Large Scale Central

Dems Blocked Financial Reforms that McCain and GOP Proposed in 2

General Discussion
#1

(from Mike’s America)

And the current financial meltdown is the result.

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.
– John McCain, May 25, 2006

Fannie Mae and Freddie Mac together hold or own up to FIVE TRILLION DOLLARSin mortgage debt. That’s more than half the total of the current U.S. national debt.

Their failure is what has sparked the world financial crisis and the blame lies solely with the Democrats in Congress who shielded them from reform for years while Democrat party hacks running the companies enriched themselves. (it’s a Democrat scandal as I described here).

Looking back to the root of the problem Wayne Barret describes how the snowball started:

Andrew Cuomo and Fannie and Freddie
How the youngest Housing and Urban Development secretary in history gave birth to the mortgage crisis
By Wayne Barrett
[url=http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/]The Village Voice[/url]
Tuesday, August 5th

…Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of

decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in
combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without
putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing
Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and
he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced
and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the
reasons why.

Republican Reforms Blocked by Democrats

In the year 2000 Congressman Richard Baker (R-La.) then the chairman of the House subcommittee that had jurisdiction over Fannie and Freddie introduced legislation to more tightly regulate the mortgage giants. The bill never saw the light of day. Congresspersons from both parties receive contributions from Fan & Fred (the list) and collectively they spent $174 million lobbying Congress the last ten years.

The result of Rep. Baker’s legislation would not have been a surprise to Rep. Paul Ryan (R-WI) who had proposed tighter regulation in the 1990’s only to find a highly paid Fannie Mae lobbyist stalking him at events in his district and who played hardball by directing calls to every mortgage holder in the Congressman’s district falsely implying that Ryan meant to raise their rates.

Republicans Try Again

In 2004 another attempt was launched. The Senate took up a measure put forwarded by Senate Banking Committee Chairman Richard Shelby (R-AL) only to have it blocked again by Fan & Fred using Democrats as a partisan attack machine:

Fannie and Freddie chose to fight legislation in the Senate Banking Committee that embodied the

administration’s minimum requirements, particularly the receivership provision, in the late spring of 2004. The
companies called in their chits and managed to obtain solid Democratic opposition to the bill crafted by the
committee’s chairman, Richard Shelby (R-Ala.). The committee also watered down the receivership provision.
The partisan nature of the vote to send the bill to the floor virtually assured that it would not be taken up in the

Senate unless Fannie and Freddie relented in their opposition … but Fannie and Freddie would not budge. It may
be that the [Fan&Fred] were banking on the defeat of President George W. Bush and on the assumption that a
Democratic president would abandon the effort to pass tougher regulation. If that was their thinking, it was an
exceedingly costly error.

In the last year of the Republican Congress House GOP leaders were determined to try again. They put forward H.R. 1461 [109th]: Federal Housing Finance Reform Act of 2005. The bill would have stripped control of Fan & Fred from the Housing and Urban Development Department where Cuomo had turned it into a regulatory farce.

The bill would also introduce “anti advocacy provisions” barring money from Fan & Fred being used as a slush fund for liberal lobbying organizations.

Despite Democrat opposition to that measure the bill passed the House, but could not get a vote in the Senate even after the anti-lobbying provision was removed.

John McCain was one of three Republicans in the U.S. Senate to sponsor the bill. Rising to propose the legislation Senator McCain’s words now sound prophetic:

Senator McCain Speaks in Support of
The FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005
The United States Senate
May 25, 2006

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth

over the past few years were “illusions deliberately and systematically created” by the company’s senior
management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees

deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for
senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report
shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting
earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit
restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to

interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks
after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and
restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and
over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie

Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the
role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the
report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without
delay.

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.

McCain took action in 2005 that might have helped us avoid the severity of this current financial crisis. Democrats also took action in 2005 and stopped McCain’s reforms.

#2

It’s not Fannie and Freddie that started this crisis–the crisis started much earlier. So the strategy now is to say this is a Democratic crisis?

What HAS the Bush admin been doing for the last eight years? Nothing, it seems

When I get time I’ll check out your info

#3
mike omalley said:
It's not Fannie and Freddie that started this crisis--the crisis started much earlier. So the strategy now is to say this is a Democratic crisis?
This is an [b]American crisis[/b]: Equal opportunity for all of us to be raped by the financial / banking community as they line up for the hand outs our government is now providing. Unfortunately we probably haven't seen the end of it.

The Fannie / Freddie bailouts are responsible for the largest share of the doubling of the national debt that has taken place in the last couple of weeks.

