This is the end of the 3 part posting. Note use this as information to help explain what happened. Enjoy! “Special Examination of Fannie Mae” Put Democrats into Crisis Mode Just days before the Freddie Mac crisis erupted into public view, the Office of Federal Housing Enterprise Oversight (OFHEO) – the agency charged with regulating GSEs – had stated Freddie’s internal controls were “accurate and reliable.” With ample egg on his face, OFHEO’s director, Democrat Armando Falcon, was determined to be certain before giving Fannie Mae a clean bill of health. In February 2004, he obtained White House funding to hire accounting giant Deloitte & Touch to scrub Fannie books. Deloitte assigned to lead the project the same person who had led a similar investigation of Enron a few years earlier. The Bush Administration also proposed increasing OFHEO’s budget from $40 million to $59 million. On September 22, 2004, the OFHEO released “Special Examination of Fannie Mae,” which stated management had purposely broken accounting rules and established “a dysfunctional and ineffective process for developing accounting policies” that involved “weak or nonexistent” internal controls. The report blamed much of the problem on “an executive compensation structure that rewarded management for meeting goals tied to earnings-per-share, a metric subject to manipulation by management.” Between 1994 and 2004, according to the report, Fannie Mae improperly reported $10.6 billion in earnings. From 1998 through 2004, Fannie management reported earnings per share (EPS) figures that triggered the maximum bonus payouts they had set for themselves. As described by OFHEO later, “management of Fannie Mae set earnings-per-share targets. And every quarter, they manipulated — or every year, they manipulated the earnings to hit those numbers because their bonuses were based on them. And every year, they got their maximum bonuses…Fannie Mae’s executives were precisely managing earnings to the one-hundredth of a penny to maximize their bonuses.” Franklin Raines responded to the OFHEO report by questioning the regulator’s abilities and jurisdiction. He also requested that the SEC arbiter between Fannie Mae’s and OFHEO’s positions. Mr. Raines appeared confident this move would support him: he hired the powerful law firm of Wilmer Cutler to help make his case…Bill McLucas, Cutler’s lead partner on the case, had deep SEC connections from his former role as the agency’s chief enforcement officer. Meawhile, Congressional Democrats went after OFHEO directly… The Washington Post referred to the situation as a gutsy David (OFHEO) taking on Goliath. In November 2004, Barney Frank (D-MA), senior Democrat on the House Financial Services Committee, stated continued OFHEO funding was “inappropriate” due to the controversial nature of the OFHEO report. In a November 2004, he bluntly called for a detailed public investigation of OFHEO, stating “It is clear that a leadership change at OFHEO is overdue.” In June, Mr. Frank had supported the Bush request for additional OFHEO funding…in November, after the September “Special Examination” report, he reversed that support and called for a leadership change. The SEC Blows the Lid Off Fannie Mae Fraud On December 15, the SEC’s chief accountant, Donald Nicolaisen released the agency’s findings; a scathing indictment of Fannie Mae. It concluded, “during the period under our review, from 2001 to mid-2004, Fannie Mae’s accounting practices did not comply in material respects with the accounting requirements.” According to eyewitnesses Franklin Raines looked stricken at the meeting in which Mr. Nicolaisen released the findings. He tried to defend his actions, and his representatives argued that the business was too complicated to account for with any exactness. To this, Mr. Nicolaisen’s response was, “Many companies out there get it right,” and he held up a sheet of paper. He told the Fannie team, if the four corners of the sheet represented what was possible under legal accounting rules, and the center was perfect compliance, “you weren’t even on the page.” After using a brief “Enron defense,” claiming senior management — who received practically all the monetary benefit of the improper accounting — had absolutely no idea what was going on and therefore no responsibility – Franklin Raines resigned as Fannie CEO. Of the $90+ million in compensation from 1998 through 2003 as Fannie CEO, $52 million was for reporting fraudulent earnings numbers. according to OFHEO. In his resignation, he stated, “Although to my knowledge, the company has always made good faith efforts to get its accounting right, the SEC has determined that mistakes were made. By my early retirement, I have held myself accountable.” Mr. Raines definition of “accountable” never included an admission of responsibility, an apology, or an offer to return his $90+ million in compensation as Fannie CEO. Congressional hearings Despite resounding evidence that Fannie Mae was grossly fraudulent, Artur Davis (D-AL) re-asserted statements by his Democrat colleagues from the previous year, that the investigative focus should be on the regulator, rather than on the Fannie’s violations, “so as not to impede the affordable housing mission.” He asked Mr. OFHEO’s chief, Armando Falcon, “Is it possible that by casting all of these aspersions…you potentially are weakening this institution in the market, that you are potentially weakening the housing market in this country?“ When Mr. Falcon tried to answer, Mr. Davis acted like a prosecutor grilling a hostile witness. He wanted a one-word answer: yes or no. “Is that possible?” he asked again. Mr. Davis would later publicly regret his stance. In the words of a Fortune Magazine article that reviewed the hearings: Most CEOs would have seen the wisdom of humility at this point, but Raines showed little. “These accounting standards are highly complex and require determinations on which experts often disagree,” he said, adding that “there were no facts” that supported OFHEO’s charge that Fannie executives had deferred an expense in 1998 to earn bonuses. And most of the Democrats present agreed with him. “This hearing is about the political lynching of Franklin Raines,” said Congressman William Lacy Clay of Missouri. (William Lacy is a black man, accusing his opponents of attempting to lynch another black man, Franklin Raines.) Massachusetts Congressman Barney Frank said, “I see nothing in here that suggests that safety and soundness are an issue.” Other Democrats complained that the mere fact of releasing the report could increase the cost of home-ownership… Falcon refused to be moved by the barrage of criticism from his fellow Democrats. To him the problems at Fannie were reminiscent of the S&L crisis. He told a friend that the Democrats were “so blinded by their loyalty to Fannie that they can’t see what’s really happening. If they want to repeat history, I won’t be part of it.” 2005 Democrats’ Last Line of Defense Was Impenetrable Under Senate rules, any legislation not passed into law by the end of the session automatically expires, and that’s exactly what Democrat stonewalling achieved. The 108th Congress ended in January 2005, and with it, the Senate bill. Senator Charles Hagel (R-NE) re-introduced the on January 26, 2005, with the co-sponsorship of John McCain (R-AZ), Elizabeth Dole (R-NC) and John Sununu (R-NH). As a new bill, it had to