Alan Greenspan and the Federal Reserve Warned Congress – Greenspan Testified for McCain’s Bill to Fix Fannie Mae and Freddie Mac in 2004 and 2005 – Democrats Voted No in House and in Senate Blocked it Along Party Lines!
Posted by iusbvision on September 23, 2008
Brit Hume covered this story on Sept 23 and came to the same conclusion as we did here at IUSB Vision.
The Republicans, in a bill co-sponsored by John McCain, tried to change the Fannie Mae and Freddie Mac oversight regulations to those that are used by bank regulators. The bill to change the oversight rules was eek-ed by the Senate Committee in a party line vote with Democrats against it, but since Democrats were filibustering all significant legislation they didn’t like the Republicans did not have the 60 votes to pass it. Not one Democrat would budge.
Freddie Mac and Fannie Mae answer to the banking committee’s in Congress – NOT the Treasury Dept, and are monitored by a small agency called OFHEO to report to the committee’s, so Congress KNEW this was coming and have for years as we have covered HERE, HERE and HERE.
Alan Greenspan testified in favor of the reforms (transcript HERE and HERE) and warned:
If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis. … As I concluded last year, the GSEs need a regulator with authority on a par with banking regulators, with a free hand to set appropriate capital standards, and with a clear and credible process sanctioned by the Congress for placing a GSE in receivership, where the conditions under which debt holders take losses are made clear.
Hotair.com has the following commentary:
By special request of Ace. Nothing here you haven’t read and/or heard before, but Fox deserves a little publicity for being willing to challenge the narrative. Especially now that we’re about to be told it’s McCain’s campaign manager and his lobbyist pals, not the Democrats they lobbied who actually cast the votes, who are the real culprits in all this. The FBI: Doing the (after-the-fact) oversight job Congress wouldn’t.
UPDATE: Bloomberg News covered the story and gives similar information.
UPDATE II:Fox updated the story and has a devastating new report. The Report mirrors the investigation IUSB Vision Published HERE, HERE, HERE and HERE. Hotair.com comments on this new report from Fox HERE.
Every facet of the mortgage crisis story, who benefited and who is lying can be found HERE, HERE, HERE, HERE, HERE, HERE, HERE, HERE and HERE. - Editor
cindy dunn said
send this to larry kudlow.
let him break it all apart and challenge it
Jay said
The gop were in controll in 2005 they could of overode the vote, gop had the majority of house and senate in 2005
[Jay, with all due respect, take a civics class. It takes 60 votes to pass legislation in the Senate, so in a party line vote even then, nothing passes. - Editor]
GeraldD said
WILL THE FANNIE MAE CROOKS EVER GO TO JAIL ? THE BAIL OUT CRISIS WAS CAUSED BY A HANDFUL OF CORRUPT CONGRESSMEN AND FANNIE MAE OFFICIALS WHO BOUGHT UP 7 TRILLION DOLLARS IN BAD DEBT IN ORDER TO PAD THE BOOKS AND COLLECT HUGE SALARY BONUSES FOR THEMSELVES.
HERE ARE THREE VIDEOS THOSE CORRUPT FANNIE MAE OFFICIALS & AT LEAST FIVE CORRUPT CONGRESSMEN DON’T WANT THE
AMERICAN PEOPLE TO SEE:
http://www.youtube.com/user/TheMouthPeace
http://www.youtube.com/watch?v=_MGT_cSi7Rs
http://www.youtube.com/watch?v=q2WKtp01yOw
One Of The Crooks Is Rumored To Be The Next Attorney General Under Obama. If That Happens, NONE of them will ever
be brought to justice.
http://www.wnd.com/index.php?pageId=67068
crabbait said
I am having trouble with this story. The bill in question was S 190 introduced 26 Jan 05 and referred to committee. The last action on the bill was 28 July 05. It died in committee. Senator McCain signed on as co-sponsor 25 May 06, long after it was viable. Barney Frank’s quoted comments were made 11 Sept 03. Since he is a House member and made the comments some years earlier, how would those comments influence a Senate committee chaired by a Republican and with a Republican majority, to bottle the bill up in committee? Why would Chuck Hagel introduce such a bill that flies in the face of the Republican principle of lessening regulation wherever possible?
The whole tenor of the story seems to lack credibility.