Happy RRing,

Jerry

#4

As always, it’s more complicated

McCain’s staff includes lobbyists for Fannie and Freddie

http://www.motherjones.com/mojoblog/archives/2008/09/9663_mccain_fannie_freddie.html

Aquiles Suarez, listed as an economic adviser to the McCain campaign in a July 2007 McCain press release, was formerly the director of government and industry relations for Fannie Mae. The Senate Lobbying Database says Suarez oversaw the lending giant’s $47,510,000 lobbying campaign from 2003 to 2006.

And other current McCain campaign staffers were the lobbyists receiving shares of that money. According to the Senate Lobbying Database, the lobbying firm of Charlie Black, one of McCain’s top aides, made at least $820,000 working for Freddie Mac from 1999 to 2004. The McCain campaign’s vice-chair Wayne Berman and its congressional liaison John Green made $1.14 million working on behalf of Fannie Mae for lobbying firm Ogilvy Government Relations. Green made an additional $180,000 from Freddie Mac. Arther B. Culvahouse Jr., the VP vetter who helped John McCain select Sarah Palin, earned $80,000 from Fannie Mae in 2003 and 2004, while working for lobbying and law firm O’Melveny & Myers LLP. In addition, Politico reports that at least 20 McCain fundraisers have lobbied for Fannie Mae and Freddie Mac, pocketing at least $12.3 million over the last nine years.

For years McCain campaign manager Rick Davis was head of the Homeownership Alliance, a lobbying association that included Fannie Mae, Freddie Mac, real estate agents, homebuilders, and non-profits. According to Politico, the organization opposed congressional attempts at regulation of Fannie and Freddie, along the lines of what John McCain is currently proposing. In his capacity of president of the group, Davis went on record in 2003 and insisted that no further reform of the lenders was necessary, in contradiction to his current boss’s sentiments. “[Fannie and Freddie] are subject to an innovative and stringent risk-based capital stress test,” Davis wrote. “The toughest in the financial services industry.”

And:

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/16/AR2008091603732_2.html?hpid=topnews

"In 1999, McCain joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country’s financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.

That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.

McCain now condemns the executives at those companies for pursuing the ambitions that the Gramm-Leach-Bliley Act made possible, saying that “in an endless quest for easy money, they dreamed up investment schemes that they themselves don’t even understand.”

“I’m always for less regulation,” McCain told the Wall Street Journal in March. He added: “I’d like to see a lot of the unnecessary government regulations eliminated.”

Meanwhile, I’m happy to blame both parties for this mess

#5

Gentlemen.

Please excuse my intrusion on this topic.
It is not to offer an opinion. Rather it is to ask a couple of questions so I am better informed.

  1. Am I correct in believing that the White House itself can initiate legislation which can be supported or denied in Congress and the Senate?

  2. If that assumption is correct, could some knowledgeable soul point me in the direction of any stronger financial regulation legislation that was actually proposed by the current administration in the White House. Legislation that might have prevented the melt downs we are now witnessing.

Not McCain.

The Bush administration.

  1. If the current White House administration did propose such stronger financial regulation legislation, what happened to it?

  2. If no such legislation was proposed by the White House, why not?

#6

Tony,

The White House usually works through the ranking member of its party in the appropriate committee to get legislation through. If you look here, you will see that the administration (White House) was working closely with Senator Shelby to get the needed legislation passed. This is one of the references offered above.

#7

Thanks Steve, but you didn’t actually answer any of the questions.

Any chance you could please?

#8

I thought it did.

Let’s try it again.

  1. Yes, the White House can propose legislation, through friendly congressmen or senators. At least that is my understanding. The White House cannot propose legislation in the same manner as a congressman or senator.

  2. See the url that you were directed to above. It was proposed by the White House, at least in part.

  3. The Democrats blocked it.

  4. Already answered.

There, I think I’ve done it! :smiley:

#9
mike omalley said:
As always, it's more complicated McCain's staff includes lobbyists for Fannie and Freddie
Mike: You forgot to also mention:

Two of Obama’s economic advisors (Franklin Raines and Jim Johnson) are recent (serial) Fannie Mae CEOs

These multi-million dollar per year executives are some of those most directly responsible for a large portion of the Fannie / Freddie debacle. These two guys have been on Obama’s financial advisor team, raising millions for him, from early on and are most recently thought to have been working with Paulson to give Obama ‘private’ briefings on the government bailouts.

Another site reports that Mr. Obama came in second (to another Democrat) in the amount received from Fannie/Freddy lobbyists. $126,000 from '98 to '08. McCain has received $21,500 in 10 years.

Looks to me like Obama is directly tied to and perhaps controlled by the very people who are currently robbing us citizens and putting our country’s whole economic future at serious risk. He needs to take a look in the mirror before criticizing McCain on our current financial fiasco.

