McCain and Fannie and Freddie

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Freddie found itself in Justice Department crosshairs in 2003, after it finally admitted to years of accounting schemes to underreport its earnings...to the tune of $5 billion. Freddie paid a $125 million fine to federal regulators, more than $400 million in shareholder lawsuit settlements, and $3.8 million in civil fines to settle Federal Election Commission charges of improper political fundraising.

Freddie's creative accounting was nothing compared to Fannie's. As determined by two separate federal reports in 2004 and 2006, Fannie Mae out-and-out cooked the books so the bigwigs at the top could rake in millions in windfall profits. The Washington Post reports that Fannie misstated its earnings by about $10.6 billion from 1998 through 2004. all so fraudulent multimillion dollar bonuses could kick in for Fannhie's bigwigs.

Those Fannie Mae bigwigs who cashed in on the cooked books? Chairman Franklin Raines, Bill Clinton's OMB director...A whopping $52 million. Vice Chair Jamie Gorelick (remember her from the 9-11 Commission hearings), Clinton's deputy ATTORNEY GENERAL, $15 million. Chairman and Chief Executive James A. Johnson, liberal lobbyist (the one who was kicked off Obama's VP vetting committee...looks like they should have vetted their committee) due to his role in the Countrywide financial scandal...$1.9 million. Raines and the CFO of Fannie Mae were ousted.

Dems, loathe to clean up Fannie and Freddie houses even though Greenspan said preventitive action needed to be taken "sooner than later," came up with a "reform bill" in early 2005. The Department of Housing and Urban Development (HUD) mandated that Fannie and Freddie had to start handing out mortgages to "minority and moderate income buyers." Whether these new customers were creditworthywas of little concern; Congress had race and bean-counting to achieve. And now they basically owned half of the US housing market.

And incidentally, Franklin Raines has been advising the Obama campaign on the mortgage and housing issues....ahem.

Maybe the international community wants their money back now. Maybe that is why credit markets are frozen. Since AIG and Fannie and Freddie are backed by the full faith and credit of the United States, the world is lining up for their securitized mortgages to be repaid.

Maybe this bailout is not to buy up bad debt, but to pay off bad debt the government has already bought, insured, and now needs to ask us money for to pay. WE ARE BEING LIED TO AGAIN!

In 2006 an election year, the Democrats were still trying to lay the Enron scandal on Bush and the Republicans. With the help of the press a cover up of a larger financial scandal was taking place. A scandal that we are paying for today. In 2006 a 3 year investigation into fraud at Fannie Mae was concluded. It revealed a level of financial misconduct by Franklin Raines, Jamie Gorelick, and others that grossly overstated earnings by 10.6 Billion dollars. To gain bonuses.

For those who don't know both Raines and Gorelick were high ranking officials in the Clinton Administration.

I hope you haven�t just eaten, because what you are about to read will disturb you�and well it should. It�s proof that John McCain foresaw the Freddie Mac, Fannie Mae disaster in 2006� and tried against all Obama-Like minds to ward it off.

Below are John McCain�s remarks urging the passage of the Federal Housing Enterprise Regulatory Reform Act of 2005, which he co-sponsored and which was rendered �Dead� in Congress.

Guess who prevailed and didn�t take heed? Or more appropriately, guess who deliberately �looked the other way�?

This is all we need to know to understand exactly WHICH candidate in this election is willing to break some eggs when it comes to Fannie Mae and Freddie Mac�two organizations that, with the help of certain Democrats, deliberately redistributed wealth the easy way. Now we are all paying for it, as intended all along. Just as John McCain warned below.

As we view the carnage, this is all we need to know to understand exactly WHICH candidate foresaw this carnage we are witnessing, and which candidate worked to convince the other candidate to help avoid it. It is all we need to know to recognize exactly WHICH candidate had the right judgment and was looking out for the rest of us.

Joe Biden? It�s time for US to be Patriotic? No. It�s time for YOU to be patriotic. In fact, it�s too late. As for you saying, �It�s time to be part of the deal�. We want no part of this �deal�. And what a �deal� it was!

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.

Last Action: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.

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.