[Point 1. With all due respect, you dont know anything about Republicans. Fannie Mae and Freddie Mac needed bank regulator enforcement with police like enforcement powers like other finance industries that are under the Federal Reserve and the Security Exchange Commission. Republicans have never been against Police to protect us from theft and fraud. Republicans got Homeland Security done, drug interdiction, Campaign Finance Reform, ethics legislation, all of which are more regulation. Republicans believe that there are roles that are proper for government and roles that are improper. Police roles are a proper function.
Point 2. Maybe you should read the evidence more carefully. Republicans in the House and Senate reintroduced the same legislation in every session for years. The legislation was at first pushed by Dole, Sunnunu, and Hagel. When the Democrats were filibustering everything, McCain signed on and tried to get bipartisan support in order to get it on the floor with a chance of passage.
Frank made these comments in 2000, 2003, 2004, 2005 as Republicans kept trying to get this done in the House. As you may know, the House and Senate have to pass the same version of the bill before it goes to the President to be signed.
We have written 8 articles explaining every facet of this story in great detail, all supported with verifiable evidence. Those articles are linked in this story above. Investors business Daily, the Wall Street Journal, Bloomberg News, Human Events and Fox have all put out a similar analysis as we have but we beat them all to it.
We have a front to back plain English explanation of this story HERE and after reading it feel free to ask questions. The story is a bit complicated but if the Democrats win as a result of the mortgage crisis they will be putting in power the very people who faught to keep the status quo and force this mortgage crash and those who blocked every attempt to expand domestic energy production. The two issues that took a good economy in 2006 and damaged it today. - Editor]
Doug said
To meet congressional goals for minority loans, Fannie Mae and Freddie Mac caused the banking meltdown by buying extremely risky mortgages (interest-only and $0 downpayment mortgages with little or no documentation of lender’s earnings (ability to pay). Fannie Mae purchased approximately 10% of the mortgages in 2002, 25% in 2004,about 46% in 2006 and, according to Lockhart, 76% in 2008 ($5.4 Trillion).
Since 2005 they’ve been the only seller of Mortgage-Backed securities, aka ‘Collateral Debt Obligations’.
Because they invested in Fannie and Freddie and financed their ditzy mortgages for the poor (no-income check on borrowers who make no-downpayment),they were burned.
Once burned, twice shy. The nations of the world appear to have decided to dump their dollars. Placed in an economic depression because of their investment in Fannie Mae and Freddie Mac, Iceland has changed their holdings from dollars to the Euro. They’re making the Euro their currency. This same scenario is occurring in the UK and Denmark. They’re both considering abandoning their own currency for the Euro.
Barney Frank, Charles Schumer and Chris Dodd want to continue President Clinton’s course of disastrous social experimentation. This course destroys the country’s banks by the Community Investment Act with the fines and requiring bribes to Community Action Organizations like ACORN. More importantly, in their pursuit of pork, congressional manipulation of Fannie and Freddie will destroy the US government’s credit by replacing the banking system with their unregulated holding banks and conning the world to take their worthless securities to the world. If the world mistakes Fannie and Freddie as part the US treasury, they might decide that the US treasury’s bonds are as worthlessness Fannie and Freddie’s.
To avoid this scenerio, the congress would have to ban Collateral Debt Obligations (CDOs) also known as ‘mortgage backed securities’ and either totally privatize or nationalize Fannie and Freddie. Good luck on banning CDOs. Currently, Asst. Secretary of the Treasury Neel Kashkeri is selling the mortgages that the GSEs have recently made using mortgage backed securities. That’s how we got into this mess.
But, why should congress change? Fannie and Freddie give congressmen credit for the mortgages that they make in their district. This is great public-relations with with constituents. Many members of the Black Congressional Caucus consider these race-based mortgages (code-named Affordable Mortgage Goals) to be essential to their re-election. Many of them act viciously if anyone threatens this pork. Consider their prior actions in 2002-2004. Representatives, Clay, Meeks, and others, savagely attacked any attempt by Armando Falcon, the Administrator of OFHEO to regulate Fannie and Freddie’s when they were found to have no.