Mike, I do applaud the depth of your research, but the breadth would seem to need a little expansion. :slight_smile: :slight_smile:

Happy RRing,

Jerry

#10
mike omalley said:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/16/AR2008091603732_2.html?hpid=topnews

"In 1999, McCain joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country’s financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.

That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.

McCain now condemns the executives at those companies for pursuing the ambitions that the Gramm-Leach-Bliley Act made possible, saying that “in an endless quest for easy money, they dreamed up investment schemes that they themselves don’t even understand.”

“I’m always for less regulation,” McCain told the Wall Street Journal in March. He added: “I’d like to see a lot of the unnecessary government regulations eliminated.”


This is the bill repealing the safe guards put in place to avoid another depression. And of course, what is happening now?
And you expect John McCain and Phil Gramm to fix the banking mess they helped create?
Ralph

#11

Ralph,

It seemed like a good idea at the time, reducing regulations. It passed the Senate by a margin of 92-0, and was signed into law by Prez Clinton.

I really don’t think that anyone could have forseen (even Democrats) how greed would have corrupted those robber barons. They make Harriman and Vanderbilt look like pikers.

Perhaps you could modify your research, too, by adding a little breadth.

#12

Any conclusion that could be drawn from the above as to who has caused the current market collapse and commented on by me an outsider, would be inappropriate. So, perhaps a few quotes from Gore Vidal might suffice to shed a bit of light on the matter.

"alliric “There is only one party in the United States, the Property Party . . . and it has two right wings: Republican and Democrat. Republicans are a bit stupider, more rigid, more doctrinaire in their laissez-faire capitalism than the Democrats, who are cuter, prettier, a bit more corrupt - until recently . . . and more willing than the Republicans to make small adjustments when the poor, the black, the anti-imperialists get out of hand. But, essentially, there is no difference between the two parties.”

Retrieved from “http://bluwiki.com/go/Gore_Vidal_Quotes”

“Every four years the naive half who vote are encouraged to believe that if we can elect a really nice man or woman President everything will be all right. But it won’t be. Any individual who is able to raise $25 million to be considered presidential is not going to be much use to the people at large. He will represent oil, or aerospace, or banking, or whatever moneyed entities are paying for him. Certainly he will never represent the people of the country, and they know it. Hence, the sense of despair throughout the land as incomes fall, businesses fail and there is no redress.”

From; http://www.thirdworldtraveler.com/Society/GoreVidal_quotes.html

More gems here.

http://www.brainyquote.com/quotes/authors/g/gore_vidal.html

Even more here;

http://en.thinkexist.com/quotes/gore_vidal/

Last one;

http://lachlan.bluehaze.com.au/books/gore_vidal_essays.html

#13

Vidal pretty much nails it. I’m certainly not interested in hailing the Democrats as heroes. As usual in American politics, the system presents me with only two choices who differ relatively little, and and usual, I vote for the one I dislike the least

#14
mike omalley said:
Vidal pretty much nails it. I'm certainly not interested in hailing the Democrats as heroes. As usual in American politics, the system presents me with only two choices who differ relatively little, and and usual, I vote for the one I dislike the least
Mike, I believe you and I have truly come to a consensus. Though, unlike Vidal, I would never hail the Republicans as heroes, either. Voting for the one I dislike the least has always seemed to be the only choice.
#15

Here are the views of one VERY smart fella who seems to have predicted the current situation in 2002.

http://wfhummel.cnchost.com/derivatives.html

#16
Ric Golding said:
mike omalley said:
Vidal pretty much nails it. I'm certainly not interested in hailing the Democrats as heroes. As usual in American politics, the system presents me with only two choices who differ relatively little, and and usual, I vote for the one I dislike the least
Mike, I believe you and I have truly come to a consensus. Though, unlike Vidal, I would never hail the Republicans as heroes, either. Voting for the one I dislike the least has always seemed to be the only choice.
Well, the guy I dislike the least didn't make the cut, so I guess I'm screwed. :( What to do, what to do?

Mr. Vidal is a bit out of date. It now takes a minimum of $25 million a month to mount a campaign.

#17

“It now takes a minimum of $25 million a month to mount a campaign.”

Even jokes need to be adjusted for inflation. :wink:

#18
Steve Featherkile said:
Ralph,

It seemed like a good idea at the time, reducing regulations. It passed the Senate by a margin of 92-0, and was signed into law by Prez Clinton.

I really don’t think that anyone could have forseen (even Democrats) how greed would have corrupted those robber barons. They make Harriman and Vanderbilt look like pikers.

