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Archive for the ‘Fannie Mae Freddie Mac Bailout’ Category

Barney Frank Proposes New Bank Resolution Authority

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After years of Fed policies which allowed mergers of massive banks to form the very mega-banks which have now failed, Barney Frank, after his years of rebuking repeated efforts by Republicans to reform the system, is only now rising up to look the hero.

On October 27, 2009, House Financial Services Chairman Barney Frank (D-Mass.) released the latest version of the most complex piece of the financial reform puzzle: solving the “too big to fail” problem by giving the federal government more powers to wind down major financial firms.

barney-frank-pointing

Barney Frank blamed others for the mortgage industry meltdown while literally in bed with Fannie Mae.

Frank’s bill seeks to avoid the kinds of massive taxpayer bailouts that characterized last year’s financial crisis by empowering the federal government to wind down any financial firm, no matter how large, complex or interconnected.

“We’re going to have death panels. But they’re going to have death panels that are going to put to death these institutions before they can cause us problems, not old people,” — Frank said in a CNN interview Tuesday.

Back in 2003, House Ways and Means Committee Chairman Frank led the government charge that helped create the GSE meltdown (time line here). He made this now infamous quote about new terms to lower lending standards of Fannie Mae and Freddie Mac

I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.

Under Frank’s new (I’ve found God) vision, shareholders and unsecured creditors would have to pay for the failure, not taxpayers, according to a summary of the bill. The legislation would require resolution costs to come first from the failed firm’s assets “at the expense of shareholders and creditors,” with any additional cost to be paid from an after-the-fact assessment on the remaining large financial firms.

But as we all know, except for perhaps Frank, the costs of these penalties will ultimately be passed on to the consumer in the form of bank processing and administration fees.

Frank’s proposal reeks of a “let the bank fail and allow the market to absorb the consequences” tactic which the Feds dismissed earlier in the crisis, preferring to instead follow their “too big to fail” philosophies.

The bill’s proposal for an oversight council to act as the so-called “systemic risk regulator” to keep an eye on the overall health of the financial industry also sounds suspiciously like Bush’s proposals first advanced in 2001. The council would be directed to identify risky firms and financial activities, and have the power to slap tougher rules and standards on those firms.

Frank said Tuesday morning on CNN that the systemic risk council would also have the power to break up a company “if its too big.”

Frank’s use of the term “systemic risk” mirrors comments made in April 2005 when Secretary of the Treasury John Snow repeatedly called for GSE reform, saying

“Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system.”

Then house Minority Leader Harry Reid rejected the legislation saying ” we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process.”

Frank’s proposed Council and Fed Board would be banned from publicly releasing a list of “systemically significant” institutions – a major concern in the industry which fears that those singled out would be penalized by the market.

If these institutions were to be publicly singled out, it might have positive results on the market as banks would have a built-in incentive to engage in policies which minimize risk to themselves.

Written by Ben

November 3, 2009 at 12:12 pm

The famous meltdown began in what!!? 1977??

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Let the meltdown begin

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining. The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation. To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions.

Where did this bill get started?

The CRA was passed as a result of national pressure to address the deteriorating conditions of American cities particularly lower-income and minority neighborhoods. Community activists, such as Gale Cincotta of National People’s Action in Chicago, had led the national fight to pass, and later to enforce the Act.

Hmmm… community activist. Rings a faint bell.

And who signed this beautiful piece of legislation into law?

The original Act was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977.

A democrat. Who woulda thunk?

…and the effects?

Some economists, politicians and other commentators have charged that the CRA contributed in part to the 2008 financial crisis by encouraging banks to make unsafe loans. Others however, including the economists from the Federal Reserve and the FDIC, dispute this contention. The Federal Reserve and the FDIC holds that empirical research has not validated any relationship between the CRA and the 2008 financial crisis.

You can read the time line of events here.

Written by Ben

June 27, 2009 at 11:06 am

Barney Frank is at it again!

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Fannie, Freddie asked to relax condo loan rules

In a letter to the CEO’s of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold “may be too onerous” and could lead condo buyers to shun new developments, according to the paper.

The legislators asked the companies to “make appropriate adjustments” to their underwriting standards for condos.

You can read the whole article as it appears in Reuters here.

What does it take?

What in this world does it take to get this fool out of office? Someone, please, please tell me. Can the collective in Massachusetts be that stupid to believe Barney Frank has acted in their best interest as well as the interest of America? If they would only pull their heads out of their collective butts, maybe the voters in Massachusetts will do the right thing in 2010 and vote this piece of garbage out of office.

