This story has gotten a bit large and complex – the best bet is to scroll down to where it says “Original Story” – start there and read the updates as numbered in order – Editor
Congress yanked the oil company CEO’s in front of a committee to grill them so why not Fannie Mae?Answer: Franklin Raines, James Johnson, Jamie Gorelick etc… they are all Clinton political appointees.
This story keeps yeielding more information. 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. Be sure to scroll down where it says “Original Story” and then read the updates in order- Editor
***** HERE IS THE ORIGINAL STORY*****
Fannie Mae and Freddie Mac, Country-Wide, Lehman Brothers and the list goes on. All corrupt and all were able to keep federal regulators at bay till the end. So how did they do it? Well the first way you do it is lobby to keep Congress off your back and pay them enough to run interference for you. Fannie Mae and Freddie Mac gave $200 million to politicians and partisan organizations with the vast majority going to Democrats and left wing think tanks. Senator Chris Dodd (D-CT) (By the way Dodd is the Chair of the Senate Banking and Housing Committee and was given a sweetheart loan from Country Wide), Barack Obama and Hillary Clinton being the top recipients. In some cases Senator Chuck Schumer is in the list as well.
While this is certainly a bi-partisan scandal, it is not a balanced one. Those who benefited the most by far are top Congressional Democrats like Dodd and Obama and left wing organizations.
First – Let’s start with the first article about this that appeared in the IUSB Vision HERE. Read it then come back.
Second – Here is the list of politicians that Fannie and Freddie donated to. Just below is the list of the top 12 Senators who received money from Fannie Mae and Freddie Mac which YOU paid for:
|Dodd, Christopher J
|Bennett, Robert F
|Bond, Christopher S ‘Kit’
|Shelby, Richard C
Nine Democrats and three Republicans. Folks this is why we need people who are willing to take on some in their own party. Obama told us that he was going to be different, that he wasn’t the same old politics as usual. Not only is he more of the same, he is among the WORST and most flagrant of the same. Quasi-governmental organizations should NOT be engaging in any partisan activity period. It is easy to see who their favorite party and candidates are.
In the bail out bill that was passed by Congress, Republican Senator Jim DeMint from South Carolina tried to offer an amendment to prevent taxpayer subsidized quasi-corporations like Fannie and Freddie from abusing the public trust by slicking the palms of politicians. The Democratic Leader Harry Reid refused to allow the amendment up for a vote (Link).
Now Let’s move to Lehmen Brothers Here is the List. Here is the top 12 recipients of money in the Senate
|Schumer, Charles E
|Dodd, Christopher J
|Lugar, Richard G
|Lautenberg, Frank R
|Biden, Joseph R Jr
Of the top 12, only two are Republicans. Take a special look at the top two, who took over double the amounts of cash than those immediately below them. John McCain is on the list but lets take history as a guide, Charles Keating, the wealthy banker, tried to buy influence with John McCain and it didn’t help him much did it? It is easy to see who their favorite party and candidates are.
J. Brown at the famed Politically Drunk Blog has been poring over the donations by these groups has this to say:
Obama has also accepted campaign contributions from dozens of Lehman Brothers Executives, such as CEO Richard Fuld ($2,300), President Joseph Gregory ($4,600) and dozens of other top Lehman Executives. On June 19th, Lehman shareholders filed suit against Fuld and Gregory for the company’s exposure in the subprime market…
Theodore Janulis– Bundler (over $50,000) & Lehman Brothers Head of Global Mortgages
Francisco Borges– Bundler (over $50,000) and Chairman of Landmark Partners a private equity real estate firm.
Nadja Fidelia– Bundler (over $50,000) & Managing Director of Lehman brothers
John Rhea– Bundler & Co-head of Lehman Brothers Global Investment Banking
The listing of contributions flowing in from Financial Institutions through Senator Obama’s career is short of amazing. There are currently dozens upon dozens of Senior Vice Presidents, Managing Directors, and other top level executives from firms such as Lehman Brothers, Wachovia, Washington Mutual, Citigroup, Wells Fargo, UBS, DeutscheBank, Merrill Lynch, Goldman Sachs, Bank of America, JP Morgan Chase, Morgan Stanley and other high profile Wall Street banks and funds mired in the mortgage meltdown.
Obamahas been relentless in his attacks upon the “evil” Wall Street executives that he has blamed for the ongoing fallout from the mortgage crisis, positioning himself on a “moralhigh ground”. The reality is that while Obamahas been slapping the mortgage companies andinvestment banks with one hand, he has had his other hand in their wallet.
