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US Senate panel plans one more hearing on GSE bill (Fannie Mae scandal)
Reuters ^ | Tue Jun 20, 2006 6:10 PM ET | By David Lawder

Posted on 06/20/2006 8:40:58 PM PDT by april15Bendovr

US Senate panel plans one more hearing on GSE bill Tue Jun 20, 2006 6:10 PM ET

By David Lawder

WASHINGTON, June 20 (Reuters) - The U.S. Senate Banking Committee expects to hold one more hearing on legislation to rein in government-sponsored housing enterprises before sending the bill to the Senate floor, a panel aide said on Tuesday.

Sen. Richard Shelby of Alabama, the committee's Republican chairman, will schedule a hearing in the next few weeks to collect testimony on Fannie Mae's $11 billion accounting scandal from credit rating agencies and possibly from Fannie Mae board members, said panel spokesman Andrew Gray.

"The purpose would be to talk to the credit raters who had given Fannie such high rankings when obviously things were in such shambles," Gray said. "We think it would be informative for the committee to go into their methodology," Gray said.

Standard & Poor's and Fitch Ratings both maintained triple-A senior debt ratings and double-A-minus subordinated debt ratings for Fannie Mae last month after the Office of Federal Housing Enterprise Oversight levied a $400 million penalty against the mortgage giant and issued a report revealing an "arrogant and unethical" culture that led Fannie employees to massage earnings to trigger maximum bonuses.

Although a date and witness list for the hearing has not been set, it is being planned as Shelby gears up to push for a floor vote for a Senate bill to create a new regulator for Fannie Mae and its sibling enterprise, Freddie Mac .

It also would closely follow the committee's harsh grilling of Fannie Mae Chief Executive Daniel Mudd and Chairman Stephen Ashley last week on the OFHEO report.

The bill, backed by the Bush administration, has been stalled in the Senate, where Republicans and Democrats have failed to forge a compromise on the most contentious issue in the debate, a provision to curb the companies' $1.5 trillion investment portfolios.

Shelby said last week he expected the bill to move to the floor for a vote before August. A House version, with less stringent guidance on the portfolios, was passed last year.

Gray said Shelby was working with Senate leadership and Democrats to get a bill moved, but would stick to his plans for tougher curbs on Fannie's investment portfolios. The Senate bill would force portfolio cuts by restricting the type of assets that Fannie and Freddie hold.

"Senator Shelby's intention is to stand behind the principles we've outlined," Gray said. "We believe we have to have a strong bill coming down to the Senate floor."

Fannie and Freddie are charged by Congress with supporting U.S. housing by keeping the mortgage market liquid. To do this, they sell debt and use the proceeds to purchase mortgages from lenders, which provides lenders with money for new home loans. They repackage the mortgages into securities for sale to investors, but also hold some funds in their own accounts.

TOPICS: News/Current Events
KEYWORDS: 109th; fannie; fanniemae; fnm; govwatch; ussenate

1 posted on 06/20/2006 8:41:05 PM PDT by april15Bendovr
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To: All

Lets see what unfolds with this scandal?

2 posted on 06/20/2006 8:56:37 PM PDT by april15Bendovr
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To: april15Bendovr

Remember Bill Clinton's buddy Raines was the CEO that took the money.

3 posted on 06/20/2006 9:13:22 PM PDT by encm(ss) (USN Ret.)
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To: april15Bendovr

Good! Republicans are ignoring a juicy Democrat scandal here.

4 posted on 06/20/2006 9:51:20 PM PDT by Dems_R_Losers (The Kerry/Lehane/Wilson/Grunwald/Cooper plot to destroy Karl Rove has failed!!)
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To: encm(ss)

Fannie Mae reported paying the following executive bonuses in 1998: chairman and chief executive James A. Johnson received $1.932 million; Franklin D. Raines, chairman-designate, received $1.11 million; Chief Operating Officer Lawrence M. Small received $1.108 million; Vice Chairman Jamie S. Gorelick received $779,625; Chief Financial Officer J. Timothy Howard received $493,750; and Robert J. Levin, an executive vice president, received $493,750.

5 posted on 06/20/2006 11:01:42 PM PDT by april15Bendovr
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To: encm(ss)