Are ya listening Massachusetts?

While I’m at it, someone wake up Connecticut and let them know about their fine leader, Chris Dodd.

Written by Ben

June 27, 2009 at 10:05 am

Fed to pump another $1 trillion into U.S. economy

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Washington: The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed’s measures in the last year.

The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply.

The idea was to encourage more economic activity by lowering interest rates, including those on home loans, and to help the financial system as it struggles under the crushing weight of bad loans and poor investments.”

Full story here.

ED:

Treasury monetizes debt by printing 1 trillion dollars to inject into economy – effectively borrowing from itself.

Taking such a measure this drastic means the “patient” is almost dead and this “injection” is a last ditch effort to save it.

Written by Ben

March 22, 2009 at 7:38 pm

Who benefits from this meltdown?

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Since 1989, Rep. Frank has received $42,350 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, Senator Reid has received $77,000 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, Sen. Dodd has received $165,400 from Fannie Mae and Freddie Mac, more than any other Member of Congress. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, Sen. Carper has received $55,889 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

In just four years, Sen. Barack Obama (D-IL) has received $126,349 from Fannie Mae and Freddie Mac, more than any Member of Congress except for Sen. Dodd. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, Sen. John Kerry (D-MA) has received $111,000 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, Sen. Hillary Clinton (D-NY) has received $76,050 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, House Speaker Nancy Pelosi (D-CA) has received $56,250 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Since 1989, Rep. Rahm Emanuel (D-IL) has received $51,750 from Fannie Mae and Freddie Mac. (Lindsay Renick Mayer, “Fannie Mae And Freddie Mac Invest In Lawmakers,” Center For Responsive Politics’ “Capital Eye” Blog, www.opensecrets.org)

Former Fannie Mae, Freddie Mac Executives Ignored Warnings

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(AP – Tuesday, December 09, 2008)

WASHINGTON–Top executives at mortgage finance companies Fannie Mae and Freddie Mac ignored warnings that they were taking on too many risky loans long before the housing market plunged, according to documents released Tuesday by a House committee.

E-mails and other internal documents released by the House Oversight and Government Reform Committee show that former Fannie CEO Daniel Mudd and former Freddie Mac CEO Richard Syron disregarded recommendations that they stay away from riskier types of loans.

“Their own risk managers raised warning after warning about the dangers of investing heavily in the subprime and alternative mortgage market. But these warnings were ignored” by the two chief executives, said Rep. Henry Waxman, D-Calif., the committee’s chairman. “Their irresponsible decisions are now costing the taxpayers billions of dollars.”

The two companies were seized by government regulators in September. A month later, Freddie Mac asked for an injection of $13.8 billion in government aid after posting a massive quarterly loss. Fannie Mae has yet to request any government aid but has warned it may need to do so soon.

Lawmakers questioned Mudd about an internal Fannie Mae presentation from June 2005 that showed the company at a “strategic crossroads,” at which it could either delve into riskier loans or focus on more secure ones.

Questioned about the presentation, Mudd defended his company’s effort to compete against Wall Street banks that were pouring money into subprime and other exotic loans.

“We couldn’t afford to make the bet that the changes were not going to be permanent,” Mudd said.

Mudd and three other former executives of the two companies defended their stewardship in a hearing held by the House committee.

“It’s important to remember that Freddie and its sister institution, Fannie Mae, did not create the subprime market,” said Richard Syron, Freddie Mac’s former CEO.

But Rep. Darrell Issa, R. Calif., blasted Syron and Mudd, along with former Fannie Mae CEO Franklin Raines, and former Freddie Mac CEO Leland Brendsel.

“All four of you seem to be in complete denial that Freddie and Fannie are in any way responsible for this. Your whole excuse for going to risky and unreasonable loans that are defaulting at an incredibly high rate is that everyone is doing it. If we don’t do it, we’ll be left out.”

Fannie and Freddie own or guarantee around half the $11.5 trillion in U.S. outstanding home loan debt. The two companies are the engines behind a complex process of buying, bundling and selling mortgages as investments.

They traditionally backed the safest loans, 30-year fixed rate mortgages that required a down payment of at least 20 percent. But in recent years, they lowered their standards, matching a decline fueled by Wall Street banks that backed the now-defunct subprime lending industry.

