Skip to comments.How Democrat Thieves Looted Fannie Mae and Freddie Mac (Interim CEO Daniel Mudd partial transcript)
Posted on 09/18/2008 8:08:04 PM PDT by Libloather
How Democrat Thieves Looted Fannie Mae and Freddie Mac
September 18, 2008
RUSH: The McCain camp is accusing Obama of cheering on this discord on Wall Street, cheering on the financial mess, trying to actually make it worse, trying to make people feel more upset -- of course, what's hard to understand about that? They want you suffering; they want you in panic; they want you hurting, ladies and gentlemen. That's the nature of liberalism. And they asked Obama, "What do you think about the AIG bailout?" He didn't have a word to say? He had nothing to say about it. He had no comment on it. McCain's out there right now speaking someplace in Iowa, proposing some commission, the mortgage financial institution trust that would work with the private sector in identifying areas here that need to be looked at and so forth and so on. They asked Obama about this, he has nothing to say, he has no answer whatsoever.
If you want to explain the financial market turmoil from Obama, you want his explanation, he just points his skinny finger of blame at President Bush, which is simplistic. This whole campaign issue-wise is simplistic. Now, let's review a little history here. Long before the subprime crisis, the Bush administration not only warned of impending calamity, they had a plan to avert it. Fannie Mae, under the leadership of Clinton appointee Franklin Raines, who's now an Obama insider, economic advisor, and Freddie Mac, had issued over one-and-a-half trillion dollars in loans, but their accounting was in shambles. The agency that Congress set up to monitor them had failed to rein 'em in, so on September 11, 2003 -- this is five years ago -- President Bush proposed the agency that Congress set up to monitor them. He proposed what the New York Times called the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. The New York Times called it that. Central to Bush's proposal was creating a new agency to oversee Fannie and Freddie.
Now, a little bit about that. Why do we need somebody to oversee Fannie and Freddie? Why do we need somebody to oversee every damn government program? Why do we need somebody to oversee every government operation? Why do we need a blue ribbon commission to handle base closings? Why do we have a blue ribbon commission to find fraud in Medicare? Because they all are fraudulent, because they all are financial sifts. You know, we were talking about this yesterday here at the EIB Network. Snerdley is always asking me, how in the hell do these guys end up with millions of dollars and lots of homes when they work for the government at a GS-13 salary of $140, $150,000? I said, wait a second. We all make the mistake of assuming these people are going to Washington for the salaries they make, the GS-13s and 14s, whatever the pay scale is. I said, "Snerdley, where do you find the largest pile of money in this country?" It ain't Fort Knox, and it's not in the Federal Reserve banks. It's in Washington. The largest single stash of money is in Washington, DC. And where do these liberals target their lives? Washington, DC. That's what Yale, that's what Harvard, all these Ivy League institutions are about, and in many cases creating a network of people, alums, who know each other, take care of each other, they get themselves entrenched, like Franklin Raines ends up at the Clinton administration.
We now know why there haven't been any tell-all books written about the Clintons. Jamie Gorelick has scored gazillions of dollars from government, not from her salary, but from other ways. Franklin Raines, a hundred million dollars over I think seven years working at Fannie Mae while running it into the ground. He was also OMB director working for Clinton, making his usual $150,000 a year. That's chump change. These people go to Washington, and they siphon stuff. all of these programs are fraudulent. How many congressmen have we heard about, these stories, they arrive with nothing and they leave with a net worth of millions. There's only one way this can happen, and that is deals with contributors, lobbyists. So it's the largest stash of money that just waiting to be taken in the form of legitimate grants, commissions, personal fees for what have you. It's just waiting there to be grabbed. And guess where liberals gravitate? Washington, DC. You know, we conservatives look at Washington as someplace we want to smaller. We don't target our lives to take control of government. We target our lives to try to limit its size and influence. Liberals, government is God, government is religion, government is their nirvana. They seek jobs there for the purpose of infesting the place with each other in lifetime-appointed positions so as to forever control as much of life in this country as possible, and when they can, grab a little from the till. And they do it.