Congress might not change course if the General Media (like ABC, NBC, CNN, Time, Newsweek, etc) continue to deflect the blame to Wall Street, saying that the $700 Billion was to bail out Wall Street not Fannie and Freddie. In that case, the United States might experience the hyperinflation that occurred in Germany in 1922-23, and that is currently happening in Zimbabwe. Although it is incredibly rich in diamonds, chromium and gold, Zimbabwe’s government ruined the country by deciding to embark on their own social engineering.
Let’s briefly review the effect of hyperinflation on the average citizen Germany had only 9 Billion marks in circulation in 1910. When their government tried to pay international debts by printing money, it took 23 Billion marks to pay for a loaf of bread and 6 million marks to pay for a pound of butter.
The savings and pension of the middle class was wiped out and many city dwellers starved. However, in 1923, over 90% of the American population lived on the farm. The percentage in Germany was probably the same. Mechanization of the planting and harvest has since displaced the farm worker to the city. Now, approximately 98% of the population lives in cities.
The good news is that Fed Chairman Bernanke knows about the problem and has some ideas on how to fix it http://www.thecherrycreeknews.com/content/view/3503/2/=
The bad news is that congress does not want to fix the problem.
They’ll lie saying, “Fannie and Freddie are financially sound” when they’re not. In the midst of accounting scandals with Freddie, then Fannie, Barney Franks also said “Fannie and Freddie are financially sound.” When the New York Times carried Greenspan’s warning to congress, they also carried a statement by Schumer, saying “Fannie and Freddie are financially sound.” In June 2008, two months before they went bankrupt, Senator Dodd reported “Fannie and Freddie are financially sound.”http://politicalticker.blogs.cnn.com/2008/07/13/dodd-on-fannie-freddie-they-are-sound/ Not satisfied that 76% of all mortgages were purchased by the GSEs, Dodd wanted to raise the number. In his presidential platform, he proposed that congress increase the percentage of the mortgage market that they control. http://www.chrisdodd.com/issues/homeownership/
Fannie Mae was extremely influential in politics. James Johnson developed Fannie Mae to be a modern day Tammany Hall. Johnson himself remained the president of the Brookings Institute while he was CEO of Fannie Mae from 1991 until 1998. Fannie hired the politically influential, some of whom didn’t have any great skill to offer except influence. For example, Clinton’s Assistant Attorney General, Jamie Gorlick, was made a co-chair of Fannie Mae although she had almost no qualification for the job except influence. These political operatives were well paid. In 2003 Representative Richard Baker discovered that the top 21 executives were paid $50 Million in salary and bonuses. Fannie Mae executives threatened Baker with a lawsuit if he revealed this information to anyone. However, in 2004 Baker revealed this information when he discovered that Fannie Mae had cooked the books so that their report to the stockholders’ report showed enough per-share earnings so that their executives made the maximum bonus. Although congress denied the GSE regulator, OFHEO the money to hire enough auditors to regulate the company, Armando Falcon got the Treasury to audit Fannie Mae. When he turned up financial irregularities, Falcon had the SEC to do a comprehensive analysis. The SEC found that Fannie’s accountants had hidden income from former years and had falsely declared a profit when they had a $9 Billion loss.
The house passed a regulation bill, but Senator Dodd said that he would filibuster any measure. Further problems caused a regulatory bill to be passed in the house, but Fannie’s executives hired the son of Senator Benton (Utah) to head Fannie Mae’s Utah office. Subsequently, Senator Benton added a provision to weaken the power of the regulator.
