Skip to comments.LETTER: Bush raised red flags about Fannie and Freddie
Posted on 03/15/2009 4:23:34 AM PDT by Libloather
LETTER: Bush raised red flags about Fannie and Freddie
March 14, 2009 6:00 AM
Bush raised red flags about Fannie and Freddie
In its editorial, "Protect homeowners: It's job No. 1 for Congress" (March 8), The Standard-Times proclaimed that Rep. Barney Frank has been a victim of unfair criticism and that he was actually among the voices "warning that disaster loomed" at government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Having an entirely different recollection of the facts, I did a little digging. Here is what I found.
Starting with the 2002 budget request in April 2001, the Bush administration raised red flags about Fannie Mae and Freddie Mac. In 2003, the White House warned that financial problems with the organizations could spread well beyond the housing sector and proposed to Congress that they create a new regulatory agency to supervise Fannie and Freddie.
On Sept. 10, 2003, Rep. Frank objected, stating, "Fannie Mae and Freddie Mac are not in a crisis"¦ The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the treasury, which I do not see. I think we see entities that are fundamentally sound financially"¦ But the more pressure there is, then the less I think we will see in terms of affordable housing."
In 2005, Alan Greenspan stated, "If we fail to strengthen our GSE regulation, we increase the possibility of crisis."
To that end in 2006, Sen. John McCain cosponsored regulations to tighten oversight, stating, "The GSEs need to be reformed without delay." The bill passed the Republican-controlled committee on a party-line vote, with all Democrats voting in opposition. But knowing that they did not have sufficient votes to overcome a Democrat filibuster, the Republicans withdrew the legislation.
If you are unsure which version of the facts to trust mine or The Standard-Times' you can see a video of Rep. Frank speaking his own words at http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1.
Peter D. Friedman
Editor's note: The Standard-Times said Rep. Frank "warned several years ago that not everyone could afford to own a home and that Fannie Mae and Freddie Mac should encourage more multifamily and apartment houses." We made no mention of his take on the financial well-being of the agencies. At a Financial Services Committee hearing Feb. 18, 2002 regarding the proposed 2003 budget, Rep. Frank said, "I am in favor of trying to help lower income people get the advantages of homeownership"¦ But almost by definition, the large majority of poor people are going to need rental housing. And we will never alleviate the terrible housing crisis that affects so many people in this country if we do not do a much better job of building decent, affordable rental housing."
The note added at the end is interesting—it doesn’t even appear to be related to the letter itself. (My coffee hasn’t kicked in).
They meant well. That’s there excuse.
And thus the problem with the Bush admin. Raising the flag was the first step but he and his admin did not do the next bigger and more important step of demanding reform and using his bully pulpit to expose the fraud. Maybe one day we’ll find out why Bush was so nonchalant about certain things key to conservative ideology and so gung ho about being a big government Rino like his Daddy.
Man also invented spell check.
Well, Barney, in full democrat mode, says opposite things, therefore, covering his butt for all purposes.
[This has been no secret for years, although there have been voices warning that disaster loomed. Among them was U.S. Rep. Barney Frank, who has been a target of much unfair criticism as the head of the House Banking Committee. He warned several years ago that not everyone could afford to own a home and that Fannie Mae and Freddie Mac should encourage more multifamily and apartment houses.]
You can read the whole column of bullsh*t at:
I think 'big tent' republicanism got so big there were no distinguishing features between republicans and liberals. Liberals knew republican moderates through that seniority system would allowed self interested, get mine while the getting is good individuals filled the GOP leadership positions. Liberals did their part in research and with their MSM 24/7 painted, deservedly so Republicans the image of power, greed, and corruption, knowing full well the majority of Americans would turn these people out come election.
The GOP did not 'regulate' itself and hence we got lord McCained, Foleyized and Cunninghamed right out of the majority. When the opportunity to send Brawny Frank packing back to the land of Mass the GOP went 'compassionate' and covered over his nakedness. And not even a whisper is to be heard from elected Republicans about who knew what and when they knew it when Brawney Frank stuck his pin in his over inflated balloon.
IF Brawney was a Republican we all would know every dime he had collected in his private bank account since the day he was elected.
In before the Bush knew so it is his fault post.
By the time he and the GOP did anything it was too late. In 2002 W was pushing risky home loans just like everybody else.
Oh, I didn't know spell check could check for syntax errors. Uh, where's the misspelled word?
Exactly. Bush did exactly what what the democrats did vis-a-vis housing. He pushed for expansion of Fannie and Freddie's puchasing of mortgages. He appointed two minority cronies to head HUD with the purpose of being politically correct and expanding ownership among hispanics and "poor".
Bush's legacy will turn out to be one of a president that unlocked and opened the door for the socialist Obama.
It’s quite simple, really: congress had him by the short hairs in the U.S. Senate where, even when the GOP had the slim majority, the squishy moderate GOP senators could never be trusted. Why is this fact important? Well, because President Bush needed the Left to continue to authorize the funding for two conflicts in the Middle East. He knew that he had to leave certain things alone because he didn’t have the votes to continue the fight that was neccessary.