go through committee again before coming up for full Senate vote. Alan Greenspan testified at these hearings in April 2005, stating, ”We at the Federal Reserve remain concerned about the growth and magnitude of the mortgage portfolios of the government-sponsored enterprises, which concentrate interest rate risk and prepayment risk at these two institutions and makes our financial system dependent on their ability to manage these risks” … “To fend off possible future systemic difficulties, which we assess as likely if G.S.E. expansion continues unabated, preventive actions are required sooner rather than later.” The Senate Committee for Banking, Housing and Urban Affairs passed the legislation on a party-line vote on July 28, 2005… all 11 Republicans voted in favor of the new regulations; all 9 Democrats voted against. The Senate bill took a stronger approach than the House measure, in that it gave the new regulator broad power over the kinds of assets Fannie and Freddie would be allowed to hold. By 2005, GSEs held or guaranteed $1.5 trillion in mortgage debt, having grown the amount by a 20% annual rate since President Clinton’s 1994 GSA changes. At this point, GSE regulation had passed through the full House and through Senate committee… essentially all that remained was the full Senate to pass it. This was Democrats’ last line of defense, and it was impenetrable. Under Senate Rule 22, any Senator can filibuster a piece of legislation simply by threatening to do so, without having to formally stand at the podium and read the phone book or anything like that. Such a “filibuster” requires 60 Senators to break, as we have seen more recently with regard to the Health Care legislation. In other words, the minority party can force approval of any bill to require 60 votes, rather than the usual 50. In the 109th Congress of 2005, there were 55 Republican Senators — five Democrats would have had to have supported the GSE regulatory bill. Chris Dodd (D-CT), ranking Democrat on the Senate Committee for Banking, Housing and Urban Affairs — and the Democrat party general with regard to GSE regulation strategy — let it be known that he recommended opposition to the bill. Every one of Mr. Dodd’s Democrats had opposed the bill in committee, and not one Democrat from the larger Senate offered support to bring the legislation to the floor. Barack Obama (D-IL) had joined the Senate in January 2005 and was among the people de-facto supporting the “filibuster.” At the time, Democrats were using the Rule 22 filibuster with extraordinary regularity and effect. Democrats and Republicans were in tense negotiations with regard to ending many filibusters on Bush judicial nominees. By mid 2006, the Senate Republican sponsors of the regulatory bill became frustrated, as it would expire with the coming of the 109th Congressional session. On May 5, 2006, they wrote an open letter to Senate leadership that began, “We are concerned that if effective regulatory legislation for the housing-finance government sponsored enterprises (GSEs) is not enacted this year, 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.” Despite the evidence presented by OFHEO, Deloitte & Touche, the SEC, and several financial analysts, Democrats never wavered in shielding Fannie Mae from effectively increased regulation or transparency. Despite the regulatory bills passing out of committees in the House and Senate, and passing the full House, it never had a chance of being enacted as long as Senate Democrats remained unified in opposition — it needed five Democrats; none stepped forward. Democrats Admitted Responsibility, Then Recanted When Obama Consolidated Power Bill Clinton summed up the role of fierce Democrat opposition to GSE regulation in a moment of candor on Good Morning America (relevant section at -2:25 on the video), in September 2008, “I think that the responsibility that the Democrats had may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac.” He said nothing about Democrats’ role in actively causing the system crash. On September 30, 2008, Representative Artur Davis (D-AL), who had vehemently defended Fannie Mae against regulatory efforts in 2003-2004, echoed President Clinton’s sentiments. “Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong.” He did not explain how he was “slow” to realize Freddie’s recklessness, which was essentially proven by 2003…or for that matter, Fannie’s which was well proven in 2004. Political Contributions — Personal Payola From 1995 – 2008, Democrats Chris Dodd, Barack Obama and John Kerry received more Fannie Mae money that any politician. Remarkably, Obama places as number two despite having been in the Senate less than four years, versus Kerry’s 23 and Dodd’s 34. The top three recipients of Fannie Mae political contributions were #1 Chris Dodd (D-CT), the Democrat leader on the Senate Banking Committee responsible for Fannie Mae regulatory legislation; #2 Barack Obama (D-IL), an up and coming politician who, as one of Democrats’ few winners in the 2005 Congressional elections, was key to maintaining Democrats’ regulatory legislation – Mr. Obama also had deep ties to the local Chicago political machine from which ACORN, a major Fannie supporter, had become a powerful force in recent years; #3 John Kerry (D-MA) who nearly became President in 2004 and whose support would have been key in preventing investigations into Fannie’s illegal accounting that masked its central role in financial crisis. As a quasi-governmental agency, Fannie’s official contributions, in form of PAC money, needed to be at least somewhat evenly spread between the parties. What made the Fannie political contributions so focused on key Democrats was the money given by senior Fannie executives who had, after all, been receiving millions in target-based compensation, and who were also directly knowledgeable of Fannie’s/their accounting being, as the SEC’s chief accountant put it, “off the page.” This list is really the most important indicator of linkage between what Fannie improprieties and Congressional individuals: Senator Chris Dodd (D-CT) As the Democrat Party’s Senate strategy general with regard to GSE regulation, Mr. Dodd – in the end – was the single person most responsible for assuring Fannie Mae was not effectively regulated, because he was the one responsible for making sure Senate Democrats held the line. Also key to that process; the Democratic Whip at the time, Harry Reid (D-NV). 1.Countrywide payola: Mr. Dodd received questionably favorable treatment from one of the housing bubble’s top non-GSE subprime offenders, Countrywide Financial. Countrywide established a special V.I.P. program under which it extended highly favorable loan terms to a highly targeted list of influential people. Mr. Dodd’s special terms would save him an estimated $75,000 over the loans’ 30-year life. Congress then wrote legislation governing Countrywide’s takeover by Bank of America – much of that legislation being done in the Senate committee Mr. Dodd chairs. 