I've got a story here in the stack. This is the New York Times, April 1997. This, my friends, is 11 years ago. "The chairman of the House Banking Committee called today for an investigation into the investment practices of Freddie Mac, the Congressional-chartered, shareholder-owned mortgage finance company, saying it had abused the preferential borrowing terms it enjoys through its ties to the Government. Representative Jim Leach, Republican of Iowa, said Freddie Mac -- short for the Federal Home Loan Mortgage Corporation -- had borrowed $125 million in the bond markets on Monday at 6.99 percent, an interest rate reflecting the market's belief that the Treasury had effectively guaranteed repayment. Freddie Mac, whose charter calls for it to invest primarily in mortgages and mortgage securities, then used the $125 million to buy corporate bonds issued by the Philip Morris Companies with identical 10-year maturities yielding 7.68 percent. Mr. Leach said that such an investment strategy might be legal, but that it was not appropriate. 'Freddie Mac was established by an act of Congress for a specific purpose: to advance home ownership, not to facilitate tobacco sales,' he said. 'What Freddie Mac's action amounts to is taxpayer subsidization of corporate arbitrage and, implicitly, the tobacco industry.'''
So all these people that hated tobacco, running down Big Tobacco, we gotta kill Big Tobacco, here they are investing in it with your mortgage money! In 1997, run by Democrats at the same time, and Jim Leach is so boring nobody heard him say this except in New York Times. So it kept getting worse and worse and worse and worse and worse, and finally in 2003 President Bush proposed the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis, which was a new agency to oversee Fannie and Freddie, which is an admission that it was a bunch of thieves running the place. Why do you need a commission to oversee them? Why can't you just apply the law to them? If there are people in there violating the charter with Congress, then get the hell rid of them. Have investigations. Well, here's what happened. Even though Bush proposed a new oversight committee, the Democrats said no way. They cried foul. Barney Frank said these two entities, Fannie Mae, Freddie Mac, they're not facing any kind of financial crisis.
Barney Frank, "They're not facing any kind of financial crisis." Melvin Watt, Democrat, North Carolina, he agreed. He accused Bush of wanting this oversight committee so he could weaken the bargaining power of poorer families. Weaken the bargaining power? You as a family member never interact with Fannie Mae or Freddie Mac unless you're not putting enough down, in which case Fannie Mae, Freddie Mac might not buy your mortgage, the bank might tell you, "You gotta throw a little more in here, or Freddie Mac, Fannie Mae won't buy it, and we don't want it if they won't buy it 'cause all we want is to give you this mortgage and get rid of it. We're gonna dump it somewhere else, we're gonna package it with other mortgages, what your good old S&L would do or your bank." But Freddie Mac, Fannie Mae, they had some requirements on these mortgages, and if you as the mortgage borrower didn't meet them, then they were going to -- so you did have some interaction with Freddie Mac and Fannie Mae; but you didn't deal with them, and Freddie Mac and Fannie Mae were not weakening the bargaining power of poorer families unless you could say the poorer families didn't have enough money to put enough into their down payment or whatever so Freddie Mac or Fannie Mae would buy it. But it didn't matter by this time because we were lending money to people who couldn't pay it back anyway!
So this was nothing more than Barack Obama-type cynicism and racism, Melvin Watt accusing Bush of weakening the bargaining power of poor families. So, Democrats did not pay any attention to any of the problems going on, they looked the other way. In fact they made the problems even worse by extending loans to people in greater numbers who couldn't pay them back. So, instead of solving the problem, Democrat insiders kept using Fannie Mae and Freddie Mac as personal piggy banks, Clinton-era policies fueled the giveaway that is now in the famous words of Jeremiah Wright, coming home to roost. Democrats fought every effort, every form, and now they're rewriting history. It's just a sitting duck. It's just a sitting duck issue.