Republicans blame Fannie and Freddie, and homeownership policies of the Clinton administration for sowing the seeds of the financial meltdown. Democrats defend the companies’ role in encouraging homeownership and stress that Wall Street banks — not Fannie and Freddie — led the dramatic decline in lending standards.

For years the two companies flexed their lobbying muscle in Washington to thwart efforts to impose tighter regulation.

Internal Freddie Mac budget records obtained by The Associated Press show $11.7 million was paid to 52 outside lobbyists and consultants in 2006. Power brokers such as former House Speaker Newt Gingrich and former Sen. Alfonse D’Amato of New York were recruited with six-figure contracts.

The more difficult questions, however, will come next year, when lawmakers weigh what role, if any, the two companies play should play in the mortgage market.

Options include taking the companies private, morphing them into a public utility or a federal agency, or leaving them as government-sponsored entities that have private shareholders and profits, with tougher regulations.

A watershed moment

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Clinton signs banking overhaul measure

November 12, 1999

WASHINGTON (CNN) — The biggest change in the nation’s banking system since the Great Depression became law Friday, when President Bill Clinton signed a measure overhauling federal rules governing the way financial institutions operate.

“This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation,” Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton’s sternest critics — a sign of the bipartisan support that eventually developed for the package.

Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial “supermarkets” selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years.

“The world changes, and Congress and the laws have to change with it,” said Senate Banking Committee Chairman Phil Gramm (R-Texas), who has fought for years for the overhaul. Gramm said the bill would improve banking competition and stability.

“This is a bill that is bipartisan, bicameral and tri-institutional,” said Rep. Jim Leach (R-Iowa), chairman of the House Banking and Financial Services Committee. He noted that the House, Senate and White House had worked together on the compromise that became law.

Clinton said the measure will “save consumers billions of dollars a year through enhanced competition.” He said it also would protect consumers’ rights and require banks to expand the availability of funds for community development.

At stake is an estimated $350 billion that Americans spend annually on fees and commissions for banking, brokerage and insurance services. Proponents say the legislation will save consumers some $15 billion each year, offering them greater choice and convenience and spurring competition. Consumer groups and other opponents maintain it will bring higher prices and jeopardize consumers’ financial privacy.

The overhaul measure is one of the few major pieces of bipartisan legislation to emerge from the Republican-controlled Congress this year.

Clinton’s support for the legislation comes despite warnings from Democratic critics and consumer activists that it could lead to price-gouging of consumers and the erosion of their privacy by newly formed financial conglomerates that are too big and powerful.

“The bill is anti-consumer and anti-community,” advocate Ralph Nader declared. “It will mean higher prices and fewer choices for low-, moderate- and middle-income families across the nation.”

In addition, he said, “Personal privacy will be virtually eliminated” under provisions allowing affiliated businesses of the newly merged companies to share customers’ personal financial data as they offer one-stop shopping.

And up until a few weeks ago, the Clinton Administration itself had threatened a veto of the legislation as it took various forms that raised a series of White House objections. In recent months, the administration objected most sharply to the issue of rules requiring that banks make loans in minority and low-income communities where they operate.

Gramm, an outspoken conservative who opposes the rules, last year managed to kill a similar bill that would have overhauled the community lending laws. The White House insisted that banks be required to have a strong track record in local loan-making as a condition for being allowed to expand into other financial activities.

The big breakthrough came in the wee hours of October 22 when administration officials — including Treasury Secretary Lawrence Summers — and key Republican lawmakers reached a compromise after negotiating for days behind closed doors. The White House then lifted its longstanding veto threat.

“It was sweaty, it was tense, but it had momentum,” Sen. Charles Schumer (D-New York) said of the final bargaining session. He and Sen. Christopher Dodd (D-Connecticut) whose states are home to Wall Street and the banking industry (New York) and the insurance industry (Connecticut), helped broker the agreement.

Dodd: General Motors Executive Should Resign in Exchange for Bailout

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Sen. Chris Dodd called on the CEO of General Motors to be replaced if the auto company is to receive any bailout money from the federal government.

U.S. Senate Banking Committee Chairman Chris Dodd called on a top auto executive to resign in exchange for bailout money from the federal government.

Dodd said General Motors’ chief executive officer Rick Wagoner — who has been with GM since 1977 — should be replaced if the faltering auto company is to receive any money from the government.

“I think he has to move on,” the Democratic senator said of Wagoner during an interview Sunday on CBS’ “Face the Nation.”

“If you are really going to restructure this, you’ve got to bring in a new team to do this,” he said.