2.Bank of America payola and crisis coverup links: In the year-and-a-half after Democrats regained the Senate in January 2006 and Mr. Dodd became committee chairman — covering the period in which his committee wrote the Countrywide takeover rules — Bank of America (BofA) gave Chris Dodd over $70,000…or more than $1,000 per week. Only Barack Obama and Hillary Clinton received more BofA money during the election cycle…and they ran for President. Bank of America has long and deep subprime and ACORN ties, partnering with ACORN since 1990 (according to ACORN). In 2008, the US federal government bailed Bank of America out of mortgage-related near insolvency. Later that year, BofA gave ACORN of Chicago $2 million. BofA has been one of ACORN’s largest extra-government funding sources. Mr. Dodd defended his blocking of strict Fannie Mae regulations to the last moment… even beyond, after it was clear the agency had moved the global economy to the precipice. In July 2008, he stated, “there is no reason for the kind of reaction we are getting. The fundamentals are sound – these institutions are sound, they have adequate capital, they have access to that capital, and this is a reason for people to have confidence in these GSEs, in Fannie and Freddie.” In September 2008, he stated, “if this is merely ideologically driven, as some have suggested, to merely eliminate these programs altogether, forget what they have looked like, then this could be a real problem.” Barney Frank (D-MA) As ranking House Financial Services Committee ranking Democrat, Mr. Frank led Dems’ House effort to loosen mortgage lending standards and defend GSEs from Republican regulation attempts. He also made statements to lead investors to believe that, while the federal government would not guarantee individual Fannie mortgage issues, it would fund Fannie if buying Fannie Mae’s securities involved little risk because the implied federal guarantee was quite real. For instance, the 2003 committee statement, “I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the federal government doesn’t bail them out.” From roughly 1978 through 1998, Mr. Frank was in a serious romantic relationship with Herb Moses, referring to him as his “spouse.” According to the February 23, 1998 issue of National Mortgage News, “Moses was the assistant director for product initiatives at Fannie Mae and had been at the forefront of relaxing lending restrictions at the company for rural customers.” Of the eight appearances Barney Frank made on the three broadcast networks during the January-September 2008 presidential election cycle, not one even touched upon his role in the Fannie Mae crisis. Only six of the appearances dealt with the economy in general. Of those six, two — including a feature April 6, 2008 appearance on CBS’s “60 Minutes” — focused on Mr. Frank’s opposition to a manned Mars mission. Barack Obama (D-IL) Barack Obama had three strong impacts on the financial crisis, placing him easily in the top 20 people to have caused it. 1.ACORN: Mr. Obama’s ACORN links go back far and deep. In 1995, when the Clinton Administration was changing the CRA, he was on a team of lawyers representing ACORN in a suite against Illinois’ Republican governor with regard to motor voter provisions. According to Chicago ACORN leader Toni Foulkes in early 2004, “we asked him to help us with” that lawsuit. “Since then, we have invited Obama to our leadership training sessions to run the session on power every year, and, as a result, many of our newly developing leaders got to know him before he ever ran for office…By the time he ran for US Senate, we were old friends.” Mr. Foulkes goes on to detail how ACORN helped Mr. Obama become Senator. 2.Fannie Mae payola: Despite having been in the Senate only four years, Mr. Obama was the politician to receive the most campaign contribution money from Fannie Mae executives. He was also the Senator who received the second highest total from Fannie employees and the company’s official PAC in during the entire 1995-2008 period…this, despite having been in the Senate less than four of those years. Numbers’ one (Dodd) and three (Kerry) were both Senators the entire time. 3.Opposition to regulation: When Mr. Obama joined the Senate in January 2005, he joined the Democrat opposition in blocking the regulation that had passed the House and Senate committee, and preventing it from reaching the Senate floor Had he supported the regulation and led only four of his Democrat colleagues to do the same, the Fannie Mae bubble would have deflated in 2005, rather than exploding in 2007. 4.Franklin Raines: In July and August 2008, the Washington Post cited Franklin Raines as being employed by the Obama campaign. When the McCain campaign made that news an issue, the Obama campaign denied the report’s accuracy. The Post then agreed with the Obama campaign that the reports were not well sourced. Rahm Emanuel (D-IL) — Barack Obama’s Chief of Staff When Rahm Emanuel joined the House of Representatives in January 2003, Democrats gave him a seat on the Financial Services Committee, where he served under Barney Frank blocking effective GSE regulation efforts. Democrats also gave Mr. Emanuel a seat on the subcommittee that directly oversaw Fannie Mae and Freddie Mac – despite having served as Freddie director during the scandalous accounting. A major initiative at Freddie during Mr. Emanuel’s directorship was campaigning Congress against regulations that would add transparency to the GSE’s financial health or potentially restrict its mortgage lending activities. Mr. Emanuel was one of the directors President Clinton appointed to Freddie Mac, and he held the position from February 2000 through April 2001, a period in which the company’s accounting violations accelerated significantly. During the entire directorship, he was also a senior executive at investment firm Wasserstien Perella in Chicago. According to the Chicago Tribune, Freddie’s management told the directors, including Mr. Emanuel, about their aggressive (illegal) accounting procedures — the directors did not investigate or take any action to stop the improprieties. Freddie paid its directors extremely well considering some claims its directors were little involved in providing oversight, a director’s primary role … Mr. Emanuel received at least $320,000 in cash and stock over his 14 months with Freddie, equaling well over $40,000 per board meeting. Mr. Emanuel’s spokeswoman, Sarah Fienberg, explained the compensation by highlighting his deep involvement with Freddie’s mortgage purchase activities. One of Mr. Emanuel’s fellow Freddie directors, Illinois Attorney General Neil Hartigan, stated Emanuel was heavily involved with convincing other board members of Freddie Mac’s potential to become more politically powerful. Clinton appointee, Franklin Raines, spearheaded a similar effort as Fannie Mae CEO. Mr. Emanuel also used his Freddie Mac directorship to drive the GSE’s use as a political fundraising machine. He helped Freddie design a system under which it hosted mega fundraisers. Among these was one that Freddie’s CEO, Leland Brendsel, held for Rahm Emanuel in 2002 during Mr. Emanuel’s Congressional campaign. Mr. Brendsel soon resigned in disgrace following the explosion of Freddie’s accounting scandal. In the words of a March 26, 2009 Chicago Tribune article: On Emanuel’s watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass. The accounting scandal wasn’t the only one that brewed during Emanuel’s tenure. During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago. Another focus of Freddie during Emanuel’s day—and one that played to his skill set—was a stepped-up effort to combat congressional demands for more regulation. During a September 2000 board meeting—midway through Emanuel’s 14-month term—Freddie