billion (now estimated at $700 Billion).     

(The Following is from WorldNetDaily, Reader alert, the following contains obscene amounts of pay and bonuses) 

In the aftermath of the U.S. government takeover, attention has focused on three Democrats with close ties to Obama who served as Fannie Mae executives: Franklin Raines, former Clinton administration budget director; James Johnson, former aide to Democratic Vice President Walter Mondale; and Jamie Gorelick, former Clinton administration deputy attorney general.

All three Obama-related executives earned millions in compensation from Fannie Mae.

Johnson earned $21 million in just his last year serving as Fannie Mae CEO from 1991 to 1998;  and left with a consulting contract worth $600,000 a year.

Raines earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004;

and Gorelick earned an estimated $26 million serving as vice chair of Fannie Mae from 1998 to 2003,  according to author David Frum, a fellow at the American Enterprise Institute.

All three have been involved in mortgage-related financial scandals.

In 1998,  according to the Washington Post  Gorelick, as Fannie Mae vice chairman, received a bonus of $779,625, despite a scandal in which  employees   falsified signatures on accounting transactions to manipulate books to meet 1998 earning targets. The moves, in turn, triggered multi-million-dollar bonuses for top executives.

Gorelick was embroiled in another controversy over an alleged conflict of interest when a 1995 memo she authored as deputy attorney general surfaced while she was a member of the 9/11 commission.

The memo, which became known as the "Gorelick Wall," appeared to establish barriers that barred federal anti-terrorist criminal investigators from accessing various federal records and databases that may have assisted them in their criminal investigations.

  In a story in the Associated Press, Raines and several other Fannie Mae top executives were ordered in a civil lawsuit to pay nearly $31.4 million for manipulating Fannie Mae earnings over a period of six years to trigger their massive bonuses.

Raines was also forced in the settlement to give up Fannie Mae stock options  valued at $15.6 million.

Last year, the  Securities and Exchange Commission alleged Freddie Mac had engaged in accounting fraud from 2000 to 2002, imposing a $50 million fine on the company and on four executives fines for amounts ranging from $65,000 to $250,000.

Raines currently advises Obama on housing policy.

Johnson was appointed to head Obama's vice presidential selection committee, until a controversy concerning an alleged $7 millions in questionable real estate loans  he received on favorable terms from failed sub-prime mortgage lender Countrywide Financial (Sen. Chis Dodd also received a very low interest loan from Countrywide)  surfaced and forced him to step down.

  It isn't his money. . .