JAMES A. JOHNSON James A. Johnson is Vice Chairman of Perseus, L.L.C., a merchant banking and private equity firm based in Washington, DC and New York City. Beginning in January of 1990 and continuing through December 1999 he was employed by Fannie Mae. He served as Vice Chairman (1990), Chairman and CEO (1991-1998), and Chairman of the Executive Committee (1999). Prior to joining Fannie Mae, Johnson was a managing director in corporate finance at Lehman Brothers. Before joining Lehman, he was the president of Public Strategies, a Washington- based consulting firm he founded to advise corporations on strategic issues. From 1977 to 1981, he served as executive assistant to Vice President Walter F. Mondale, where he advised the Vice President on domestic and foreign policy and political matters. Earlier, he was employed by the Target Corporation, worked as a staff member in the U.S. Senate, and was on the faculty at Princeton University. Johnson serves as chairman of The John F. Kennedy Center for the Performing Arts and is chairman of the board of trustees of The Brookings Institution. He also serves on the board of the following organizations: The Enterprise Foundation; Gannett, Inc.; The Goldman Sachs Group, Inc.; KB Home; National Association on Fetal Alcohol Syndrome; National Housing Endowment; Target Corporation; Temple-Inland, Inc.; and UnitedHealth Group. He is also a member of The American Friends of Bilderberg, The Business Council, the Council on Foreign Relations, the Trilateral Commission, and he is Chairman of the Advisory Council for Public Strategies Incorporated. In March 1994, Johnson was named "CEO of the Year" by The George Washington University School of Business and Public Management. He also was named a 1998 “Washingtonian of the Year” by WashingtonianMagazine. In May 2001, he was elected to the American Academy of Arts and Sciences. Johnson received a B.A. degree in political science from the University of Minnesota and a Masters Degree in public affairs from the Woodrow Wilson School at Princeton. In 1997, Mr. Johnson received an Honorary Doctor of Laws Degree from Colby College, in 1999 he received an Honorary Doctor of Humane Letters Degree from Howard University, and in 2002, he received a Doctor of Laws Degree from Skidmore College.

Franklin Raines was born January 14, 1949. He attended Harvard College in Boston, where he received his B.A. degree magna cum laude. He continued his education at Harvard Law School where he graduated cum laude with his J.D. (law degree). His studies also included Magdalen College and Oxford University (as a Rhodes Scholar). He went on to serve as the Associate Director for Economics and Government in the Office of Management and Budget (OMB), Executive Office of the President; and Assistant Director of the White House Domestic Policy Staff between 1977 and 1979. He then joined the firm of Lazard Freres & Company where he was a general partner. His tenure there was 11 years. From 1991 to 1996, he was Vice Chairman of Fannie Mae, in charge of the company's legal, credit policy, finance, and other corporate functions. For two years he was the President's (William Jefferson Clinton) key negotiator in the talks that led to passage of the bipartisan Balanced Budget Act of 1997. Raines was the first OMB director in a generation to balance the federal budget. Raines also helped the President manage the federal government by coordinating procurement, financial management, information technology, and regulatory policies for all federal agencies. The Fannie Mae Board of Directors designated Raines as the successor to James A. Johnson in April 1998. From May through December 31, 1998, Raines served as Chairman and CEO-Designate. Franklin D. Raines now serves as Chairman and Chief Executive Officer of Fannie Mae. Fannie Mae is the largest non-bank financial services company in the world. He became Chairman and Chief Executive Officer on January 1, 1999.

Jamie S. Gorelick (born May 6, 1950) was the number two official in the U.S. Department of Justice during the Clinton administration. She was appointed by Senate Democratic Leader Tom Daschle to serve as a commissioner on the bipartisan National Commission on Terrorist Attacks Upon the United States, which sought to investigate the circumstances leading up to the terrorist attacks of September 11, 2001. Gorelick served as Vice Chairman of the Federal National Mortgage Association from 1997 to 2003. Before serving as Deputy Attorney General of the United States, she was General Counsel of the Department of Defense and a prominent attorney with the firm of Miller, Cassidy, Larroca & Lewin. She also served as an assistant to the U.S. Secretary of Energy from 1979 to 1980. Gorelick was president of the District of Columbia Bar from 1992 to 1993. She is currently a law partner in the Washington office of Wilmer, Cutler & Pickering.

6 posted on 06/20/2006 11:21:36 PM PDT by april15Bendovr
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To: encm(ss)
Franklin Raines, Jim Johnson and Gorelick were all on Kerry's list of Cabinet positions,3566,132759,00.html

Kerry Camp Keeping Mum on Possible Cabinet

Friday , September 17, 2004

All interesting timing if you think about Gorelick's position on the 911 Commission?
7 posted on 06/20/2006 11:23:53 PM PDT by april15Bendovr
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To: All

A $40 billion scandal
By Dan Gainor

Published June 21, 2006

When most people hear the word "Enron," they mentally complete the phrase by adding the word "scandal." As reporter Lester Holt of NBC's "Today" put it in a Jan. 1 story, "Enron has been the poster child, if you will, of corporate scandals."

It isn't the only one, though. There's $40-billion scandal with most of the same elements -- even connection to prominent politicians. Just don't expect to see much about it on TV. After all, the top people involved here are Democrats.

Welcome to Fannie Mae, the government-sponsored mortgage giant. As part of a scandal that's been running nearly two years, Fannie Mae has "misstated earnings" to the tune of $10.8 billion. That's some tune.

So far, the Fannie fiasco has cost Chief Executive Officer Franklin Raines and several other top executives their jobs. The stock has dropped from nearly $80 a share to around $50 -- roughly $30 billion in lost value. And the company recently settled with the federal government and agreed to pay $400 million in fines, stemming from allegations the firm fiddled with the books to ensure bigwigs got performance bonuses.