In her January 2005 article for CNN/Fortune, Bethany McLean mentioned these and other tricks that Fannie Mae used. Through their foundation they supported various housing groups who they called upon to write letters and to agitate on their behalf. In addition they pressured the institutions that they served to apply political pressure on their side of the issue. Fannie and Freddie could patronize any lending institution that they chose. Consequently, Fannie Mae had power over them and could persuade many of these lending institutions to write letter on their behalf and to lobby congress for them. http://money.cnn.com/magazines/fortune/fortune_archive/2005/01/24/8234040/index.htm
According to a CATO institute report on December 29, 1997, Vern McKinsey reported that they gave monitary support to the following housing groups. That financial carpet-bombing has also included the contribution of funds to many liberal or left-wing, activist organizations in Washington that might otherwise be critical of the billions of dollars of corporate welfare diverted to Fannie Mae and Freddie Mac. A recent analysis by the Capital Research Center of corporations’ charitable giving patterns listed Fannie Mae and Freddie Mac in its “bottom ten,” and gave both a failing grade of “F” for their support for organizations hostile to the free market. Fannie Mae gave approximately $3 million over a two-year period (1992-93) to such organizations as the Association of Community Organizations for Reform Now (ACORN)–$120,000; Center for Community Change–$200,000; Children’s Defense Fund– $170,000; Enterprise Foundation–$725,000; and the National Center for Lead-Safe Housing–$800,000. Those organizations support extensive, interventionist, government solutions to housing issues. The largest two recipients of Freddie Mac’s half a million dollars during this same period were the Children’s Defense Fund ($154,800) and the housing-activist Enterprise Foundation ($200,000). http://www.cato.org/pub_display.php?pub_id=1152&full=1#N_106_N_106_
According to Politico, Fannie Mae spent $175 Million on lobbyists from 1998 to 2008. During the 2004 hearings on Fannie Mae, Christopher Shays said that Fannie and Freddie paid some to lobby for them and paid others to keep them from lobbying against them.
In the Oct. 6, 2004 edition New York Times, Jennifer Lee and Eric Dash told this story about how quickly Fannie’s lobbying operatives worked in 1998: “The political heavyweights affiliated with Fannie Mae have not made the company slow footed, however. Once, during the Clinton administration, an official from the Office of Management and Budget mentioned to a senior Treasury Department official that the White House was considering removing an exemption from Fannie Mae and Freddie Mac and asked him not to mention that to anyone.
“Within 15 minutes of the person leaving the office, the phone was ringing off the hook,” with callers expressing concern, said the O.M.B. official who, fearing retaliation from Fannie Mae, spoke on condition of anonymity.
“At a Christmas party in 1998, a Fannie Mae executive heard a tip that the Clinton administration was thinking of pushing a proposal to end the company’s longstanding exemption from paying fees to the S.E.C. when it registers its securities. The company mobilized, recalling executives from Christmas vacations. It also galvanized dozens of mayors, lobbyists from the housing industry and lawmakers, including members of the Congressional Black Caucus, to interrupt their holidays to call the White House and express dismay at the proposal and its effect on low- and middle-income homeowners.
The White House quietly shelved the proposal before it was made public.” http://www.nytimes.com/2004/10/06/business/06inside.html?_r=1&pagewanted=print&position=&oref=slogin
Bernanke’s highly regarded predecessor, Alan Greenspan, was savaged by Charles Schumer when he tried to warn congress on 9 April 2005 that the Government Sponsored Enterprises, Fannie Mae and Freddie Mac posed a “systemic risk”.
Paying my neighbors bills. - Page 13 - US Message Board - Political Discussion Forum said
[...] Mac in 2004 and 2005 – Democrats Voted No in House and in Senate Blocked it Along Party Lines! Alan Greenspan and the Federal Reserve Warned Congress – Greenspan Testified for McCain’s Bill…. Carter and the Dems codified the Democratic Principle of "equality: homes for [...]
cmb said
The usual lies. This crisis was precipitated by the Gramm-Leach-Bliley act of 1999, added to a veto-proof bill by
McCain’s ex-campaign cochair Phil Gramm. This act repealed key provisions of Glass=Steagal and removed the operant markets from all regulatory oversight.
Right wing screamers can squeal about 2005 all they want – the market regulations they wanted in 2005 were simply to cover for those they made sure to remove in 1999.
[Those provisions actually helped because it allowed other banks to buy up pieces of Lehmen Brothers and others who would have had to be bailed out by the government if that didn't happen. Bill Clinton and most analysts and Republican law makers agree that Gramm-Leach-Bliley helped more than it hurt. These facts are not in dispute.
As far as your comments about what they wanted in 2005 were to make up for what they removed in 1999 are easily proved wrong. Even the NYT reported in 2001 that the Bush administration and OFHEO were asking for the new policing regulation that would have put them on par with other bank regulators. Senators Sunuunu, Dole and Hagel all pushed for that new policing year after year and in 2006 McCain started pushing for it as well.
You can contimnue to drink the Kool-aid all you like, but the facts presented are easily verifiable. No lies here at all. The narrative we present is supported by the facts and by people on both sides of the isle. Nice try. - Editor]