Posted on 09/21/2008 4:01:25 PM PDT by NoobRep
May 26, 2006
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.
(Excerpt) Read more at uppitywoman08.wordpress.com ...
The McCain campaign needs to create and ad containing this information and play it over and over.
Even better;
http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/
McCain’s attempt to fix Fannie Mae, Freddie Mac in 2005;
With the financial sector in turmoil today, the media and the politicians have started throwing around blame with the same recklessness as lenders threw around credit to create the problem. Politically, the pertinent question is this: Which candidate foresaw the credit crisis and tried to do something about it? As it turns out, John McCain did — and partnered with three other Senate Republicans to reform the government’s involvement in lending three years ago, after an attempt by the Bush administration died in Congress two years earlier. McCain spoke forcefully on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark):
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. 190, 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.
Bump
I like those pumas, and uppity women!
“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.”
Video of Fannie Mae CEO lobbying members of congress in 2005:
http://www.youtube.com/watch?v=usvG-s_Ssb0
Unfortunately you won’t see this in the MSM. You have to dig and dig for this type of information. John McCain needs to do a better job showing people that he was right on THIS issue aswell
The comments related to the story are awesome!
I’ll check them out! Thanks!
2003;
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
Published: September 11, 2003
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
‘’There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,’’ Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.
McCain is starting to fight back, and they took a good first step by taking on 0bama’s inner circle of Franklin Raines and Jim Johnson. McCain needs to attack 0bama’s credibility on the issue, and this is a good way to do it.
Next McCain must begin presenting his own credentials, showcasing his own leadership.
I’m not sure why McCain wasn’t out there from the start talking about his prophetic warnings about Freddie and Fannie. Maybe his campaign wanted to take the slow and steady routine and let the information sink in before going on counter attack, or perhaps they just weren’t tuned in to policy as much as they should have been, after just coming off a successful run focusing on politics.
In the long run I don’t think it will matter much that McCain was slow to rev up for this new debate, since 0bama has spent this whole time spinning his wheels but not actually saying anything. The one major gaffe from McCain was insisting that the fundamentals of the economy are strong. That may be true, but he’s not the incumbent who has to defend his record. Let Bush do that.
Later
http://www.newsmeat.com/ceo_political_donations/Franklin_Raines.php
Raines was an early contributor to Obama.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, 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.
And herein is why McCain cannot win the election. He and his campaign cronies are either too ignorant or too stupid to focus on what would actually affect this election. Right now we know that the American people do not respond well to negative personal ads. We also know that the Democrats are seen by a large majority as having the high ground on economics. Knowing these things what does McCain do? He runs ads about who Obama hangs out with (as important as this is to you and I, most people don't care), who works on his campaign (ditto), and also keeps the facts about the role the Democrats played in the failure of Fannie Mae to himself. Silly.
GWB tried to fix this Fannie Mae implosion in 2003, and McCain cosponsored this above legislation in 2005. In both instances it was the Democrats who insisted that there was no danger and that these GSEs had to continue unabated in the same way they had been. In spite of this fact Obama is going around saying that it is the Republican policies that have led to the current crisis, which of course can be largely laid on the doorstep of Fannie Mae and Freddie Mac. And most people seem to believe this. Why has McCain not used this above quote to show that he saw this coming and tried to fix it? Why has he not made it popular knowledge that the Democrats were responsible for it not being fixed? If he did the assumptions might be changed and this may open a path to the White House. But, instead, McCain is continuing to attack Obama because of his relationships. Yes, this is important and telling, but it is a losing strategy which merely preaches to the choir so to speak. Until he starts educating America in how we got where we are, and who caused it, nothing is going to change.
Demand Watergate type open hearings NOW!!!!!!!!!!!!!
So now we see Dubya was recommending oversight of the Freddie and Fannie scam in 2003? I wonder what happened to it? DemocRATS? It appears as though people saw this disaster coming A LONG TIME AGO and nobody did anything about it.
Darn right! I didn't know about this and am impressed with McCain.
And with Sarah.
“Holy War” *that!*, Charleeeee.
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