Barney Frank and Chuck Schumer’s Role in the Fannie Mae Failure!

[IEATV8S]

One month from tomorrow, U.S. Rep. Barney Frank, D-Mass., will be the keynote speaker at the New Hampshire Democratic Party’s annual Jefferson-Jackson dinner. It is a coveted and high-profile role previously filled by such notables as Hillary Clinton and Al Gore. The Democrats’ choice of House Financial Services Committee Chairman Barney Frank is, therefore, very revealing.

The party announced Frank as the keynote speaker on Sept. 11 — three days after the U.S. government took control of Fannie Mae and Freddie Mac, costing taxpayers untold billions. That takeover probably could have been prevented had Frank not worked to thwart every attempt to limit the risks taken on by the two government-sponsored mortgage giants.

For 16 years reformers in Congress have tried to improve oversight of Fannie Mae and Freddie Mac and prevent the government-chartered companies from putting the housing market and the whole economy at risk. All that time, Frank was involved in efforts to block those attempts, and in the last eight years he was a leader of those efforts.

In 2002, shortly before accounting irregularities were exposed at both companies, Frank said, “I do not regard Fannie Mae and Freddie Mac as problems,” The Wall Street Journal reported. After the Freddie Mac accounting scandal in 2003, Frank said, “I do not think we are facing any kind of a crisis.”

But there was a crisis, thanks in large part to Frank, Sen. Charles Schumer and others on the leash of these companies. In Congress, they made sure there was no additional oversight, no additional limit on executive behavior and compensation, and no further restraint on the growth of the companies’ mortgage-backed-securities portfolios, among other changes.

(All of these needed reforms, by the way, have been championed for years by Sen. John Sununu.)

In fact, Frank & Co. made matters worse by pushing Fannie Mae and Freddie Mac to take on greater risk. They wanted more loans to people who might not qualify for traditional bank financing. And, as The Wall Street Journal has pointed out, Frank “pressured regulators to ease up on their capital requirements — which now means taxpayers will have to make up that capital shortfall.”

Even now, after the government took the companies over (which Frank repeatedly said over the years was not a possibility), Frank opposes limits on the amount of money they can risk on mortgage backed securities — the one reform that might have done the most to prevent the current meltdown and probably would do the most to keep it from happening again.

Barney Frank is the very symbol of Washington’s deliberate refusal to prevent the collapse — the predicted collapse — of Fannie Mae and Freddie Mac. And this is the guy the New Hampshire Democratic Party showcases at its most prestigious annual event. That ought to tell you a lot right there.

Besides their total ignorance about the troubles that Fannie Mae and Freddie Mac were headed towards is the fact that these two men, and other Democrats, helped to make the problem worse.

In fact, Frank & Co. made matters worse by pushing Fannie Mae and Freddie Mac to take on greater risk. They wanted more loans to people who might not qualify for traditional bank financing. And, as The Wall Street Journal has pointed out, Frank “pressured regulators to ease up on their capital requirements

These companies were forced to loan money to people who couldn’t afford it in the interest of “being fair.” Rules were relaxed and money was loaned and predictably low income families defaulted on loans that they never had any business getting in the first place and now you and I have to pay for it.

Another liberal policy and another liberal failure. And now we must all pay for it. But hell, they meant well.



Barney Frank and Chuck Schumer’s Role in the Fannie Mae Failure « Wake Up America

[Weester]

The presidential campaigns went after each other’s economic advisers this week — and they’re both right in claiming that the other camp deserves a share of the blame.

John McCain and Barack Obama are each taking advice from people who created, passed and implemented the laws that paved the way to the market meltdown.

Democrats point to two Republican-backed bills — the Gramm-Leach-Bliley Act, passed in1999, and the Commodities Futures Modernization Act, passed in 2000 — that broke down the firewalls between Wall Street and commercial banks and banned regulation of credit default swaps, an insurance-like product bought by financial services companies to cover their risky subprime mortgage investments. American International Group, rescued by the Federal Reserve on Tuesday, is one of the biggest sellers of these swaps.

“You can’t erase 26 years of support for the very policies and people who helped bring on this disaster with one week of rants,” said Obama, slamming McCain at a Thursday rally in Espanola, N.M. “What we’ve seen the last few days is nothing less than the final verdict on an economic philosophy that has completely failed.”

McCain has taken economic advice from his longtime political friend, former Texas Sen. Phil Gramm, who left his role as co-chairman of McCain's campaign after he called Americans a “nation of whiners” in a “mental recession.” McCain aides say he is no longer officially advising the campaign.

An avowed deregulator, Gramm sponsored and shepherded the 1999 bill to passage.

“I am proud to be here because this is an important bill. It is a deregulatory bill,” Gramm said at the bill signing. “I believe that that is the wave of the future.”

According to regulators involved in the process, Gramm buried the swaps measure in an 11,000-page omnibus spending bill.

“There are plenty of other people’s fingerprints on it, but as I read the legislative record without [Gramm’s] support the CFMA would have never happened,” said Michael Greenberger, who directed the Commodity Futures Trading Commission's division of trading and markets in the late 1990s. “It was a very nontransparent legislative process, and Gramm was part of that maneuvering effort.”

