Fannie Mae and Freddie Mac were accidents looking for a place to happen. Their collapse was not inevitable, but the way they were managed, as placed to enrich political pals made their end tragically foreseeable.

They were so-called “private” corporations with an implicit government guarantee on their bonds. They were able to borrow money at rates only a few tenths of a percentage point higher than the treasury because of the implicit guarantee. Using “cheap” money the Fannie (and Freddie) bought mortgagees from banks, put them in a package and resold them, making a profit on the difference. Knowing they could sell their mortgages to Fannie and Freddie, banks were willing to lend to anyone who could fog a mirror, knowing that the loans would be off their books by the time the homeowner defaulted. This left Fannie and Freddie with the debris once the housing bubble burst.

While the going was good, they made tons of money,... For a long time the management played fast and loose with the books, paying themselves multi-million dollar salaries and bonuses with not a care in the world. And why would they? The government would be there to pick up the pieces. Their friends in government gave them the jobs for which they were eminently unqualified. Becoming a Fannie and Freddie executive was a plum handed out by Democrat administrations as a way of making you rich.

Which brings me to Jamie Gorelick, James Johnson and Franklin Raines, Democrat biggies all. Two of them are now close advisors of Barack Obama. Just three of the geniuses who ran Fannie and Freddie into the ground, saddling the taxpayers with billions of dollars in debts

Bush and McCain proposes solutions for this in 2003-2007. Obama and the Dems did nothing but run interference for their buddies at Freddie and Fannie.

FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005 (Bill pdf )

The United States Senate

May 25, 2006

Statement by John McCain

Sen. John McCain [R-AZ]: 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.

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New Agency Proposed to Oversee Freddie Mac and Fannie Mae - NY Times Sept 11, 2003

McCain - Federal Housing Enterprise Regulatory Reform Act of 2005 (Democrats blocked reform)

Sponsor: Sen. Charles Hagel [R-NE]

Cosponsors [as of 2007-01-08]

Sen. Elizabeth Dole [R-NC]

Sen. John McCain [R-AZ]

Sen. John Sununu [R-NH]

Thank you thank you thank you - bump - am in conversation with several libs about the disaster that FMac and FMae have brought upon this nation and how the masterminds of the disaster are all DEMS who made multiplied millions who are now influencing Obama - and who should be in JAIL like Bernie Ebbers and the Enron guys - for doing the very same thing those guys did - supposedly - “cooking the books”.

Instead they have their multiplied millions, the us taxpayers are paying for their crimes, and they walk free to give their milions to elect more corrupt dems to do more damage to this country’s economy and government!!!

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