Mac lobbyist R. Mitchell Delk laid out a strategy titled “Political Risk Management” aimed at influencing lawmakers and blunting pressure in Congress for more regulation. Several people have requested the recordings of Freddie’s board meetings under the Freedom of Information Act, including the Chicago Tribune for the above article. The Obama Administration has refused these requests despite Freddie being a quasi public agency that is currently operating through the graces of a taxpayer bailout. The legal statute of limitations for this matter will expire early in 2011. Rahm Emanuel is well known as a Chicago-based Democrat party political power broker. He began his career with a local community organization and was a key fundraiser for Richard Daley’s 1989 Chicago mayoral campaign; a position Mr. Daley holds to this day. Mr. Emanuel then spearheaded fund raising for Bill Clinton’s 1992 Presidential campaign, attracting a then-unheard-of $72 million through his connections network. President Clinton rewarded him with a White House advisory post in 1993, and very soon after appointed Richard Daley’s brother, William, to be a Fannie Mae director. Inside the Clinton Administration, Mr. Emanuel coordinated political fund flows among Democrat Party politicians and was a key strategist for Clinton-era health care legislation. He left the Administration in 1998 to join investment banking firm Wasserstien Perella. In less than four years as a banker, Rahm Emanuel earned $16.2 million by raising funds for investment projects, including real estate, and planning corporate mergers. In 2000, while Mr. Emanuel was still a banker, President Clinton gave him the Freddie Mac directorship. This period in the latter Clinton administration years, was arguably designed to be a key acceleration period of the housing/financial crisis. When his directorship neared expiration in 2001, the Democrat Party gave Mr. Emanuel the nomination to be Congressional representative from a staunchly Democrat Chicago district. The previous rep, Rod Blagojevich, had resigned to become Illinois governor. Democrat party re-establishing its mortgage-market political power base Despite the crisis they enabled, Democrats are attempting, successfully, to restart Fannie’s and Freddie’s ability to take more risk. The attempt currently has two major parts: fund the agencies/companies with more taxpayer money, and remove regulations that restrict their activities in the high-risk loan market. Key to the Democrat deregulation push is lowering the capital commitment (raising financial leverage) so people and speculators can get mortgages by putting less of their own funds at risk. This reduced capital requirement was a hallmark of the Democrats’ deregulation push during the housing bubble, and it has two primary effects… enable people with lower incomes to obtain higher-risk mortgages, and enable investor-speculators (such as Valerie Jarrett pre-Obama Administration) to obtain government-backed mortgages by putting less of their own money at risk. As the housing bubble popped, many speculators simply walked away from their mortgages because they had so little of their own funds tied up in the transaction…since they obtained the mortgage through a “corporation” of whatever sort, their personal credit records were unaffected. According to a February 28, 2008 New York Times article: Democrats in Congress and some mortgage industry officials have been calling on (OFHEO director) Mr. Lockhart to loosen controls over Fannie Mae and Freddie Mac so the companies could play a more active role in the housing market by buying bigger and more risky home loans and securities backed by those mortgages. On Wednesday, Senator Charles E. Schumer, Democrat of New York, welcomed the lifting of the portfolio caps and called on Mr. Lockhart to go even further by removing the excess capital requirement. While Democrats have advocated lifting restrictions on Fannie Mae and Freddie Mac, the Bush administration and the Federal Reserve have insisted that the companies deserve close scrutiny because of their large role in the mortgage and financial markets. The Obama Administration used the 2009 Christmas media lull for several key mortgage-market agenda items, on top of the its Congressional health care legislation. 1) On Christmas Eve the Obama Administration issued executive orders to change the amount – from $400 billion to unlimited — that the US federal government would commit to Fannie Mae and Freddie Mac in the event those agencies/companies could no longer service the mortgages it held/guaranteed. It also deregulated the total amount of mortgages that Fannie and Freddie can own or guarantee, enabling the GSEs to fully return to the lower-quality, higher-risk segments of the mortgage market. Fannie and Freddie currently finance roughly three-quarters of all new mortgages. The order empowers the Obama Administration’s Treasury Department to pressure the GSEs to hold more subprime/non-performing mortgages, instead of clearing the risk off their balance sheets. According to Edward Pinto, Fannie’s chief credit officer in the latter years of the Regan Administration, “They’ve cleared the decks to use Fannie and Freddie as a vessel for whatever they want.” 2) It gave GMAC Financial Services $3.8 billion of taxpayer funds, on top of the $12.5 billion it had already extended in a bail out. Until recently, GMAC was General Motors’ finance unit, but it is now a government bank holding company. The new investment makes the US federal government GMAC’s majority owner. GMAC suffered badly from risky mortgage market activities but, as what is supposed to be its primary business, it essentially controls the sales network for General Motors and Chrysler cars. 3) The Obama “Pay Czar” made public statements supporting multi-million-dollar incentive-based compensation packages for senior Fannie Mae and Freddie Mac executives…despite exactly that structure having been singled out by regulators as a primary cause of the GSE violations that enabled the housing/financial crisis. The Obama Administration is incentivizing Fannie’s and Freddie’s CEOs with up to $6 million per year, and senior executives can also receive hefty cash payouts under a similar target-based structure as existed during the bubble. Both companies/agencies currently operate under taxpayer-funded bailout. The Pay Czar cited the unique stresses of the jobs, despite the fact that they can now make roughly 12-times more than the President of the United States. Like · · Share. Carroll County GA Republican Party . 1 person saw this post. . LikesSee All. John Boehner Politician. Team Boehner Political Organisation. Eric Cantor Government Official. Walker County Georgia Republican Party Political Organisation. Catoosa County Republican Party Political Organisation. . Carroll County GA Republican Party 5 October. Part two. Franklin Raines moves Fannie into Subprime The Clinton Administration’s 1995 CRA changes authorized GSE’s to buy subprime mortgages, which it began to do in 1997. “Subprime” means that the person receiving the loan has a poor credit record and/or very low income compared to the loan size. Almost immediately, Fannie began to loosen its standards, requiring people to show lower wealth am... See more Like · · Share. Carroll County GA Republican Party . 