RUSH: There's a letter to the editor today in the Financial Times by a guy named John Kay. He says, "Fannie Mae and Freddie Mac were probably the world's most heavily supervised financial institutions. They already had this massive oversight agency examining what they do." That's what makes this even more outrageous. "They were subject to a specialist agency. It's called the Office of Federal Housing Enterprise Oversight. The office employed 236 people at the time of its last annual report. The Office of Federal Housing Enterprise Oversight did not fail because it was understaffed or not well informed about Fannie Mae's activities, but because it lacked authority. The entire staff earned less in aggregate than Franklin Raines, the CEO who masterminded the expansion." So you had an oversight agency that had no authority.
This is Daniel Mudd, 2005 on Capitol Hill, Fannie Mae, Interim CEO.
MUDD: I am humbled to come here today to reaffirm the friendship and the partnership between Fannie Mae and the Congressional Black Caucus. Fannie Mae is determined to keep tearing down the barriers to deliver on the American dream and that means we need to work together with the CBC. So many of you have been good friends to Fannie Mae and our mission, you've been friends through thick and thin. We have indeed come upon a difficult time for Fannie Mae. There is much to be done inside my company, and I humbly ask you --
RUSH: Stop the tape because I got a follow up bite. I want to go to number eight next. This is his interim swearing-in ceremony, Daniel Mudd. He's phrasing the Congressional Black Caucus for helping save Fannie Mae. This is a sound bite from his same remarks.
MUDD: We will work hard inside our company to resolve the serious matters before us, to put our house in order, and to forge a new future. And all the while you will see Fannie Mae reaching out and listening to the caucus.
RUSH: Black caucus.
MUDD: Over a century of endeavor, you have earned the reputation as the conscience of Congress. In many ways I want to tell you today you're also the conscience of Fannie Mae, keeping us on course to serve those who need serving the most.
RUSH: There you have it, the Congressional Black Caucus, the conscience of Fannie Mae. You figure it out.
RUSH: I get to that I want to go back and play these two sound bites from Daniel Mudd. I had to hurry through these at the conclusion of the previous hour. This is all about Fannie Mae, Freddie Mac, out of control. They had a regulatory agency looking over their shoulder, they had no authority, they were in trouble starting all the way back in 1997. The point of this is that everybody is a little concerned now to varying degrees, some people are getting close to really concerned about their investments and portfolios and so forth and what all this is going to mean in terms of ramifications down the line. I know Obama's running around blaming Bush and the Republicans and so forth, which is typical, but this is a sitting duck issue for McCain and Palin to blame the real culprits here, and that is Democrats in Congress.
Folks, I'm telling you when it comes to this stuff, whether it's Hurricane Katrina and the aftermath, I don't care whatever problem you talk about, all roads lead to Congress, in this case the Democrat Congress back in the nineties. Congress writes the laws. Congress sets up the way these government-run institutions, even with so-called private sector involvement, are going to operate. And then when the excrement hits the fan, guess who gets to act like they were clueless and had no idea what was going on and they get to investigate? The very people who messed it up, set it up in the first place. The very people who create the problem then investigate it as though they were innocent bystanders and spectators and then they give themselves even more control of the mess they made ostensibly out of benevolence to fix it. And remember all this chatter during campaign finance reform that money in the electoral process was corrupting good people, and I never thought that was the case.
I never thought that our electoral system and campaign contributions and donations was corrupting in and of itself, but I'll tell you, that large stash of money sitting around waiting to be looted by people in Washington, various degrees power, I am telling you there is a level of corruption in that town with people thinking that all money is theirs, what you end up with is what they decide you should have. They do not realize that that big pile of money is produced by one thing, the collective work and productivity of the American people. If the American people didn't work and produce and weren't paying confiscatory taxes, that big pile of money wouldn't be there. These people create nothing; they produce nothing. They gum up the private sector, they clog it you will with all kinds of things, then they act like they had nothing to do with it, then they come in and fix it and appoint themselves an oversight role that gives them even more power over the called fixed situation.