To top it off, the Fannie Mae leadership was quite well-connected in D.C., especially to the Democratic Party. The Washington Post on May 23 made this all clear in black and white. The front page of that day's Business section showed how James A. Johnson, a former campaign manager for Walter Mondale's presidential run, had created "a political powerhouse."

That story had a photo of Mr. Johnson, who had been chairman and chief executive of Fannie Mae, flanked by two other photos -- both other prominent Democrats. On one side was Mr. Raines, a former head of the Office of Management and Budget under Bill Clinton. On the other was Clinton Deputy Attorney General Jamie Gorelick.

While the rest of the graphic listed other prominent Democrats and Republicans, the titanic captains at Fannie Mae were clearly Democrats.

Sounds like an amazing political scandal. Certainly, newspapers and business magazines think so. The Wall Street Journal, New York Times and The Washington Post have done hundreds of stories on the Fannie fiasco. An Oct. 4, 2004, Wall Street Journal editorial summed up the crisis: "The company was cooking the books. Big time."

Then there's network news. When the Business & Media Institute looked into this last year, we found almost no network coverage of the scandal. Instead, ABC, CBS, NBC and CNN all focused hours and hours on the damage done at Enron.

Since last year's study period ended on Feb. 1, 2005, CBS has reported on the Fannie Mae scandal just twice -- both the same day of the $400-million settlement. NBC has mentioned it just once and ABC has been completely out to lunch. CNN has mentioned it just six times -- a decline in its coverage.

None of the stories discussed the roughly $30 billion in lost value to stockholders since this scandal has hit the news. None of them mentioned this was a Democratic scandal.

When it came to Enron, the media did everything they could to link it to Republicans or President Bush. Back in January, Anne Thompson of NBC's "Today" showed how it was done. "He was Houston's No. 1 corporate citizen who morphed into public enemy number one when Enron disintegrated: Ken Lay, friend of presidents past and present. Kenny Boy, President Bush called him, a powerful, influential man with a photograph album of famous figures." Being connected to President Bush was newsworthy. Being connected to President Clinton apparently was not.

In a Dec. 28, 2004, interview on CNN's "Newsnight With Aaron Brown," Newsweek reporter Charles Gasparino, who was covering the scandal, said he thought reporters ignored it because "it's a politically correct company."

Much like Fannie Mae, perhaps Mr. Gasparino underreported the real results. It seems there was something else about the organization network media types love -- the big (D) after so many of the prominent names. How else can you explain a scandal that equals the wealth of the second-richest man in the country, Warren Buffett, but gets less network coverage than skateboarding during the same time period?

There's still time for the networks to do their job because Congress just heard it could take years to fix the problems at Fannie Mae.

According to a June 12 BusinessWeek article, "Fannie didn't admit or deny any wrongdoing" in its $400-million settlement. After $10.8 billion in misstated earnings, nearly $30 billion in lost market value and a $400-million settlement, no admission from the firm is necessary. What we do need is an admission from the networks that they have missed a huge story -- and a good reason why.

Dan Gainor is a career journalist and the Boone Pickens Free Market Fellow. He is also director of the Media Research Center's Business & Media Institute.

8 posted on 06/21/2006 7:35:35 AM PDT by april15Bendovr
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To: All
Where are all the FReepers on this story? Think of the implications these hearings could have on the Democrats considering the media hid the scandal?

Kind of a low turnout here considering?

We should be constantly on this scandal like flies on crap.

Good Post at Newsbusters

A $40 Billion Scandal the Media Overlook
Posted by Ken Shepherd on June 21, 2006 - 11:22.

9 posted on 06/21/2006 9:30:21 AM PDT by april15Bendovr
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To: All

History post

What I was saying in 2006

10 posted on 09/30/2008 9:54:41 PM PDT by april15Bendovr (Free Republic & Ron Paul Cult = oxymoron)
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To: april15Bendovr

bump ttt!

11 posted on 09/30/2008 10:04:58 PM PDT by Admin Moderator
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To: Admin Moderator

Thank you

12 posted on 09/30/2008 10:19:34 PM PDT by april15Bendovr (Free Republic & Ron Paul Cult = oxymoron)
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To: april15Bendovr

“Where are all the FReepers on this story? Think of the implications these hearings could have on the Democrats considering the media hid the scandal?

Kind of a low turnout here considering?

We should be constantly on this scandal like flies on crap.

Good Post at Newsbusters

A $40 Billion Scandal the Media Overlook
Posted by Ken Shepherd on June 21, 2006 - 11:22. “


13 posted on 10/01/2008 8:17:17 AM PDT by AuntB ( "During times of universal deceit, telling the truth becomes a revolutionary act." - George Orwell)
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To: AuntB

Here is another retro article on the topic

Study: ‘Extensive financial fraud’ by Fannie Mae execs (Enron? small potato)
Washington Post ^ | 5/25/06 | By Kathleen Day

Posted on Thu May 25 12:42:08 2006 by april15Bendovr

14 posted on 10/01/2008 8:23:14 AM PDT by april15Bendovr (Free Republic & Ron Paul Cult = oxymoron)
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