That right there is the point. He should have continually screamed those facts from the mountain tops until congress relented from public pressure. Not doing so gave the democrats a reason to "blame Bush" and it was his fault. When dealing with democrats, it has to be in their face type of contact 24/7 as Rush does.
“covering his butt” - poor choice of words when discussing Bwarney. LOL
there should be their
The Lame Stream Print Media doing the cya for Bawney.
Is that AD or BC?
Thank you. Blaming this on the Democrats when the Republicans had Congress and the White House is rediculous. There were Republicans on those Committees. What were they doing? Sleeping? The Republicans are just as guilty as the Democrats for not dealing with this, which is why they don't take advantage of the Barney and Maxine show.
wood knot work their
There was no sort of crisis until the prices started falling. “We’re going to stop putting Americans into their own homes because I have a bad feeling about it?” Nothing was going to happen until you could point to something real.
Shhhhhhh! The BDSers don't care about any of that as it interferes with their BDS rants.
Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... Dems Ignored Warnings
For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.
April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
January: Freddie Mac announces it has to restate financial results for the previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (”Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.
September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.
October: Fannie Mae discloses $1.2 billion accounting error.
November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)
February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)
February: CEA Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)
April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07)
September: RealtyTrac announces foreclosure filings up 243,000 in August up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the previous month the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.
December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)
March: Bear Stearns announces it will sell itself to JPMorgan Chase.
March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)
April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)
May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.
“Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)
“[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that and Congress is making progress on this is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)
“Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)
June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)
July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
In 2005— Senator John McCain partnered with three other Senate Republicans to reform the governments involvement in lending.
Democrats blocked this reform, too.
More... Not only did democrats not act on these warnings but Barack Obama put one of the major Sub-Prime Slime players on his campaign as finance chairperson.
UPDATE: The media is not reporting that the failed financial institutions are big Obama donors.
That is easier said than done. This needed to be stopped by no later than 2004. This stuff wasn't on many peoples radar screen back then. One was labeled as a tin foil hatted old crank if you brought up on FR..
No. Really? Tell me how "spell check" would have caught that?
Not to mention a racist if one were to raise flags about risky lending to poorly qualifying potential home buyers. I distinctly recall, in 2006-2007, numerous news stories about how the lending practices of banks were racist based on a data-driven analysis of skin color as a factor when adjusting for credit scores. Rep. Clyburn (D-SC) was all over it and faster than Jessie Jackson at a corporate shakedown.
The man was screwed from the git go. You can use the bully pulpit all you want. If the majority does not want to go along with it they won’t.
If you look back, the warning signs were all over the place. I live in a non bubble area, but there was still some hanky panky going one here. A friend trying to sell his house in 2004 was warned by a Realtor to take the "funny" bid. It was one of those American dream loans were the potential minority purchaser didn't have a down payment and temporarily borrowed the money from the seller for closing costs. Those types of feel good programs ended up hurting a lot more people than it helped..
...official member of the Immaturity Police. You are under arrest. Any hyperbole you say, can and will be used against you.
Two misspelled words. Spell check existed before computers.
There is no misspelled word in the sentences “They meant well. Thats there excuse.” There is one used in the wrong context but not one is misspelled.
Or, wood knot halve worked their.... :)
Part of being an effective leader is to get people to go along with you, Bush didn't have it. Reagan had it.
Perhaps, Bush needed congress to support the War effort.
The price paid was the Democratic boondoggle of Freedie and Fannie, among other Democratic boondoggles
The real problem is that the majority in the legislative branch, i.e. the Republicans, sat on their hands, or they were tapping their feet.
Dubya was too wrapped up with Iraq to pursue any real reform.
The major difference between the two parties is this: at least Pubbies occasionally admit to doing wrong, such as overspending during the Bush II administration. Democrats never admit to any wrongdoing, because their intentions are always noble.
How do you know he doesn't know how to spell "their"?
How do you know he does?
Over the last decade I have argued that through Gerrymandering the US Senate is the worst collection of carpet-baggers since Reconstruction. I haven’t changed my mind. A potential historical analogy to consider would be the Roman republic’s Senate that had turned corrupt and was easily destroyed by Caesar; all we need is another depression and our Senate will implode with disastrous consequences.
He should have took it to the American people who vote for Congress. Bush lost the concept of “We The People”.
I can only imagine some of the people on my street who were also trying to unload their homes after our sales price was officially transacted at $176.5K and their homes were not moving at $185K with similar comps. Of course it didn't help them that my wife was a Realtor and we could afford to drop the price lower since she could forego her commission.
Refrence bump - lots of ammo - Thanks! ;-)
How many time do you have to tell someone your on fire before they start to look for water?
While gerrymandering is done in congressional districts, it is not done with respect to the Senate. The entire state votes for senators. No Gerrymandering involved.
It rubbed my friend the wrong way as well. He turned it down and somebody else bought the home about a week later for the same price as the "dream on America loan"..
Too late, and it NEVER fails.
Amazing << Hear this. Feel this, and tell me that this isn't music.
Correct. Hindsight is 20/20.
But the war was won because Pres. Bush pushed on despite tremendous obstacles. Amazing how quickly so many conservatives forget.