Now, to set up these two bites is Daniel Mudd, and this is his swearing-in ceremony for the Congressional Black Caucus in 2005, and he's the interim CEO of Fannie Mae at the time, Daniel Mudd. Now, this is after Franklin Raines had been kicked out. He finally couldn't look the other way at all the corruption. He still walked out of there with a hundred million dollars in bonus and salary over seven or eight years. The point is, this problem started back in the nineties with the Clintons demanding the end of redlining. That's really where this starts, the end of redlining. Redlining was a bogus charge that lending institutions would look at the race of the applicant and just refuse on the basis of race, not on the basis of anything else, it was racist, redlining was racist, and I don't doubt that it happened in some cases. So the fix for it, always an overstep, it's always an overreach. So to extend the American dream to everybody, they said, "Get rid of redlining and loan money to people that can't pay it back. That's the way we're going to fix it." It's sort of like affirmative action. We're going to not only address the grievances of the past, we're going to go so far beyond addressing the grievances, we're going to create new ones on the other side of the stick. So here's the swearing-in ceremony for the Congressional Black Caucus, members of Congress and the Interim CEO of Fannie Mae shows up to speak to them.
MUDD: I am humbled to come here today to reaffirm the friendship and the partnership between Fannie Mae and the Congressional Black Caucus. Fannie Mae is determined to keep tearing down the barriers to deliver on the American dream. That means we need to work together with the CBC. So many of you have been good friends to Fannie Mae and our mission, you've been friends through thick and thin.
RUSH: What does that mean?
MUDD: We have indeed come upon a difficult time --
MUDD: -- for Fannie Mae.
MUDD: There is much to be done inside my company, and I humbly ask you to help us and to help me.
RUSH: What, forget Frank Raines' corruption?
MUDD: There are areas where we can do better. We'd like to hear it from our friends and I'd be so bold as to say our family first.
MUDD: It is true that Fannie Mae has lent more money to more minorities and more underserved individuals than any single company in history.
RUSH: All right, hubba hubba hubba, we lent more money to people that can't pay it back than any company in history. And that money is now gone! And, by the way, we're not a company; we are a government run outfit. This whole notion that Fannie Mae, Freddie Mac are private sector things with little government ownership, you can't have any government ownership in a private sector entity and still call it private sector. So here this guy is, he's showing up, this is after Frank Raines, all this corruption, this is 2005, and this guy shows up and he falls on the sword for the Congressional Black Caucus, you're our hope, you're our dream, you are the people who kept us together and this and that, you are our family. I humbly ask you to help us and to help me. Now, what the hell does this tell you that the root of the problem is? And then Daniel Mudd, he wasn't through groveling. He added this.
MUDD: We will work hard inside our company to resolve the serious matters before us, to put our house in order, and to forge a new future.
RUSH: That really worked.
MUDD: And all the while, you will see Fannie Mae reaching out and listening to the caucus.
MUDD: Over a century of endeavor you have earned the reputation as the conscience of Congress.
RUSH: Don't make my gag.
MUDD: In many ways, I want to tell you today you're also the conscience of Fannie Mae.
RUSH: Well, now we know.
MUDD: -- keep us on course to serve those who need serving the most.
RUSH: There you have it, all roads lead to Congress. I mean I have never heard somebody kiss ass in public like this in my life. I mean I may have. I just don't remember it. But I mean this guy, is he still around, or is he sick with anal poisoning? Daniel Mudd, anybody seen Daniel Mudd lately? This, ladies and gentlemen, identifies the el problemo, for those of you in Nevada, Florida, Colorado, and Nebraska listening to Obama ads.
RUSH: By the way, we found out where Daniel Mudd, by the way, he's Roger Mudd's son, of CBS fame. This is Braden Keil at the New York Post from just three days ago. "As more than a million US homeowners face devastating mortgage foreclosures, ousted Fannie Mae CEO Daniel Mudd continues to live in an opulent Washington, DC, mansion replete with expansive gardens, servants' quarters and a home theater. Mudd, whose former company," Fannie Mae, don't call this a company "is being bailed out by billions in taxpayer dollars, calls home a 22-room Colonial mansion on Newark Street in tony Cleveland Park, built on the former property of President Grover Cleveland. The eight-bedroom, eight-bath pad includes large public rooms with fireplaces, a home theater, a gym, a wine cellar, a solarium, servants' quarters, a terrace off the master-bedroom suite, and a gourmet kitchen. The gated, landscaped property also features a pool, fountains, gardens and a guesthouse.
