Democrats Killed Fannie Mae/Freddie Mac Fix In 2005

• September 23, 2008

We could have avoided the current financial mess we’re in, but certain key Democrats (including all-time Fannie Mae/Freddie Mac political contribution leaders Chris Dodd) killed it.

…in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. . . .
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

The connections between Demcorats and the housing mess are significant, and being overlooked.
Former Fannie Mae CEO Franklin Raines (who left the company after using accounting voodoo to line his pockets with undeserved bonuses) worked for the Clinton administration. He’s also advised the Obama campaign.
The majority of the political money Fannie Mae and Freddie Mac have given to politicians has gone to Democrats, with Senators Chris Dodd, Barack Obama and John Kerry topping the list.
It has been liberals, and not conservatives, who have in the past demanded that mortgage lenders be forced to loan to subprime borrowers. Jimmy Carter signed the Community Redevelopment Act into law, and Bill Clinton amplified that legislation creating the market for subprime loans that is causing all of these problems now.
If government, at the behest of liberals, had kept their noses out of the mortgage industry from the start these companies that are suffering now would have long since failed due to poor businesses practices, and we wouldn’t be facing the problems we’re facing now.

Tags: Asshats, Domestic Issues, Politics, The Loony Left

http://ndgoon.blogspot.com/ goon

2005, Repugs controlled all branches of gov’t.

Didn’t have a veto proof majority…
Duude

We can go back to 2003 as well. Here are a few excerpts taken from the New York Times, Sep 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. ”

“”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.”
(here’s a link to the full article)
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=2

Then we get the list of politicians who have dined at the Fannie Mae trough over the last 10 years. Interesting that Obama received more in 3 years than any other senator in 10 years except Dodd. Taken from Opensecrets.org
All Recipients of Fannie Mae and Freddie MacCampaign Contributions, 1989-2008Name Office State Party Grand Total Total from
PACs Total from
Individuals Dodd, Christopher J S CT D $165,400 $48,500 $116,900 Obama, Barack S IL D $126,349 $6,000 $120,349 Kerry, John S MA D $111,000 $2,000 $109,000 Bennett, Robert F S UT R $107,999 $71,499 $36,500 Bachus, Spencer H AL R $103,300 $70,500 $32,800 Blunt, Roy H MO R $96,950 $78,500 $18,450 Kanjorski, Paul E H PA D $96,000 $57,500 $38,500 Bond, Christopher S ‘Kit’ S MO R $95,400 $64,000 $31,400 Shelby, Richard C S AL R $80,000 $23,000 $57,000 Reed, Jack S RI D $78,250 $43,500 $34,750 Reid, Harry S NV D $77,000 $60,500 $16,500 Clinton, Hillary S NY D $76,050 $8,000 $68,050 Davis, Tom H VA R $75,499 $13,999 $61,500 Boehner, John H OH R $67,750 $60,500 $7,250 Conrad, Kent S ND D $64,491 $22,000 $42,491 Reynolds, Tom H NY R $62,200 $53,000 $9,200 Johnson, Tim S SD D $61,000 $20,000 $41,000 Pelosi, Nancy H CA D $56,250 $47,000 $9,250 Carper, Tom S DE D $55,889 $31,350 $24,539 Hoyer, Steny H H MD D $55,500 $51,500 $4,000
Hungry Bear

It’ll be interesting to see if the true story of who’s responsible for this mess makes it onto ABC, CBS, NBC, MSNBC, or CNN.

If this story is told at all It’ll be told after the election.
http://ndgoon.blogspot.com/ goon

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

I want to know why there isn’t/aren’t any subpoenas’ being issued. I also want to know why the outrage is being placed on the republicans; some head should be rolling right now. The Subpoenas would start with NOBAMA. Dodd should lose his chairmanship.
Hannitized

Hey Robert and Bat,

Here is a little present from you courtesy of Rep. Mike Pence (r) Indiana on Hardball:

Pence: “Well Chris if I am going first let me say that it is morally wrong for people that run companies into the ground who are going to be bailed out with a golden parachute.”

Now, tell me again why about that CEO who drove the telecom into the ground and how it is none of my business to complain about his Golden Parachute!!

I think you guys are as far off on the economy as you are in the rest of the real world. The only question is: How badly does this country need to get fucked up before you realize you were wrong?
robert108

Robert fails to admit CEOs are sometimes overpaid for running companies into the ground.

Why would I “admit” to a lie? In our system, things and people are worth what others are willing to pay for them.
You just can’t make it in a free economy, so you want a managed one. It’s the leftie wet dream.
Remove the affirmative action social engineering mandates on loans, and the system will heal itself with free market forces.
Right

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”
Duude

For those that use the tired old excuse, ‘well, the Republicans had the power in 2005 or 2003′, you are fooling yourself. These bills can’t get out of committee. Committees are split almost 50/50 but with one more to the majority party. If that one or two majority members vote with the minority party, the vote is blocked and never comes to the floor. Fannie and Freddie were the most aggressive lobbyists in DC. They gave to virtually everyone. Because one or two Republicans vote with the Democrats who were 100% voting to block, how is that now the Republicans fault? Come on, put down the crack pipe and sober up.
Hungry Bear

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

Also unforgivable is the outright corruption of the prominent Democrats who ran the organization. There are two undeniable truths about the current financial crisis:

1.If the Democrats hadn’t blocked reform, the current crisis could have been avoided.

2.If the Democrat appointees running the organization hadn’t been as greedy and dishonest as Ken Lay and Jeff Skilling, the crisis would not be so great.
Hannitized

Robert fails to admit CEOs are sometimes overpaid for running companies into the ground. He likes to go down with the captain, in the sinking ship.
WOOFX

2005, Repugs controlled all branches of gov’t.

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Democrats Killed Fannie Mae/Freddie Mac Fix In 2005

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