1 person saw this post. . This is the end of the 3 part posting. Note use this as information to help explain what happened. Enjoy! “Special Examination of Fannie Mae” Put Democrats into Crisis Mode Just days before the Freddie Mac crisis erupted into public view, the Office of Federal Housing Enterprise Oversight (OFHEO) – the agency charged with regulating GSEs – had stated Freddie’s internal controls were “accurate and reliable.” With ample egg on his face, OFHEO’s director, Democrat Armando Falcon, was determined to be certain before giving Fannie Mae a clean bill of health. In February 2004, he obtained White House funding to hire accounting giant Deloitte & Touch to scrub Fannie books. Deloitte assigned to lead the project the same person who had led a similar investigation of Enron a few years earlier. The Bush Administration also proposed increasing OFHEO’s budget from $40 million to $59 million. On September 22, 2004, the OFHEO released “Special Examination of Fannie Mae,” which stated management had purposely broken accounting rules and established “a dysfunctional and ineffective process for developing accounting policies” that involved “weak or nonexistent” internal controls. The report blamed much of the problem on “an executive compensation structure that rewarded management for meeting goals tied to earnings-per-share, a metric subject to manipulation by management.” Between 1994 and 2004, according to the report, Fannie Mae improperly reported $10.6 billion in earnings. From 1998 through 2004, Fannie management reported earnings per share (EPS) figures that triggered the maximum bonus payouts they had set for themselves. As described by OFHEO later, “management of Fannie Mae set earnings-per-share targets. And every quarter, they manipulated — or every year, they manipulated the earnings to hit those numbers because their bonuses were based on them. And every year, they got their maximum bonuses…Fannie Mae’s executives were precisely managing earnings to the one-hundredth of a penny to maximize their bonuses.” Franklin Raines responded to the OFHEO report by questioning the regulator’s abilities and jurisdiction. He also requested that the SEC arbiter between Fannie Mae’s and OFHEO’s positions. Mr. Raines appeared confident this move would support him: he hired the powerful law firm of Wilmer Cutler to help make his case…Bill McLucas, Cutler’s lead partner on the case, had deep SEC connections from his former role as the agency’s chief enforcement officer. Meawhile, Congressional Democrats went after OFHEO directly… The Washington Post referred to the situation as a gutsy David (OFHEO) taking on Goliath. In November 2004, Barney Frank (D-MA), senior Democrat on the House Financial Services Committee, stated continued OFHEO funding was “inappropriate” due to the controversial nature of the OFHEO report. In a November 2004, he bluntly called for a detailed public investigation of OFHEO, stating “It is clear that a leadership change at OFHEO is overdue.” In June, Mr. Frank had supported the Bush request for additional OFHEO funding…in November, after the September “Special Examination” report, he reversed that support and called for a leadership change. The SEC Blows the Lid Off Fannie Mae Fraud On December 15, the SEC’s chief accountant, Donald Nicolaisen released the agency’s findings; a scathing indictment of Fannie Mae. It concluded, “during the period under our review, from 2001 to mid-2004, Fannie Mae’s accounting practices did not comply in material respects with the accounting requirements.” According to eyewitnesses Franklin Raines looked stricken at the meeting in which Mr. Nicolaisen released the findings. He tried to defend his actions, and his representatives argued that the business was too complicated to account for with any exactness. To this, Mr. Nicolaisen’s response was, “Many companies out there get it right,” and he held up a sheet of paper. He told the Fannie team, if the four corners of the sheet represented what was possible under legal accounting rules, and the center was perfect compliance, “you weren’t even on the page.” After using a brief “Enron defense,” claiming senior management — who received practically all the monetary benefit of the improper accounting — had absolutely no idea what was going on and therefore no responsibility – Franklin Raines resigned as Fannie CEO. Of the $90+ million in compensation from 1998 through 2003 as Fannie CEO, $52 million was for reporting fraudulent earnings numbers. according to OFHEO. In his resignation, he stated, “Although to my knowledge, the company has always made good faith efforts to get its accounting right, the SEC has determined that mistakes were made. By my early retirement, I have held myself accountable.” Mr. Raines definition of “accountable” never included an admission of responsibility, an apology, or an offer to return his $90+ million in compensation as Fannie CEO. Congressional hearings Despite resounding evidence that Fannie Mae was grossly fraudulent, Artur Davis (D-AL) re-asserted statements by his Democrat colleagues from the previous year, that the investigative focus should be on the regulator, rather than on the Fannie’s violations, “so as not to impede the affordable housing mission.” He asked Mr. OFHEO’s chief, Armando Falcon, “Is it possible that by casting all of these aspersions…you potentially are weakening this institution in the market, that you are potentially weakening the housing market in this country?“ When Mr. Falcon tried to answer, Mr. Davis acted like a prosecutor grilling a hostile witness. He wanted a one-word answer: yes or no. “Is that possible?” he asked again. Mr. Davis would later publicly regret his stance. In the words of a Fortune Magazine article that reviewed the hearings: Most CEOs would have seen the wisdom of humility at this point, but Raines showed little. “These accounting standards are highly complex and require determinations on which experts often disagree,” he said, adding that “there were no facts” that supported OFHEO’s charge that Fannie executives had deferred an expense in 1998 to earn bonuses. And most of the Democrats present agreed with him. “This hearing is about the political lynching of Franklin Raines,” said Congressman William Lacy Clay of Missouri. (William Lacy is a black man, accusing his opponents of attempting to lynch another black man, Franklin Raines.) Massachusetts Congressman Barney Frank said, “I see nothing in here that suggests that safety and soundness are an issue.” Other Democrats complained that the mere fact of releasing the report could increase the cost of home-ownership… Falcon refused to be moved by the barrage of criticism from his fellow Democrats. To him the problems at Fannie were reminiscent of the S&L crisis. He told a friend that the Democrats were “so blinded by their loyalty to Fannie that they can’t see what’s really happening. If they want to repeat history, I won’t be part of it.” 2005 Democrats’ Last Line of Defense Was Impenetrable Under Senate rules, any legislation not passed into law by the end of the session automatically expires, and that’s exactly what Democrat stonewalling achieved. The 108th Congress ended in January 2005, and with it, the Senate bill. Senator Charles Hagel (R-NE) re-introduced the on January 26, 2005, with the co-sponsorship of John McCain (R-AZ), Elizabeth Dole (R-NC) and John Sununu (R-NH). As a new bill, it had to go through committee again before coming up for