Tag Archives: Freddie Mac

Fannie and Freddie – Shook the Economy as Feared!

Just how did the American economy get shaken at the roots.

According to the U.S. Speaker of the House, Democrat Nancy Pelosi, it was caused by “Eight years of weakened regulation of our nation’s financial system — including a failure to regulate risky, and often predatory, lending practices — by the Bush administration and Republicans in Congress have led us to this point, and could further erode our nation’s economic health.”

Senate Majority Leader, Democrat Harry Reid said, “What we are seeing on Wall Street is the legacy of the Bush-McCain economic policies that have failed this nation.”

(WHISTLE BLOWS! REFEREE TOSSES BULLSHIT FLAG ONTO THE FIELD!) Watch the replay tapes!

Democrats probably won’t believe the Fox News report. At this point, they probably won’t believe the New York Times, USA Today, the Boston Globe, or any other prominent U.S. news sources from across the United States. But history has been written, and the reality of how America got to the current economic crisis is a matter of record, and that record clearly shows that the culprits were democrats.

The articles below are a small sample of the thousands of articles published between 2002 to 2006. And in each of them, democrats fought to prevent stricter regulation/financial accountability of Fannie Mae and Freddie Mac.

In 2002, the following information was reported by the New York Times.

“Proposals on Mortgage Agencies”
Published: May 30, 2002

The Bush administration is urging new rules to require Fannie Mae and Freddie Mac, the government-sponsored companies that are the largest purchasers of home mortgages, to make financial disclosures similar to those of other publicly traded companies. (Read the full story)”

Another New York Times article in 2003 indicated the Bush administration sought “significant regulatory overhaul”, while Democrats Barney Frank and Melvin L. Watt disagreed with the president and said, “Fannie Mae and Freddie Mac — are not facing any kind of financial crisis…”

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By STEPHEN LABATON
Published: September 11, 2003

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.

”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.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

In 2005, USA Today reported:

Fannie Mae regulator says more problems could be found
Published: April 26, 2005

At a hearing in October by a House panel, after Fannie Mae’s accounting woes came to light, Democratic lawmakers still staunchly defended the two companies against Republican attempts at tighter government regulation and turned their criticism against Falcon, who testified.

“This hearing is about the political lynching of Frank Raines,” declared Rep. William Lacy Clay, D-Mo., referring to former Fannie Mae chief executive Franklin Raines. Raines and chief financial officer Timothy Howard were ousted by the company’s board in December.

In the interview, Falcon recalled several years of political struggle.

“It’s not easy to get up in front of a congressional committee and have them accuse you of everything from having improper motives to poor judgment to being poorly qualified,” Falcon said. “It was difficult at times, having to deal with all that, especially from people who I’d worked with over the years.”

The people, notably Democratic lawmakers who benefited from housing investments by Fannie Mae and Freddie Mac in their districts, became Falcon’s harshest critics.

Now there is a drive in Congress, endorsed by the [Bush] administration, to tighten the government’s hand over Fannie Mae and Freddie Mac and create a new regulator with broader powers, including reducing their combined $1.5 trillion mortgage portfolios.

On December 27, 2004, Realty Times Kenneth R. Harney wrote:

Fannie Mae’s Tough Times Likely To Continue In 2005

Published: December 27, 2004
Fannie’s year ahead on Capitol Hill looks grim. The Bush administration, along with Federal Reserve chairman Allan Greenspan, have long been critics of Fannie’s government-subsidized growth and high profits. Critics also have worried that a financial crisis at Fannie, with nearly $1 trillion at stake, could trigger seismic repercussions in the banking, housing and international capital markets.

By early Spring 2005, according to the House banking committee, legislation should be well underway to create a new, more powerful oversight agency for Fannie, Freddie Mac and the Federal Home Loan Banks.

Whereas as late as this past October Fannie had passionate defenders among House and Senate Democrats — plus a handful of Republicans — those ranks were sharply depleted after the SEC found Fannie’s hedge accounting noncompliant with federal rules. Democrats, especially ranking House banking committee minority member Rep. Barney Frank (D-Mass.), had helped stymie the Bush administration’s efforts to create a new regulator for over a year, arguing that Fannie’s housing mission could be compromised by too many restrictions.