Dodd also said he is hopeful Congress will pass a short-term $15 billion aid package for the automakers in the next several days. But the Connecticut Democrat says the companies should have to restructure if they want a more significant bailout from Congress next year.

He added that the companies need quick cash to avoid collapse in the next several weeks. But over the long-term, Dodd said Chrysler probably ought to merge with another company.

Dodd said Ford is the healthiest of the Big Three U.S. automakers.

—-

ED:

If Dodd’s reasoning for calling upon a top auto executive to resign his position as head of a faltering company rests on claims of mismanagement, incompetency, dereliction of duty, lack of vision, failing to accurately gauge and correct failed policies, then for the same reasons Dodd should likewise resign his position as Chairman of the Senate Banking Committee.

Dodd’s leadership and failed policies for Fannie Mae and Freddie Mac served to usher in the credit debacle tax-payers are to pay for.

In my opinion, both Dodd and Barney Frank are at the top of the pyramid and both should be the first in the long line of many Democrats (please give me a name of a Republican – an no, Bush does not count) to be removed from office.

If Dodd wants accountability from auto company leadership we should all be screaming from the mountain tops for Dodd’s and Frank’s heads.

We should show no mercy two years from now.

Why haven’t we seen heads roll?

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When working Americans act irresponsibly with their finances and fall behind on their rent/mortgage, credit card payments we have to answer to our lenders. If we cannot pay, our collateral is seized and our homes are foreclosed and we use whatever resources we have left to start over. That sounds, fair doesn’t it? Personal responsibility and accountability are the key components there.

Not so for the banks. Not so for Fannie Mae and Freddie Mac, Government Sponsored Enterprises. They appear to be operating under a different set of rules. There doesn’t seem to be accountability whatsoever. I haven’t seen a single CEO fired or a single polititian lose their seat on a single board. There’s something wrong with that.

As all of these recent events slowly unfold, we are getting conditioned to the idea that when companies act irresponsibly and wreak them as we have seen, all we have to do is to look to the national treasury for the bailout. In the case of the banking industry, there are few options. They cannot declare bankruptcy and have the world fall into a depression scenario.

But in the case of the auto industry, we seem to believe the solution to their problem is also in the national treasury They appear to believe that since the banks are getting a bailout, why not them, too.

The message we send to these industries is clear and not healthy for our economy. In the process, we are certainly well on our way to a socialist society with government owning industry.

So who do we blame? Who should we hold responsible? Who is accountable? Who should pay?

Why haven’t we seen heads roll?

The scary part about the recovery plan for the auto industry is in Nancy Pelosi’s plan; save the unions. Truth is, the unions are a large component to the problem.

I read a story at the site of a famous journal which described the efforts of one auto company demonstrating innovation and vision by designing a plan that positioned the company to offer state-of-the-art autos using an alternate energy source. The plan to build these autos would be put into effect once gas prices became high enough. The trouble was that the execs couldn’t figure out how to make money with the plan. The production costs where too high. The main problem was that before the production line even rolls, there is a $5000 to $6000 cost associated with benefits demanded by the unions.

These are the same execs who agreed to the labor union’s demands and signed the labor contract.

We’ve been at this bailout thing for a long time

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Apparently, America is so rich we don’t know what to do with it.

$11 Billion to $22 billion is spent on welfare to illegal aliens each year by state governments.
Story here

$2.2 Billion dollars a year is spent on food assistance programs such as food stamps, WIC, and free school lunches for illegal aliens.
Story here

$2.5 Billion dollars a year is spent on Medicaid for illegal aliens.
Story here

$12 Billion dollars a year is spent on primary and secondary school education for children here illegally and they cannot speak a word of English!
Story Here

$17 Billion dollars a year is spent for education for the  American-born children of illegal aliens, known as anchor babies.
Story here

$3 Million Dollars a DAY is spent to incarcerate illegal aliens.
Story here

30% percent of all Federal Prison inmates are illegal aliens.
Story here

$90 Billion Dollars a year is spent on illegal aliens for Welfare & social services by the American taxpayers.
Story here

$200 Billion Dollars a year in suppressed American wages are caused by the illegal aliens.
Story here

The illegal aliens in the United States have a crime rate that’s two and a half times that of white non-illegal aliens.  In particular,  their children, are going to make a huge additional crime problem in the US
Story here

During the year of 2005 there were 4 to 10 MILLION illegal aliens that crossed our Southern Border also, as many as 19,500 illegal aliens from Terrorist Countries.  Millions of pounds of drugs, cocaine, meth, heroin and marijuana, crossed into the U. S from the Southern border.
Homeland Security Report:

The National Policy Institute, ‘estimated that the total cost of mass deportation would be between $206 and $230 billion or an average cost of  between $41 and $46 billion annually over a five year period.’
Story here

In 2006 illegal aliens sent home $45 BILLION in remittances back to their countries of origin.
Story here

‘The Dark Side of Illegal Immigration: Nearly One Million Sex Crimes Committed by Illegal Immigrants In The United States ..’
Story here

The total cost is $ 338.3 BILLION DOLLARS A YEAR. In two years we could pay the Wall Street bailout!