Update: Well looky here. Here�s a glowing Wall Street piece on Obama, written in June 2008. You would think Mr. �Regulator� Obama really is Jesus looking out for us! But�..here�s the paragraph that hooked me�the paragraph that haunts today:

He characterized the senator as a quick study on financial services, citing his early support of efforts by Senate Banking Committee Chairman Chris Dodd and House Financial Services Committee Chairman Barney Frank to empower the Federal Housing Administration to help struggling homeowners.

Oh they �empowered� all right. The Democrats killed this bill while Dodd, Frank and Obama fiddled and helped Fannie and Freddie cook their books, continue to tank, all the while keeping the regulators out of their way. These are the guys who killed the bill that McCain fought for. The bill that would have avoided the financial disaster we witnessed during the past two weeks. In the meantime, take a look at which senators were feeding at the Fannie Mae/Freddie Mac trough. My party is not what it used to be. My party has not only let me down, but it has also screwed me and my country in the process.

Note: All of these facts can be independently confirmed if you are interested in the truth of this matter.

November 7, 2008

President-elect Barack Obama's newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot "red flags," according to government reports reviewed by ABCNews.com.

According to a complaint later filed by the Securities and Exchange Commission, Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002.

Emanuel was not named in the SEC complaint (click here to read) but the entire board was later accused by the Office of Federal Housing Enterprise Oversight (OFHEO) (click here to read) of having "failed in its duty to follow up on matters brought to its attention."

In a statement to ABCNews.com, a spokesperson said Emanuel served on the board for "13 months-a relatively short period of time."

The spokesperson said that while on the board, Emanuel "believed that Freddie Mac needed to address concerns raised by Congressional critics."

Freddie Mac agreed to pay a $50 million penalty in 2007 to settle the SEC complaint and four top executives of the Federal Home Loan Mortgage Corporation were charged with negligent conduct and, like the company, agreed to settle the case without admitting or denying the allegations.

The actions by Freddie Mac are cited by some economists as the beginning of the country's economic meltdown.

The federal government this year was forced to take over Freddie Mac and a sister federal mortgage agency, Fannie Mae, pledging at least $200 billion in public funds.

Freddie Mac records have been subpoenaed by the Justice Department as part of its investigation of the suspect accounting procedures.

Emanuel was named to the Freddie Mac board by President Bill Clinton in 2000 and resigned his position when he ran for Congress in May, 2001.

Freddie Mac Misrepresented Income, Says SEC

During the years 2000, 2001 and 2002, according to the SEC, Freddie Mac substantially misrepresented its income to "present investors with the image of a company that would continue to generate predictable and growing earnings."

The role of the 18-member board of directors, including Emanuel, was not addressed in the SEC's public action but was heavily criticized by the oversight group (OFHEO) in 2003.

The oversight report said the board had been apprised of the suspect accounting tactics but "failed to make reasonable inquiries of management."

The report also said board members appointed by the President, such as Emanuel, serve terms that are far too short "for them to play a meaningful role on the Board."

As a Congressman, Emanuel recused himself from any votes dealing with Freddie Mac until just this year.

In dealing with the nation's economic crisis, the new White House chief of staff will almost certainly be involved in discussions about the house and mortgage markets.

Emanuel's spokesperson said, "As White House chief of staff he will work with President-elect Obama and his economic advisers to help ensure we protect taxpayers and homeowners."

Franklin Raines, who served as President Clinton's budget director, argues in court documents that the Bush administration felt the government-chartered agency wielded too much power in the mortgage industry. His attorneys say the White House pushed regulators to weaken Fannie Mae and triggered a $6 billion accounting scandal.

Raines subpoenaed the White House for documents in July. Justice Department lawyers will go before a federal judge Thursday to fight it.

Relying primarily on articles by financial journalists and the testimony of industry analysts, Raines describes in court documents an unofficial task force dubbed "Noriega" that was formed to weaken Fannie Mae and drive down its stock price.

Fannie Mae is the largest U.S. buyer and backer of home loans. It was created by Congress but is publicly traded. Raines says the Bush administration wanted to undermine confidence in the agency so it could push for tighter government controls.

like he hurts. It makes me uncomfortable to watch. Obama has a significantly larger amt of data in his mind (constitutional law professor, etc) to sort through, gather, and assemble before he responds to a question. It is to his favor that he does not immediately yelp out an answer like a trained seal.