On December 4, 2006, the Boston Globe reported:

US Rep. Frank seeks to broaden mortgage program.

Byline: Susan Milligan

Dec. 4–WASHINGTON — Democrats plan to use their new majority status in Congress to expand the mortgage market for tens of thousands of home buyers in Massachusetts and other states where high housing prices are limiting use of federally regulated mortgage programs, according to Capitol Hill lawmakers.

Representative Barney Frank, a Newton Democrat set to become the chairman of the House Financial Services Committee in January, said he will aggressively push legislation to ease current restrictions on the amount of a mortgage that can be held by Fannie Mae and Freddie Mac, two private mortgage companies chartered by the federal government.


Democrats Blocked Efforts to Regulate Fannie and Freddie in 2004

Watch this! It shows there is no doubt that Democrats blocked efforts for oversight and regulation of Fannie Mae and Freddie Mac in 2004.


Fannie Mae and Freddie Mac – The Facts

First of all, it’s important to understand that Fannie and Freddie were originally created by the U.S. Congress to purchase home mortgages from banks, which would free up money for banking institutions to offer more loans to prospective homeowners.

The political blame game for Fannie Mae and Freddie Mac has begun in Washington, D.C. This post is an attempt to provide verifiable facts about both of the failed companies from national news sources. If you have additional facts about Freddie and Fannie, please submit the information in the comment form, along with active links to a verifiable national level news source.

The video below offers insight into some of the political ties of Fannie and Freddie. More will be available as they are found.

What are Fannie Mae and Freddie Mac?

1938 – Fannie Mae established by Congress. “Fannie Mae, the largest nonbanking financial institution in the world, plays a pivotal role in the nation’s housing markets. It was established by Congress and President Franklin D. Roosevelt during the Depression and was a unit of the federal government until 1968, when it became a publicly traded company on the New York Stock Exchange.” [1]

1970 – Freddie Mac established by Congress. “The Federal National Mortgage Association (Fannie) and the Federal Home Loan Mortgage Corp. (Freddie) have always been unique institutions. They are publicly held, for-profit corporations that were legislated into existence by Congress and operate with a congressional charter to help lower- and middle-income Americans buy homes. (They are often referred to as government-sponsored enterprises, or GSEs.) Fannie was founded in 1938 as a federal agency and became a for-profit company in 1968. Freddie, started in 1970, offered shares to the public in 1989.” [2]

Who’s been running Fannie Mae? The answer is Democrats.

The CEO of Fannie Mae from 1991 to 1998 was James A. Johnson, who once served as a senior aide to  Democrat Senator Mondale, executive assistant to Vice President Mondale, and chairman of Mondale’s presidential campaign. Prior to that, the Minnesota Post reported that “Johnson worked on the campaigns of Gene McCarthy and George McGovern. More recently, Jim Johnson was selected to vet VP candidates for democratic vice presidential nominees John Kerry and Barack Obama.

Who was the vice chairman, or second in command of Fannie Mae from 1991 to 1996? Franklin Delano Raines, who was appointed as the Clinton Administrations Director of the Office of Management and Budget from 1996 until 1998. When Jim Johnson retired from Fannie Mae in 1998, Franklin Delano Raines was appointed as CEO by Clinton and headed Fannie from 1999-2004. Additionally, Clinton’s Deputy Attorney General, Jamie Gorelick, left her post in the Justice Department in 1997 and was immediately
appointed as Vice Chairman of Fannie Mae, where she served from 1997 to 2003.

Franklin Delano Raines served as Fannie Mae CEO until he was forced out for accounting rules violations on December 21, 2004. Mr. Raines also played a major role during the Carter Administration as Associate Director for Economics and Government in the Office of Management and Budget and Assistant Director of the White House Domestic Policy Staff from 1977 to 1979;

In 2006, the Office of Federal Housing Enterprise Oversight (OFHEO) announced a suit against Raines in order to recover some or all of the $90 million in payments made to Raines based on overstated earnings initially estimated to be $9 billion but have been announced as 6.3 billion. The following quote from the Acting Director of OFHEO, Mr. James B. Lockhart III, was submitted as testimony to the U.S. Senate Committee on Banking, Housing, and Urban Affairs Special on June 15, 2006.