It gets worse– In addition, Obama has received tens of millions of dollars from Law firms and attorneys specializing in Corporate representation:
Those who are familiar with Sidley Austin LLP understand that the firm is a large, international law firm with a large presence within the financial services and insurance industry. For instance, the firm was just recognized by Alpha Magazine as the top firm for Hedge Funds for the secondyear along with consistently ranking as a top corporate law firm. Obama has also accepted more than $280,000 from Skadden, Arp, et al… employees, a firm that was recently recognized as the “Best Corporate Law Firm In The United States” for the eighth consecutive year by Corporate Board Member. Skadden is another large Law firm specializing in practices related to investment banking and representing clients such as Merrill Lynch. In addition to the aforementioned law firms, Jones Day, Latham & Watkins, & Wilmerhale LLP are all large law firms and top 20 contributors to the Obama campaign. All three of these law firms also specialize in corporate law and ranking among the top ten “corporate law firms” by the Corporate Board Member.
It still gets worse – read HERE & HERE .
This is the kind of stuff Governor Palin put an end to in Alaska with the energy company influence and corruption.
UPDATE: McCain Speaks – Blames the very system that we are exposing here – While Obama blames Bush & McCain for this…..Hotair.com posts the transcript:
Palin Speaks: Our regulatory Structure needs a complete overhaul. John McCain and I are going to put an end to this. No more multi-million dollar payouts and golden parachutes to those who violate the public trust. Blames lobbyist rules. The old oil monopoly that controlled my state, I broke it and the good ole’ boy network of lobbyists and special interests that used to run things up there, what ever they are running now it’s NOT the state of Alaska:
UPDATE II – Barack Obama campaign economic adviser James Johnson led a fierce lobbying campaign to fight reform of Freddie and Fannie. Link Here & Here and thanks to Instapundit for the headsup. Johnson is a former executive of Fannie Mae and Lehman Brothers…
Instapundit: “So it would appear that this is precisely what Obama has been railing against: Washington insiders lining the pockets of other Washington insiders while the taxpayers ultimately have to foot the bill. The Agent of Change, it seems, didn’t exactly walk the walk on this one.”
UPDATE III: Megan McArdle at The Atlantic Magazine slams Obama for blaming this on Bush calling it “High-test Hooey”. Megan’s analysis is a good one, but I wish she addressed the influence peddling issue I addressed, because that is a part of this problem. Malkin comments HERE.
UPDATE IV: Hillarious Bias! Huffington Post and New York Times go all out saying that people from the “failed bank” Merrill Lynch were some of McCain’s top contributors. REALITY CHECK – Merrill Lynch didn’t fail, it was bought. What they fail to mention is the information in this post, which shows Fannie Mae and Freddie Mac and Lehmen Brothers – all of which did fail – all had a favorite candidate that they lined with cash before they went under and that was Barack Obama. HERE is the link to the NYT story.
UPDATE V: Obama Lied. Bush tried to get a Freddie Mac and Fannie Mae regulatory overhaul in 2003 – Democrats stopped it!
New York Times Excerpt:
September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
”The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,” Mr. Oxley said at the hearing. ”We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,” the independent agency that now regulates the companies.
”These irregularities, which have been going on for several years, should have been detected earlier by the regulator,” he added.
”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.
Hat Tip to Hotair.com for the heads up on this 2003 piece. They comment further on this HERE. It is no secret that the Democrats and the Clinton Administration pushed mortgage lendors to make more high risk loans for “affordable housing” to help prop up the economy. Former Clinton Sec. of Labor Robert B. Reich has been making some talk show rounds saying the same thing and being critical of that policy. Hotair sounded off on this NYT story HERE.
UPDATE VI: Look who was minding the store!
David Frum reports for the National Post:
The two institutions have long been run not by bankers but by retired political figures, predominantly Democrats. From 1991 to 1998, Fannie Mae was headed by James Johnson, a longtime aide to former Democratic vice president Walter Mondale. Johnson’s successor, Franklin Raines, had served as budget director to Bill Clinton. Jamie Gorelick, vice chair of Fannie Mae from 1998 to 2003, served as deputy attorney general in the Clinton administration.
These figures have paid themselves impressive private-sector salaries. Johnson earned US$21-million in just his last year at Fannie Mae. Raines earned US$90-million for five years’ work at Fannie Mae. Gorelick got US$26-million.
Franklin Raines was Clinton’s former UMB Director, is a former CEO of Fannie May, was paid a total of $90 MILLION for his tenure at Fannie May, who was forced to resign due to a $6.3 billion accounting debacle he oversaw in 2004, and James Johnson former Vice-Chair of Fannie Mae and Managing Director of Lehman Brothers….. Raines and Johnson are the current economic advisors for Barack Obama. Raines was in charge when most of these high risk, sub prime rate loans were being given away; the primary catalyst to Fannie Mae’s collapse. The people who oversaw the Country-Wide scandal were working for Obama as well. Here is a New York Times article with some good info on Raines.