Written by Ben

October 10, 2008 at 5:56 pm

Impeach Representative Barney Frank and Senator Chris Dodd

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Representative Barney Frank (D-MA) and Senator Chris Dodd (D-CT), the Chairs of the House and Senate committees, respectively, must resign their positions on these committees and impeachment proceedings against them must begin immediately.

Both Frank and Dodd have demonstrated their incompetency as the Chairs of these committees, engaging in economic policies which bring the U.S. closer to centrally planned economies such as Marxian economies.  Frank and Dodd are making decisions this country can literally not afford and threaten the world’s economies.

Our government must not be in the business of being in business and therefore must bring its involvement with the Government Sponsored Enterprises known as Fannie Mae and Freddie Mac to an immediate end.

Socialism has no future in the United States, unless of course, you vote for Barack Obama.

Read about the meltdown time line here.

Barney Frank screws Director at Fannie Mae, then the rest of us.

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…  an alternate title might be …

Barney Frank and boyfriend Herb Moses, executive at Fanne Mae, are just the tip of the iceberg of a larger underlying problem.

From this article we learn that Representative Barney Frank, (D-Mass.) who is a homosexual (the term “Gay” is subversion to make the behavior palletable to the rest of us) had a boyfriend who worked at Fannie Mae. If his boyfriend, Herb Moses, worked in the mail-room that relationship might be overlooked, but Frank’s boyfriend was Director of Housing Initiatives at Fannie Mae from 1991 to 1998, when Frank was on the House Banking Committee, which had jurisdiction over Fannie Mae.

The article states

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical.

“It’s absolutely a conflict,” said Dan Gainor, vice president of the Business & Media Institute. “He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?

“If this had been his ex-wife and he was Republican, I would bet every penny I have – or at least what’s not in the stock market – that this would be considered germane,” added Gainor, a T. Boone Pickens Fellow. “But everybody wants to avoid it because he’s gay. It’s the quintessential double standard.”

Now, we have a lot of things to be angry about. If you’re fuming and can’t think straight right now, I’ll highlight them for you, since I’ve had a little time to stop the bleeding from my eyeballs.

  1. There is Barney Frank himself just because he is the way he is.
  2. There is his behavior while he is being himself.
  3. There is his lack of scruples and ethics (covered that, I know), engaging in questionable behavior with the head of a government body he and his committee preside over.
  4. There is the media, all too willing to give Democrats a pass while those Democrats screw heads of Fannie Mae and by extension, the rest of us.

For those who are now regaining their normal blood pressure and the tunnel vision fades away, you might have a few questions.   Some of them might even be among the following list.

  1. Does anyone see a problem with our media?
  2. Is the media blind?
  3. Is the media – ABC, CBS, CNN, MSNBC, NBC, New York Times, Washington Post, San Francisco Chronicle, Public Broadcasting System et. al. – so busy advancing the agenda of the Democrat Party and its socialist leaning value systems that the media in the U.S. are incapable of showing America how these socialist policies – some of which are represented by the very existance of Fannie Mae and Freddie Mac – are a failure to the people and the country as a whole?
  4. Is the media in bed with the Democrat Party?
  5. Does the Democrat Party also have influence over the media just as they have over Fannie Mae and Freddie Mac?

Think about this the next time you’re waiting in line at the check-out counter at the grocery store as you ponder the cover of the National Inquirer.  Think about the pablum the media wants to feed us. Think about who is directing our (voting public) attention.

Better yet, just think.

Then go vote every one of those sons of bitches out of office this November.  If we do not do this, we deserve what we get, just as we have been getting for decades.  Send a ripple through the psyche of America in the process, too.

Just do it.

Are GSEs Constitutional? (Probably, but perhaps they shouldn’t be)

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I singled-out the paragraph below which comes from The Wall Street Journal online edition entitled “Fannie Mae’s Patron Saint” which talks about Barney Frank.