Fannie Mae’s management directed employees to manipulate accounting and earnings to trigger maximum bonuses for senior executives from 1998 to 2003. The image of Fannie Mae as one of the lowest-risk and ‘best in class’ institutions was a façade. The examination found an environment where the ends justified the means.

Senior Fannie Mae executives were precisely managing earnings per share (EPS) to the one-hundredth of a penny to maximize their bonuses while neglecting investments in systems, internal controls and risk management. The combination of earnings manipulation, mismanagement and unconstrained growth resulted in an estimated $10.6 billion of overstated profits, well over a billion dollars in expenses to fix the problems, and ill-gotten bonuses in the hundreds of millions of dollars. Senior executives were flat-out wrong, or, to use the proper regulatory phrase, were managing Fannie Mae in an “unsafe and unsound” manner. Senior management manipulated accounting; reaped maximum, undeserved bonuses; and prevented the rest of the world from knowing about it. They co-opted their internal auditors and other managers. They stonewalled OFHEO.

By the way, Jeff Skillings was sentenced to 24 years in jail for his role in Enron. Who’s going to be his cell mates from Fannie and Freddie?

CEO of Freddie Mac, Leland Brendsel

I haven’t found any national news sources that state Freddie Mac CEO Leland Brendsel’s political affiliation, however based on his 2002 political contributions, it appears he’s a little partial to Democrats. The following data was obtained from http://www.campaignmoney.com/political/contributions/leland-brendsel.asp?cycle=02

Leland Brendsel Contribution List in 2002

Name & Location Employer/Occupation Dollar
Amount
Date Primary/
General
Contibuted To
BRENDSEL, LELAND
MACLEAN, VA
22102
FREDDIE MAC $1,000 07/23/2002 G FRIENDS OF DICK DURBIN COMMITTEE – Democrat
Brendsel, Leland Mr.
MCLEAN, VA
22102
Freddie Mac/CEO $2,500 07/12/2002 G FEDERAL VICTORY FUND
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 06/30/2002 G FRIENDS OF SENATOR ROCKEFELLER – Democrat
BRENDSEL, LELAND
MCLEAN, VA
22102
FREDDIE MAE $1,000 06/30/2002 G REED COMMITTEE – Democrat
Brendsel, Leland
MCLEAN, VA
22102
Freddie Mac/C.E.O. $2,000 06/28/2002 P LONE STAR FUND
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 06/28/2002 G TIM JOHNSON FOR SOUTH DAKOTA INC – Democrat
Brendsel, Leland
MCCLEAN, VA
22102
Freddie-Mae/CEO $1,000 06/28/2002 P MALONEY FOR CONGRESS – Democrat
Brendsel, Leland
MC LEAN, VA
22102
Freddie Mac/Chairman & CEO $1,000 06/20/2002 P DEDICATED AMERICANS FOR THE SENATE AND THE HOUSE PAC(DASHPAC)
Brendsel, Leland
MC LEAN, VA
22102
FreddieMac/Chief Executive Officer $1,000 01/30/2002 P DEFEND AMERICA PAC
Brendsel, Leland
MCLEAN, VA
22102
Freddie Mac/CEO $1,000 01/03/2002 P FRIENDS OF JOHN LAFALCE – Democrat
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 12/31/2001 G WAYNE ALLARD FOR UNITED STATES SENATE COMMITTEE – Republican
Brendsel, Leland
MCLEAN, VA
22102
Freddie Mac/Chairman & CEO $1,000 12/31/2001 G PENNSYLVANIANS FOR KANJORSKI – Democrat
BRENDSEL, LELAND
MCLEAN, VA
22102
FREDDIE MAC $1,000 12/31/2001 P PEOPLE FOR PATTY MURRAY U S SENATE CAMPAIGN – Democrat
Brendsel, Leland
WASHINGTON, DC
20004
Freddie Mac/CEO $1,000 11/20/2001 G FRIENDS OF RAHM EMANUEL – Democrat
Brendsel, Leland
WASHINGTON, DC
20004
Freddie Mac/CEO $1,000 09/04/2001 P FRIENDS OF RAHM EMANUEL – Democrat
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 08/02/2001 P FRIENDS OF SENATOR ROCKEFELLER – Democrat
BRENDSEL, LELAND
MCLEAN, VA
22102
FREDDIE MAE $1,000 06/30/2001 P REED COMMITTEE – Democrat
BRENDSEL, LELAND
MCLEAN, VA
22102
FREEMACK TOOLS $1,000 06/29/2001 P ENZI FOR US SENATE – Republican
Brendsel, Leland
MCLEAN, VA
22102
Freddie Mac/CEO $500 06/26/2001 P CITIZENS FOR MARK SHRIVER – Democrat
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 06/22/2001 P TIM JOHNSON FOR SOUTH DAKOTA INC – Democrat
Brendsel, Leland Mr.
MC LEAN, VA
22102
Fredddi Mac/Chairman & CEO $1,000 06/05/2001 P KEN BENTSEN FOR CONGRESS COMMITTEE – Democrat
Brendsel, Leland
MCLEAN, VA
22102
Freddie Mac $1,000 05/29/2001 P PENNSYLVANIANS FOR KANJORSKI – Democrat
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 05/29/2001 P WAYNE ALLARD FOR UNITED STATES SENATE COMMITTEE – Republican
Brendsel, Leland Mr.
MCLEAN, VA
22102
Freddie Mac/CEO $2,500 05/24/2001 P FEDERAL VICTORY FUND
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 05/23/2001 G FRIENDS OF CHRIS DODD 2004 – Democrat
BRENDSEL, LELAND
MC LEAN, VA
22102
FREDDIE MAC $1,000 05/23/2001 P FRIENDS OF CHRIS DODD 2004 – Democrat
Brendsel, Leland
MC LEAN, VA
22102
Freddie Mac/CEO $1,000 05/10/2001 P RE-ELECT HAROLD FORD JR – Democrat