Following his loss to George W. Bush in the 2000 South Carolina primary, John McCain did something extraordinary: He confessed to lying about how he felt about the Confederate battle flag, which he actually abhorred. "I broke my promise to always tell the truth," McCain said. Now he has broken that promise so completely that the John McCain of old is unrecognizable. He has become the sort of politician he once despised.

The precise moment of McCain's abasement came, would you believe, not at some news conference or on one of the Sunday shows but on "The View," the daytime TV show created by Barbara Walters. Last week, one of the co-hosts, Joy Behar, took McCain to task for some of the ads his campaign has been running. One deliberately mischaracterized what Barack Obama had said about putting lipstick on a pig -- an Americanism that McCain himself has used. The other asserted that Obama supported teaching sex education to kindergarteners.

"We know that those two ads are untrue," Behar said. "They are lies."

Freeze. Close in on McCain. This was the moment. He has largely been avoiding the press. The Straight Talk Express is now just a brand, an ad slogan like "Home Cooking" or "We Will Not Be Undersold." Until then, it was possible for McCain to say that he had not really known about the ads, that the formulation "I approve this message" was just boilerplate. But he didn't.

"Actually, they are not lies," he said.

Actually, they are.

McCain has turned ugly. His dishonesty would be unacceptable in any politician, but McCain has always set his own bar higher than most. He has contempt for most of his colleagues for that very reason: They lie. He tells the truth. He internalizes the code of the McCains -- his grandfather, his father: both admirals of the shining sea. He serves his country differently, that's all -- but just as honorably. No more, though.

I am one of the journalists accused over the years of being in the tank for McCain. Guilty. Those doing the accusing usually attributed my feelings to McCain being accessible. This is the journalist-as-puppy school of thought: Give us a treat, and we will leap into a politician's lap.

Not so. What impressed me most about McCain was the effect he had on his audiences, particularly young people. When he talked about service to a cause greater than oneself, he struck a chord. He expressed his message in words, but he packaged it in the McCain story -- that man, beaten to a pulp, who chose honor over freedom. This had nothing to do with access. It had to do with integrity.

McCain has soiled all that. His opportunistic and irresponsible choice of Sarah Palin as his political heir -- the person in whose hands he would leave the country -- is a form of personal treason, a betrayal of all he once stood for. Palin, no matter what her other attributes, is shockingly unprepared to become president. McCain knows that. He means to win, which is all right; he means to win at all costs, which is not.

At a forum last week at Columbia University, McCain said, "But right now we have to restore trust and confidence in government." This was always the promise of John McCain, the single best reason to vote for him. America has been cheated on too many times -- the lies of Vietnam and Watergate and Iraq. So many lies. Who believes that in Afghanistan last month, only five civilians were killed by the American military in an airstrike, instead of the approximately 90 claimed by the Afghan government? Not me. I first gave up on the military during Vietnam and then again when it covered up the death of Pat Tillman, the Army Ranger and former NFL player who was killed in 2004 by friendly fire.

McCain was going to fix all that. He was going to look the American people in the eyes and say, not me. I will not lie to you. I am John McCain, son and grandson of admirals. I tell the truth.

But Joy Behar knew better. And so McCain lied about his lying and maybe thinks that if he wins the election, he can -- as he did in South Carolina -- renounce who he was and what he did and resume his old persona. It won't work. Karl Marx got one thing right -- what he said about history repeating itself. Once is tragedy, a second time is farce. John McCain is both.

cohenr@washpost.com

Bush systematically deregulating (savings and loans - Keating 5) and wall street so that the souless corporations can do whatever they want without any limits. they have removed the safety factors built into the system after the great depression. Well, now we have the situation that deregulation brings. As Romney said at this years' repub convention - McCain is going to go at all the regulations on industry with a weed wacker.

Oh and saw on the news that this bailout will affect even the people who do live within their means because it means that the Jones' house that gets foreclosed on will reduce the amount my house is worth and therefore I lose too! Something needs to be done and quick!

It is not fair to simply point out Obama's plans when you do not mention McCain's either. What are McCain's plans? All he seems to do is "knock" Obama. Oh better consider what Palin has to say too, you know McCain is getting no younger or any healthier for that matter.

McCain and Fannie and Freddie

Emanuel Was Director Of Freddie Mac During Scandal

New Obama Chief of Staff, Others on Board, Missed "Red Flags" of Alleged Fraud Scheme

Freddie Mac Misrepresented Income, Says SEC

The Ugly New McCain