full Senate vote. Alan Greenspan testified at these hearings in April 2005, stating, ”We at the Federal Reserve remain concerned about the growth and magnitude of the mortgage portfolios of the government-sponsored enterprises, which concentrate interest rate risk and prepayment risk at these two institutions and makes our financial system dependent on their ability to manage these risks” … “To fend off possible future systemic difficulties, which we assess as likely if G.S.E. expansion continues unabated, preventive actions are required sooner rather than later.” The Senate Committee for Banking, Housing and Urban Affairs passed the legislation on a party-line vote on July 28, 2005… all 11 Republicans voted in favor of the new regulations; all 9 Democrats voted against. The Senate bill took a stronger approach than the House measure, in that it gave the new regulator broad power over the kinds of assets Fannie and Freddie would be allowed to hold. By 2005, GSEs held or guaranteed $1.5 trillion in mortgage debt, having grown the amount by a 20% annual rate since President Clinton’s 1994 GSA changes. At this point, GSE regulation had passed through the full House and through Senate committee… essentially all that remained was the full Senate to pass it. This was Democrats’ last line of defense, and it was impenetrable. Under Senate Rule 22, any Senator can filibuster a piece of legislation simply by threatening to do so, without having to formally stand at the podium and read the phone book or anything like that. Such a “filibuster” requires 60 Senators to break, as we have seen more recently with regard to the Health Care legislation. In other words, the minority party can force approval of any bill to require 60 votes, rather than the usual 50. In the 109th Congress of 2005, there were 55 Republican Senators — five Democrats would have had to have supported the GSE regulatory bill. Chris Dodd (D-CT), ranking Democrat on the Senate Committee for Banking, Housing and Urban Affairs — and the Democrat party general with regard to GSE regulation strategy — let it be known that he recommended opposition to the bill. Every one of Mr. Dodd’s Democrats had opposed the bill in committee, and not one Democrat from the larger Senate offered support to bring the legislation to the floor. Barack Obama (D-IL) had joined the Senate in January 2005 and was among the people de-facto supporting the “filibuster.” At the time, Democrats were using the Rule 22 filibuster with extraordinary regularity and effect. Democrats and Republicans were in tense negotiations with regard to ending many filibusters on Bush judicial nominees. By mid 2006, the Senate Republican sponsors of the regulatory bill became frustrated, as it would expire with the coming of the 109th Congressional session. On May 5, 2006, they wrote an open letter to Senate leadership that began, “We are concerned that if effective regulatory legislation for the housing-finance government sponsored enterprises (GSEs) is not enacted this year, 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.” Despite the evidence presented by OFHEO, Deloitte & Touche, the SEC, and several financial analysts, Democrats never wavered in shielding Fannie Mae from effectively increased regulation or transparency. Despite the regulatory bills passing out of committees in the House and Senate, and passing the full House, it never had a chance of being enacted as long as Senate Democrats remained unified in opposition — it needed five Democrats; none stepped forward. Democrats Admitted Responsibility, Then Recanted When Obama Consolidated Power Bill Clinton summed up the role of fierce Democrat opposition to GSE regulation in a moment of candor on Good Morning America (relevant section at -2:25 on the video), in September 2008, “I think that the responsibility that the Democrats had may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac.” He said nothing about Democrats’ role in actively causing the system crash. On September 30, 2008, Representative Artur Davis (D-AL), who had vehemently defended Fannie Mae against regulatory efforts in 2003-2004, echoed President Clinton’s sentiments. “Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong.” He did not explain how he was “slow” to realize Freddie’s recklessness, which was essentially proven by 2003…or for that matter, Fannie’s which was well proven in 2004. Political Contributions — Personal Payola From 1995 – 2008, Democrats Chris Dodd, Barack Obama and John Kerry received more Fannie Mae money that any politician. Remarkably, Obama places as number two despite having been in the Senate less than four years, versus Kerry’s 23 and Dodd’s 34. The top three recipients of Fannie Mae political contributions were #1 Chris Dodd (D-CT), the Democrat leader on the Senate Banking Committee responsible for Fannie Mae regulatory legislation; #2 Barack Obama (D-IL), an up and coming politician who, as one of Democrats’ few winners in the 2005 Congressional elections, was key to maintaining Democrats’ regulatory legislation – Mr. Obama also had deep ties to the local Chicago political machine from which ACORN, a major Fannie supporter, had become a powerful force in recent years; #3 John Kerry (D-MA) who nearly became President in 2004 and whose support would have been key in preventing investigations into Fannie’s illegal accounting that masked its central role in financial crisis. As a quasi-governmental agency, Fannie’s official contributions, in form of PAC money, needed to be at least somewhat evenly spread between the parties. What made the Fannie political contributions so focused on key Democrats was the money given by senior Fannie executives who had, after all, been receiving millions in target-based compensation, and who were also directly knowledgeable of Fannie’s/their accounting being, as the SEC’s chief accountant put it, “off the page.” This list is really the most important indicator of linkage between what Fannie improprieties and Congressional individuals: Senator Chris Dodd (D-CT) As the Democrat Party’s Senate strategy general with regard to GSE regulation, Mr. Dodd – in the end – was the single person most responsible for assuring Fannie Mae was not effectively regulated, because he was the one responsible for making sure Senate Democrats held the line. Also key to that process; the Democratic Whip at the time, Harry Reid (D-NV). 1.Countrywide payola: Mr. Dodd received questionably favorable treatment from one of the housing bubble’s top non-GSE subprime offenders, Countrywide Financial. Countrywide established a special V.I.P. program under which it extended highly favorable loan terms to a highly targeted list of influential people. Mr. Dodd’s special terms would save him an estimated $75,000 over the loans’ 30-year life. Congress then wrote legislation governing Countrywide’s takeover by Bank of America – much of that legislation being done in the Senate committee Mr. Dodd chairs. 