—–ROUGH OUTLINE OF CURRENT SOURCES————————
References

1. Labaton, Stephen (Dec 22, 2004), ““Chief Is Ousted at Fannie Mae Under Pressure”, New York Times. Retrieved from http://www.nytimes.com/2004/12/22/business/22fannie.html on 9/26/2008.

2. McClean, Bethany (Jan. 24, 2005), “The Fall of Fannie Mae”, Fortune Magazine. Retrieved from http://money.cnn.com/magazines/fortune/fortune_archive/2005/01/24/8234040/index.htm on 9/26/2008.

3. Peterson, James R. (Mar. 1, 2000), Leleand Brendsel: “The tide is turning toward the small lender”, ABA Banking Journal. Retrieved from http://www.allbusiness.com/aba-banking-journal/41389-1.html on 9/26/2008.

4. Whitaker, Charles (April 2001), Franklin Raines: First Black Head of a Fortune 500 Corporation — Fannie Mae, Ebony (April 2001).


4.84 Million to U.S. Lawmakers from Freddie Mac and Fannie Mae

Would you believe that 209 democrats, 143 Republicans, and 2 Independents received 4.84 million dollars in political donations from Freddie Mac and Fannie Mae? It’s no wonder the government decided to bail out the failing institutions with American taxpayer bucks.

Now, can you guess which politicians hit the jackpot with campaign contributions from Freddie and Fannie. Drum roll please. At the top of the list is Senator Richard J. Dodd, a Democrat from Connecticut, followed by the JUNIOR Democrat Senator Barack Obama from Illinois, and the 2004 Democratic presidential candidate, Senator John F. Kerry from Massachusetts. Put your money where your mouths are gents and swallow hard, but you can’t hide the cash connections from America.

Special kudos to Senator Obama, who with a few years in politics just missed the top rung of Freddie’s and Fannie’s financial ladder, but finished far ahead of politicians with 20 and 30 years in the House and Senate.

Senator McCain and Senator Biden also received political contributions from Freddie and Fannie. So, congratulations to Governor Sarah Palin. She is the only one out of the 4 politicians in the current presidential race who hasn’t received a penny from Freddie Mac and Fannie Mae.

Did your senator or congressman receive political contributions from Fannie Mae and Freddie Mac? To find out visit the Center for Responsive Politics.