In the mean Time Democrat Speaker Nancy Pelosi says that “the Democrats bear no responsibility for the current crisis”. Real nice nancy – too bad the public record overwhelmingly proves otherwise.
UPDATE VII: CONGRESS KNEW – McCain Tried to Fix Fannie Mae in 2005 – Democrats Blocked!
This is huge folks.
CONGRESS KNEW – Here is an OFHEO report form 2006 that warned of what was coming. McCain mentions this report (in a pre-release version) in his remarks. Here is a summary from the OFHEO saying:
The report details an arrogant and unethical corporate culture where Fannie Mae employees manipulated accounting and earnings to trigger bonuses for senior executives from 1998 to 2004.
A large number of Fannie Mae’s accounting policies and practices did not comply with Generally Accepted Accounting Principles (GAAP). The Enterprise also had serious problems of internal control, financial reporting, and corporate governance. Those errors resulted in Fannie Mae overstating reported income and capital by a currently estimated $10.6 billion.
Here is McCain’s Bill and Statements:
S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005
A bill to address the regulation of secondary mortgage market enterprises, and for other purposes. Here is the text of the bill.
Sen. Charles Hagel [R-NE]
Sen. Elizabeth Dole [R-NC]
Sen. John McCain [R-AZ]
Sen. John Sununu [R-NH]
So now we know that at least TWICE Republicans saw this coming and tried to fix it, and twice the Democrats blocked it and what did Barack Obama and Joe Biden do to fix this – NOTHING.
HERE is the link to McCains remarks on the floor of the Senate. Here is an excerpt and read it CAREFULLY:
Senator John McCain (R-AZ) (2005) Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.
Lot’s of blogs did some great research on this issue.
Hotair.com – Beltwaysnark.com – Hey Look National Review caught up with us today (we like you guys).
UPDATE VIII: McCain goes off on Obama for lying about the record
Hat Tip Hotair.com
UPDATE IX: What is hilarious is that the Obama Campaign is now saying that Raines never advised or worked for the campaign. The press has reported that these guys (Raines and Johnson) have been with Obama for months, it is well known. An Obama Campaign spokesman just said on The Fox Report with Shep Smith that these guys “don’t exist”. Is the elite media so in the tank that they won’t blast Obama for this obvious whopper?? We will see.
Hotair.com puts this latest Obama lie to bed and is laughing at the Obama Campaign’s denial:
Here are a few articles of interest about Raines from the Washington Post:
- March 2005: Perverse executive pay forced Raines out of his job.
- May 2006: Extensive fraud at Fannie Mae under Raines’ direction, generating over $50 million in bonuses for nonexistent growth.
- April 2008: Raines gives up $24 million in future payouts to avoid criminal charges in Fannie Mae fraud, although most of that was in worthless options; he pays $2 million in cash.
Note that Raines continued to advise Obama even after that settlement. It’s not as though Obama didn’t know Raines’ past. Apparently, he just didn’t care.
- 7/16/08: “In the four years since he stepped down as Fannie Mae’s chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case’s D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.”
- 8/28/08: “In the current crisis, their biggest backers have been Democrats such as Senate Banking Committee Chairman Christopher J. Dodd (Conn.) and House Financial Services Committee Chairman Barney Frank (Mass.). Two members of Mr. Obama’s political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.“
Team Obama never objected to this reporting before tonight. Jim Johnson will almost certainly get the next starring role in a McCain ad, and what will Obama have to say about the man he originally tapped to pick his running mate?
UPDATE X: McCain’s new “Raines and Johnson” ads and new Washington Post chicanery trying to cover for Obama on this mess – Details HERE. Excerpt teaser:
While John McCain tried to reform Fannie Mae and Freddie Mac, Obama took boatloads of their money. While Obama talked reform and demonized CEOs, he took as advisers the very people responsible for Fannie Mae’s failure. Which candidate will bring change, and which will bring more of the same?
UPDATE XI: McCain points the economic probblems out as the influence peddling scandal that it is. Our analysis was spot on and ahead of the curve. McCain:
“We’ve heard a lot of words from Senator Obama over the course of this campaign. But maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was square in the middle of it.”
After you are done reading the article and the updates, I have written a long term history of how this scandal came about in steps, and it’s in plain English HERE.
UPDATE XII: Bloomberg Financial News gives a similar analysis to ours today (Monday Sept.22) http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=aSKSoiNbnQY0
UPDATE XIII: 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 (see HERE), tried to change the Fannie Mae and Freddie Mac oversight regulations to those that are used by bank regulators (now they answer to the banking committee’s in Congress that set up a small agency to report to the committee’s so Congress KNEW this was coming and have for years). The bill to change the oversight rules was killed in a party line vote with Democrats against it. Alan Greenspan testified in favor of the bill (transcript 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 XIV: Bloomberg News covered the story again with video and gives similar information as we have already given you here.
UPDATE XV: 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.