2.Bank of America payola and crisis coverup links: In the year-and-a-half after Democrats regained the Senate in January 2006 and Mr. Dodd became committee chairman — covering the period in which his committee wrote the Countrywide takeover rules — Bank of America (BofA) gave Chris Dodd over $70,000…or more than $1,000 per week. Only Barack Obama and Hillary Clinton received more BofA money during the election cycle…and they ran for President. Bank of America has long and deep subprime and ACORN ties, partnering with ACORN since 1990 (according to ACORN). In 2008, the US federal government bailed Bank of America out of mortgage-related near insolvency. Later that year, BofA gave ACORN of Chicago $2 million. BofA has been one of ACORN’s largest extra-government funding sources. Mr. Dodd defended his blocking of strict Fannie Mae regulations to the last moment… even beyond, after it was clear the agency had moved the global economy to the precipice. In July 2008, he stated, “there is no reason for the kind of reaction we are getting. The fundamentals are sound – these institutions are sound, they have adequate capital, they have access to that capital, and this is a reason for people to have confidence in these GSEs, in Fannie and Freddie.” In September 2008, he stated, “if this is merely ideologically driven, as some have suggested, to merely eliminate these programs altogether, forget what they have looked like, then this could be a real problem.” Barney Frank (D-MA) As ranking House Financial Services Committee ranking Democrat, Mr. Frank led Dems’ House effort to loosen mortgage lending standards and defend GSEs from Republican regulation attempts. He also made statements to lead investors to believe that, while the federal government would not guarantee individual Fannie mortgage issues, it would fund Fannie if buying Fannie Mae’s securities involved little risk because the implied federal guarantee was quite real. For instance, the 2003 committee statement, “I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the federal government doesn’t bail them out.” From roughly 1978 through 1998, Mr. Frank was in a serious romantic relationship with Herb Moses, referring to him as his “spouse.” According to the February 23, 1998 issue of National Mortgage News, “Moses was the assistant director for product initiatives at Fannie Mae and had been at the forefront of relaxing lending restrictions at the company for rural customers.” Of the eight appearances Barney Frank made on the three broadcast networks during the January-September 2008 presidential election cycle, not one even touched upon his role in the Fannie Mae crisis. Only six of the appearances dealt with the economy in general. Of those six, two — including a feature April 6, 2008 appearance on CBS’s “60 Minutes” — focused on Mr. Frank’s opposition to a manned Mars mission. Barack Obama (D-IL) Barack Obama had three strong impacts on the financial crisis, placing him easily in the top 20 people to have caused it. 1.ACORN: Mr. Obama’s ACORN links go back far and deep. In 1995, when the Clinton Administration was changing the CRA, he was on a team of lawyers representing ACORN in a suite against Illinois’ Republican governor with regard to motor voter provisions. According to Chicago ACORN leader Toni Foulkes in early 2004, “we asked him to help us with” that lawsuit. “Since then, we have invited Obama to our leadership training sessions to run the session on power every year, and, as a result, many of our newly developing leaders got to know him before he ever ran for office…By the time he ran for US Senate, we were old friends.” Mr. Foulkes goes on to detail how ACORN helped Mr. Obama become Senator. 2.Fannie Mae payola: Despite having been in the Senate only four years, Mr. Obama was the politician to receive the most campaign contribution money from Fannie Mae executives. He was also the Senator who received the second highest total from Fannie employees and the company’s official PAC in during the entire 1995-2008 period…this, despite having been in the Senate less than four of those years. Numbers’ one (Dodd) and three (Kerry) were both Senators the entire time. 3.Opposition to regulation: When Mr. Obama joined the Senate in January 2005, he joined the Democrat opposition in blocking the regulation that had passed the House and Senate committee, and preventing it from reaching the Senate floor Had he supported the regulation and led only four of his Democrat colleagues to do the same, the Fannie Mae bubble would have deflated in 2005, rather than exploding in 2007. 4.Franklin Raines: In July and August 2008, the Washington Post cited Franklin Raines as being employed by the Obama campaign. When the McCain campaign made that news an issue, the Obama campaign denied the report’s accuracy. The Post then agreed with the Obama campaign that the reports were not well sourced. Rahm Emanuel (D-IL) — Barack Obama’s Chief of Staff When Rahm Emanuel joined the House of Representatives in January 2003, Democrats gave him a seat on the Financial Services Committee, where he served under Barney Frank blocking effective GSE regulation efforts. Democrats also gave Mr. Emanuel a seat on the subcommittee that directly oversaw Fannie Mae and Freddie Mac – despite having served as Freddie director during the scandalous accounting. A major initiative at Freddie during Mr. Emanuel’s directorship was campaigning Congress against regulations that would add transparency to the GSE’s financial health or potentially restrict its mortgage lending activities. Mr. Emanuel was one of the directors President Clinton appointed to Freddie Mac, and he held the position from February 2000 through April 2001, a period in which the company’s accounting violations accelerated significantly. During the entire directorship, he was also a senior executive at investment firm Wasserstien Perella in Chicago. According to the Chicago Tribune, Freddie’s management told the directors, including Mr. Emanuel, about their aggressive (illegal) accounting procedures — the directors did not investigate or take any action to stop the improprieties. Freddie paid its directors extremely well considering some claims its directors were little involved in providing oversight, a director’s primary role … Mr. Emanuel received at least $320,000 in cash and stock over his 14 months with Freddie, equaling well over $40,000 per board meeting. Mr. Emanuel’s spokeswoman, Sarah Fienberg, explained the compensation by highlighting his deep involvement with Freddie’s mortgage purchase activities. One of Mr. Emanuel’s fellow Freddie directors, Illinois Attorney General Neil Hartigan, stated Emanuel was heavily involved with convincing other board members of Freddie Mac’s potential to become more politically powerful. Clinton appointee, Franklin Raines, spearheaded a similar effort as Fannie Mae CEO. Mr. Emanuel also used his Freddie Mac directorship to drive the GSE’s use as a political fundraising machine. He helped Freddie design a system under which it hosted mega fundraisers. Among these was one that Freddie’s CEO, Leland Brendsel, held for Rahm Emanuel in 2002 during Mr. Emanuel’s Congressional campaign. Mr. Brendsel soon resigned in disgrace following the explosion of Freddie’s accounting scandal. In the words of a March 26, 2009 Chicago Tribune article: On Emanuel’s watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass. The accounting scandal wasn’t the only one that brewed during Emanuel’s tenure. During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago. Another focus of Freddie during Emanuel’s day—and one that played to his skill set—was a stepped-up effort to combat congressional demands for more regulation. During a September 2000 board meeting—midway through Emanuel’s 14-month term—Freddie Mac lobbyist R. Mitchell Delk laid out a strategy