By early 2007, Mr. Frank was in charge of the House Financial Services Committee, arguing that he had long favored some kind of reform. “What blocked it [reform] last year,” Mr. Frank said then, “was the insistence of some economic conservative fundamentalists in the Bush Administration who, to be honest, don’t think there should be a Fannie Mae or a Freddie Mac.” What really blocked it was Mr. Frank’s insistence that any reform be watered down and not include any reduction in their MBS holdings.

The 30,000 foot question I have is this; Why is the U.S. government in the business of being in business, creating so called Government Sponsored Enterprises (GSE)? My untrained-wanna-be-Constitution-law-brain wants to call that activity “unconstitutional”, but hey, I’m just a stoo-pid U.S. tax payer.

Here’s my other concern; Throughout the evolution of the Republican’s and others’ efforts to bring oversight into the business practices and policies of Fannie Mae and Freddie Mac, the likes of Barney Frank and his ilk continually defended the GSEs. The glaring problem? They hold no expertise or qualifications as accountants or financial analysts to allow them to espouse binding opinions about the health of these GSEs.  In fact – in a court of law – their so-called “expert” opinions would not be admissible. Yet we allow their opinions to trump the wisdom and insight of others who do.

My country is upside-down.

Written by Ben

October 3, 2008 at 6:35 pm

Democrat quotes about the health of Fannie Mae and Freddie Mac

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Article and video can be seen at the Wall Street Journal web site

Take a deep breath and read some of the excerpts below. If it is upsetting to you, it should be.

Rep. Maxine Waters (D-Calif.): “Through nearly a dozen hearings, where frankly we are trying to fix something that wasn’t broke, Mr. Chairman, we do not have a crisis at Freddie Mac and in particular at Fannie Mae under the outstanding leadership of Mr. Frank Raines.”

Rep. Maxine Waters (D., Calif.): “Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals.”

Rep. Gregory Meeks (D-NY): In a hearing several years ago about a report on the safety and soundness of Fannie Mae and Freddie Mac from their regulator, Armando Falcon, Federal Housing Enterprise Oversight Director, Falcon came under fire. Meeks said; “The GSEs have done a tremendous job. There has been nothing that was indicated that’s wrong with Fannie Mae, Freddie Mac has come up on its own,” adding the regulator was trying to give the two a “heart surgeon [sic] when they really don’t need it.”

Rep. Barney Frank (D., Mass.): “The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities [Fannie Mae and Freddie Mac] that are fundamentally sound financially and withstand some of the disaster scenarios.”

Rep. Barney Frank (D-Mass.): In the same hearing several years ago about a report on the safety and soundness of Fannie Mae and Freddie Mac from their regulator, Falcon, Frank attacked Falcon: “I don’t see anything in your report that raises safety and soundness problems.”

Sen. Christopher Dodd (D., Conn.): “I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time.”

Sen. Charles Schumer (D., N.Y.): “And my worry is that we’re using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie’s mission.”

Franklin Raines, former head of Fannie Mae: “These assets are so riskless that their capital for holding them should be under 2%.

Richard Syron, former head of Freddie Mac: “If I had better foresight, maybe I could have improved things a little bit. But frankly, if I had perfect foresight, I would never have taken this job in the first place.”

Note: Raines was forced out of Fannie Mae in December 2004 after the Securities and Exchange Commission launched an investigation into alleged accounting problems at Fannie Mae involving an estimated $6 bn in accounting problems. The Office of Federal Housing Oversight sued Raines in 2006, accusing him of aiding accounting shenanigans at Fannie, which allegedly involved the delay of reporting losses so top executives could earn large bonuses.

The suit attempted to recover the $50 mn Raines in pay got based on billions of dollars in overstated earnings. In total, OFHEO demanded $110 mn in fines and a clawback of $115 mn in bonuses for three executives accused, including Raines.

Raines, Fannie’s former chief financial officer and its former controller settled the case in April 2008, agreeing to pay fines totaling about $3 mn, paid for by Fannie’s insurance policies.

Raines also agreed to donate the proceeds from the sale of $1.8 mn of his Fannie stock and to give up stock options, though the options were worthless. Raines also gave up an estimated $5.3 mn of “other benefits” said to be related to his pension and forgone bonuses. In the end, Raines kept most of his largesse–in 2003 alone, his compensation was estimated at over $20 mn.

Written by Ben

October 3, 2008 at 5:21 pm