Perhaps you could modify your research, too, by adding a little breadth.


I said it was signed by Clinton several weeks ago in another thread. It was authored by Phil Gramm.
The safeguards were there for a reason.
Ralph

#19

Wall Street Fat Cats Aren’t At Fault This Time
by Jonah Goldberg

"So, who should go to jail?

John McCain insists that the financial crisis is the direct result of Wall Street’s “unbridled corruption and greed.” Sarah Palin says likewise. Senator Obama, for the most part, has merely echoed what Treasury Secretary Henry Paulson has already said. Obama has an excuse though: He hasn’t finished conducting his seminar on what’s going on; he’ll get back to us after a rousing multivariate analysis of the value of “decisiveness.” Joe Biden says the Wall Street crisis is the result of George W. Bush’s tax cuts, which makes as much sense as blaming the rising price of fairy dust. But as a wise man once asked, Who gives a rat’s patoot what Joe Biden thinks?

Nonetheless, blame is settling on those old standby scapegoats, Wall Street fat cats.

So, I ask again: Who should go to jail? And the answer, as far as I can tell, is: no one - at least no one on Wall Street. That may turn out to be wrong. But even if there’s a bad penny or two in the pile, nobody will say this CEO or that banker is responsible for the mess. And so far, despite a flood of coverage and speeches and finger-pointing, nobody’s aimed their bony finger of condemnation at any Wall Street fat cat who did anything criminal.

Criminal stupidity is another issue entirely. But the beautiful thing about our economic system is that bad decisions are punished in the marketplace.

The starting line for the parade of falling dominoes doesn’t begin on Wall Street. Nor, alas, will the parade end there. But if you want to know where it really begins, look to the Capitol steps.

The self-proclaimed angels in Washington will tell you they’ve been working tirelessly to expand the American dream of homeownership by making mortgages available to people unable to plunk down 20 percent on a house. Franklin Raines, the Clinton-appointed former head of Fannie Mae from 1998 to 2004, made it his top priority to make mortgages easier to get for people with poor credit, few assets and little money for a down payment.

The Clinton administration, meanwhile, reinterpreted the Jimmy Carter-era Community Reinvestment Act to politicize lending practices. Under the CRA, the government forced banks to prove they weren’t “redlining” - i.e., discriminating against minorities - by approving loans to minorities and various left-wing “community group” shakedown artists whether they were bad risks or not. (A young Barack Obama got his start with exactly these sorts of groups.) Sen. Phil Gramm called it a vast extortion scheme against America’s banks. Still, the banks were perfectly happy to pass the risky loans to Raines’ Fannie Mae, which was happy to buy them up.

That’s because Raines was transforming Fannie Mae from a boring but stable financial institution dedicated to making homes more affordable into a risky venture that abused its special status as a “Government Sponsored Enterprise” (GSE) for Raines’ personal profit. Fannie bought the bad loans and bundled them together with good ones. Wall Street was glad to buy up these mortgage securities because Fannie Mae was deemed a government-insured behemoth “too big to fail.” And others followed Fannie’s lead.

The current financial crisis stems in large part from the fact that people who shouldn’t have been buying a home, or who bought more home than they could afford, now can’t pay their bills. Their bad mortgages are mixed up with the good mortgages. And thanks in part to new accounting rules set up after Enron, the bad mortgages have contaminated the whole pile, reducing the value of even stable mortgages.

Of course, there are other important factors at work here, having to do with changing technology among other things. And even if the bad mortgages weren’t in the system, we’d still have the hangover from the end of the housing boom. But the financial system could have handled that with the usual corrections. The biggest dose of poison entered the financial bloodstream through Washington. And some people warned us. In 2003, Fannie Mae and Freddie Mac revealed they cooked their books to overstate their earnings and that they didn’t really know what was going on. The Bush administration pushed for reforms, but those efforts were rebuffed by Congress, with Democrats Barney Frank and Christopher Dodd taking point, because Fannie and Freddie have spent millions in campaign contributions.

In 2005, McCain sponsored legislation to thwart what he later called “the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole.”

Obama, the Senate’s second-greatest recipient of donations from Fannie and Freddie after Dodd, did nothing.

Meanwhile, Raines, the head of a government-supported institution, made $52 million of his $90 million compensation package thanks in part to fraudulent earnings statements.

But, ah yes, the greedy criminals responsible for this mess must be somewhere on Wall Street."

#20

It is pure bunk to blame the housing crisis on “poor” people who bought homes beyond their means. Many of the failed mortgages are from investors, flippers, speculators and slum lords.
Typical Republican bull crap…blame the poor instead of the greedy SOB’s responsible.
Ralph