titled “Political Risk Management” aimed at influencing lawmakers and blunting pressure in Congress for more regulation. Several people have requested the recordings of Freddie’s board meetings under the Freedom of Information Act, including the Chicago Tribune for the above article. The Obama Administration has refused these requests despite Freddie being a quasi public agency that is currently operating through the graces of a taxpayer bailout. The legal statute of limitations for this matter will expire early in 2011. Rahm Emanuel is well known as a Chicago-based Democrat party political power broker. He began his career with a local community organization and was a key fundraiser for Richard Daley’s 1989 Chicago mayoral campaign; a position Mr. Daley holds to this day. Mr. Emanuel then spearheaded fund raising for Bill Clinton’s 1992 Presidential campaign, attracting a then-unheard-of $72 million through his connections network. President Clinton rewarded him with a White House advisory post in 1993, and very soon after appointed Richard Daley’s brother, William, to be a Fannie Mae director. Inside the Clinton Administration, Mr. Emanuel coordinated political fund flows among Democrat Party politicians and was a key strategist for Clinton-era health care legislation. He left the Administration in 1998 to join investment banking firm Wasserstien Perella. In less than four years as a banker, Rahm Emanuel earned $16.2 million by raising funds for investment projects, including real estate, and planning corporate mergers. In 2000, while Mr. Emanuel was still a banker, President Clinton gave him the Freddie Mac directorship. This period in the latter Clinton administration years, was arguably designed to be a key acceleration period of the housing/financial crisis. When his directorship neared expiration in 2001, the Democrat Party gave Mr. Emanuel the nomination to be Congressional representative from a staunchly Democrat Chicago district. The previous rep, Rod Blagojevich, had resigned to become Illinois governor. Democrat party re-establishing its mortgage-market political power base Despite the crisis they enabled, Democrats are attempting, successfully, to restart Fannie’s and Freddie’s ability to take more risk. The attempt currently has two major parts: fund the agencies/companies with more taxpayer money, and remove regulations that restrict their activities in the high-risk loan market. Key to the Democrat deregulation push is lowering the capital commitment (raising financial leverage) so people and speculators can get mortgages by putting less of their own funds at risk. This reduced capital requirement was a hallmark of the Democrats’ deregulation push during the housing bubble, and it has two primary effects… enable people with lower incomes to obtain higher-risk mortgages, and enable investor-speculators (such as Valerie Jarrett pre-Obama Administration) to obtain government-backed mortgages by putting less of their own money at risk. As the housing bubble popped, many speculators simply walked away from their mortgages because they had so little of their own funds tied up in the transaction…since they obtained the mortgage through a “corporation” of whatever sort, their personal credit records were unaffected. According to a February 28, 2008 New York Times article: Democrats in Congress and some mortgage industry officials have been calling on (OFHEO director) Mr. Lockhart to loosen controls over Fannie Mae and Freddie Mac so the companies could play a more active role in the housing market by buying bigger and more risky home loans and securities backed by those mortgages. On Wednesday, Senator Charles E. Schumer, Democrat of New York, welcomed the lifting of the portfolio caps and called on Mr. Lockhart to go even further by removing the excess capital requirement. While Democrats have advocated lifting restrictions on Fannie Mae and Freddie Mac, the Bush administration and the Federal Reserve have insisted that the companies deserve close scrutiny because of their large role in the mortgage and financial markets. The Obama Administration used the 2009 Christmas media lull for several key mortgage-market agenda items, on top of the its Congressional health care legislation. 1) On Christmas Eve the Obama Administration issued executive orders to change the amount – from $400 billion to unlimited — that the US federal government would commit to Fannie Mae and Freddie Mac in the event those agencies/companies could no longer service the mortgages it held/guaranteed. It also deregulated the total amount of mortgages that Fannie and Freddie can own or guarantee, enabling the GSEs to fully return to the lower-quality, higher-risk segments of the mortgage market. Fannie and Freddie currently finance roughly three-quarters of all new mortgages. The order empowers the Obama Administration’s Treasury Department to pressure the GSEs to hold more subprime/non-performing mortgages, instead of clearing the risk off their balance sheets. According to Edward Pinto, Fannie’s chief credit officer in the latter years of the Regan Administration, “They’ve cleared the decks to use Fannie and Freddie as a vessel for whatever they want.” 2) It gave GMAC Financial Services $3.8 billion of taxpayer funds, on top of the $12.5 billion it had already extended in a bail out. Until recently, GMAC was General Motors’ finance unit, but it is now a government bank holding company. The new investment makes the US federal government GMAC’s majority owner. GMAC suffered badly from risky mortgage market activities but, as what is supposed to be its primary business, it essentially controls the sales network for General Motors and Chrysler cars. 3) The Obama “Pay Czar” made public statements supporting multi-million-dollar incentive-based compensation packages for senior Fannie Mae and Freddie Mac executives…despite exactly that structure having been singled out by regulators as a primary cause of the GSE violations that enabled the housing/financial crisis. The Obama Administration is incentivizing Fannie’s and Freddie’s CEOs with up to $6 million per year, and senior executives can also receive hefty cash payouts under a similar target-based structure as existed during the bubble. Both companies/agencies currently operate under taxpayer-funded bailout. The Pay Czar cited the unique stresses of the jobs, despite the fact that they can now make roughly 12-times more than the President of the United States. Like · · Share. Carroll County GA Republican Party . 1 person saw this post. . LikesSee All. John Boehner Politician. Team Boehner Political Organisation. Eric Cantor Government Official. Walker County Georgia Republican Party Political Organisation. Catoosa County Republican Party Political Organisation. . Carroll County GA Republican Party 5 October. Part two. Franklin Raines moves Fannie into Subprime The Clinton Administration’s 1995 CRA changes authorized GSE’s to buy subprime mortgages, which it began to do in 1997. “Subprime” means that the person receiving the loan has a poor credit record and/or very low income compared to the loan size. Almost immediately, Fannie began to loosen its standards, requiring people to show lower wealth am... See more Like · · Share. Carroll County GA Republican Party . 1 person saw this post. .
Posted on: Tue, 08 Oct 2013 01:04:49 +0000
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