Also on McCain’s economic team is John Thain, the chief executive of Merrill Lynch who engineered the sale of the firm to Bank of America this week, and Harvard professor Martin Feldstein, an AIG board member.

Several Obama advisers played a role in securing the passage of both bills.

Former Iowa Republican Rep. Jim Leach was another sponsor of the 1999 legislation. Leach co-founded Republicans for Obama and spoke at the Democratic National Convention last month in support of the Illinois senator.

Leach defended his bill in an e-mail sent to Politico, pointing out that the Gramm-Leach-Bliley measure also allowed commercial banks to rescue troubled investment banks this week.

“[Without the law] the taxpayer would either be more on the hook or American assets would find themselves in non-American hands,” wrote Leach. "The issue is principally bad judgment rather than the right to compete. Legislation did not dupe Wall Street.”

Former Clinton Treasury Secretaries Robert Rubin and Lawrence Summers, both Obama advisers, supported and helped negotiate the bill. At the November 1999 signing of the legislation, Summers praised it as “a major step forward to the 21st century.”

Summers also submitted a letter to Congress backing the swaps bill, Greenberger said.

The McCain campaign argues that inaction is more to blame for the country’s current economic woes. For over a decade, Congress ignored calls to increase scrutiny of Fannie Mae and Freddie Mac. Last week, the government seized control over the two mortgage giants in hopes of strengthening the U.S. housing market.

McCain is slamming Obama for his connections to the two companies.

“When I pushed legislation to reform Fannie Mae and Freddie Mac, Senator Obama was silent,” McCain said Thursday in Cedar Rapids, Iowa. “While the leaders of Fannie and Freddie were lining the pockets of his campaign, they were sowing the seeds of their financial crisis.”

On the campaign trail, McCain argues that he called for reform of the mortgage giants, while Obama stayed silent. McCain’s opposition, however, came years after critics first called for heightened scrutiny and followed a highly publicized 27-month investigation of Fannie Mae that resulted in the company's paying a $400 million fine for manipulating earnings.

Even if McCain had succeeded in strengthening oversight, it might not have prevented the subprime crisis. The oversight effort focused on executive earnings and accounting, not the company’s loan holdings.

The two government-sponsored companies have deep links to both campaigns.

Arthur B. Culvahouse Jr., picked by McCain to vet his vice presidential nominees, and Jim Johnson, initially picked by Obama to perform the same function, once worked for the mortgage giants. Johnson stepped down early in the process after controversy surfaced over his tenure.

Obama collected the second-highest amount in donations from the firms’ employees and political action committees of any member in Congress.

McCain campaign manager Rick Davis served as president of an advocacy group led by Fannie Mae and Freddie Mac that defended the two companies against increased regulation.

And least 20 McCain fundraisers have lobbied on behalf of Fannie Mae and Freddie Mac, netting at least $12.3 million in fees over the past nine years.

This summer, Democrats pushed through housing legislation that created stronger regulation and provided temporary authority for the Treasury to lend a financial hand to the government-chartered mortgage companies, if needed.

President Bush threatened to veto the legislation, but dropped his objection after a meeting with Treasury Secretary Henry Paulson. Six weeks later, the government seized control of the two companies and, soon after, developed a massive government intervention to buy up hundreds of billions in troubled assets throughout the marketplace.

[IEATV8S]

Barney Frank as the LEADER of the Democrats in Committee OPOSING legislation for Fannie and Freddie in 2005..............

"“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.""

Care to SPIN this for us??????

[Weester]

The Gramm-Leach-Bliley Act, passed in 1999, and the Commodities Futures Modernization Act, passed in 2000 — that broke down the firewalls between Wall Street and commercial banks and banned regulation of credit default swaps, an insurance-like product bought by financial services companies to cover their risky subprime mortgage investments. American International Group, rescued by the Federal Reserve on Tuesday, is one of the biggest sellers of these swaps.

[UNGN]

Originally Posted by Weester

The Gramm-Leach-Bliley Act, passed in 1999, and the Commodities Futures Modernization Act, passed in 2000 — that broke down the firewalls between Wall Street and commercial banks and banned regulation of credit default swaps, an insurance-like product bought by financial services companies to cover their risky subprime mortgage investments. American International Group, rescued by the Federal Reserve on Tuesday, is one of the biggest sellers of these swaps.

The Root cause of the problem was the "risky subprime mortgage investments" in the first place.

Well, at least According to this 1999 article in the New York Times

When you get rear ended by someone with no insurance, its not the guy who sold you the insurances fault.

[Pronto]

No, the root cause of all the issues is plain ole GREED. It's not a sin to make money unless it's done by fraud and cheating and disregard for people's money that is under their care.

[Weester]

Originally Posted by Pronto

No, the root cause of all the issues is plain ole GREED. It's not a sin to make money unless it's done by fraud and cheating and disregard for people's money that is under their care.

yup and deregulation is a license to steal......................

[IEATV8S]

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