"The property is so lavish that some company employees dubbed it 'Mudd Manor.' And they're furious that the executive at the helm of the ship as it sank into profound crisis has surfaced relatively unscathed, at least for now. 'Hey, he lost his limo and corner suite [at the office], but Mudd Manor is not a bad place to contemplate your next move,' said a bitter Fannie Mae employee who requested anonymity. 'Most Fannie Mae employees are reeling from their employee stock-option-plan account balances' going to cents on the dollar.' Mudd, the son of former newsman Roger Mudd and descendent of Dr. Samuel Mudd, who treated Lincoln's assassin, John Wilkes Booth, did not return calls for comment." Now, by the way, something else you need to know here. "Under the terms of his employment contract, Daniel Mudd," who you just heard bowing down and kissing the rear of the Congressional Black Caucus in 2005, "Under the terms of his employment contract, Mudd could collect $9.3 million in severance pay, retirement benefits and compensation, as long as his dismissal was 'without cause.' His salary last year was $900,000, although in a radio interview last month, he didn't deny reports that he raked in a total of $43 million in stock options, bonuses and overall compensation through the years."
So you add this to Franklin Raines' 100 million and Jim Johnson, what he ever got out of it, and Jamie Gorelick's part of the group that got $75 million out of Fannie Mae, and you see precisely what this was. It was indeed a Democrat Party piggy bank disguised as a lending agency for people who couldn't afford anything. Now, the piece de resistance. "Democratic Sens. Barack Obama, Chuck Schumer, and Jack Reed have written to Treasury Secretary Hank Paulson to object to golden parachutes for Mudd and ousted Freddie Mac Chairman Richard Syron, saying it would be 'a gross violation of the public trust.'" Yeah, they had to do that. Obama already got his money out of there in the form of campaign contributions and so forth.
That's the first tactic of an Alinsky Community Organizer.
Stir up the community let them know how bad things are and how much they have been victimized by "the man".
Well Pelosi? Not you guys?
Rush should take out an ad the Wall Street Journal and USA Today and publish this. I am so sick of everyone blaming Bush for this...THERE IS SO MUCH BLAME TO GO AROUND. This makes me want to vote for Palin even more. We need people who are TRULY outsiders, who have no connection, no favors to pay back. This is OUTRAGEOUS.
Fannie and Freddie got shut down after the Morgan Stanley report revealed that both were WAY undercapitalized.
Syron, the CEO of Freddie, promised to raise billions of dollars of capital, didn’t, but then had the nerve to post it as CAPITAL! He then used to the increase in (bogus) capital to raise the retained portfolio by 20%!!!!!!
This meltdown is the fault of Carter and Clinton’s Community Reinvestment Act and Fannie and Freddie. Obama should be lose the election because of his scummy friends.
From Rules for Radicals, Alinsky outlines his strategy in organizing, writing:
"There's another reason for working inside the system. Dostoevsky said that taking a new step is what people fear most. Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution."
 Saul Alinsky, The Latter Rain
Our country is better for Rush’s contributions.
We should accept nothing less than arrests and convictions for this fraud of the American taxpayer and public at large.
What these people have done is nothing less than what Enron did with their accounting.
Nobody is worth 40 million dollars in bonuses on a $900k salary.
ARREST AND CONVICTIONS! Bush had nothing to do with this corruption. So go get them. And if the feds don’t arrest the crooks, I say we have a public lynching.
Heard this on El Rushbo today. Good stuff.
YES!!! I missed Rush this morning but am elated he got that Mudd audio out there. TRUTH TO THE MASSES!
The McCain camp is accusing Obama of cheering on this discord on Wall Street, cheering on the financial mess, trying to actually make it worse, trying to make people feel more upset — of course, what’s hard to understand about that?
That’s the first tactic of an Alinsky Community Organizer.
Reminds me of the day the Palys were cheering when the WTC collapsed.
There's a difference, The Muslims were just celebrating, The Obama camp are trying to stir up a Marxist revolution.