Let's look at the reality of who said what in recent years about the problems surrounding Fannie Mae and Freddie Mac:
The NYTimes reported this Sept. 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.
However, what many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices — and Democrats blocked it.
What Rep. Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee, said (page 2 of article linked above):
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.
Well, so much for the Democrats' argument that the Bush Administration ignored the building problems with Fannie Mae and Freddie Mac and is responsible for it. Obama, read it and weep, or at least quit falsely blaming Bush and McCain for all of this mess which is rooted much more in the corruption of the Congressional Democrats on the committees involved in finances and banking.
May 25, 2005, John McCain, speaking to the Senate:
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.
I urge my colleagues to support swift action on this GSE reform legislation.
The legislation was blocked by Democrats, with the assistance of a few Republicans.
October 27, 2005, NY Times reports:
Responding to the accounting scandals at Fannie Mae and Freddie Mac, the House of Representatives approved legislation on Wednesday overhauling the regulatory oversight of the two huge mortgage financing companies.
The White House issued a statement on Wednesday criticizing the legislation adopted by the House, saying it envisioned a regulatory regime that "is considerably weaker than that which governs other large, complex financial institutions."
The legislation "fails to include key elements that are essential to protect the safety and soundness of the housing finance system and the broader financial system at large," the White House statement said.
That legislation died in the Senate. Did you catch that part about the Bush Administration wanting stronger regulation? Yeah, that's right. Whatever tripe Obama is pushing is spoiled rotten and full of toxins. We all know why this legislation failed. It was purely political games by the Democrat-dominated Congress because they hate Bush so much they were willing to sacrifice all of our future financial security just because they didn't want him to "win" anything. That, and they used the excuse that they thought he was seeking too much power. blah, blah, blah
All of that being said, can we please put to rest the wrong ideas that the Republicans are at fault for our "financial crisis"? How can Nancy Pelosi or Barney Frank sleep at night knowing that they were actually big players in preventing the problems from being fixed before it became such a huge "crisis"? Pelosi has said that the Republicans and the Bush Administration failed to properly regulate things so that they got out of control. Well, Nancy, why can't you properly regulate the corruption right under your nose (Charlie Rangel, et al)?
Let's just stop it and do what Obama won't do: transcend the poison of the old political games. Yes, it's difficult and I'm having trouble doing that myself, but Jesus Christ, they (and we) are going to have to put all of that political nonsense aside and actually try to solve some problems. Will the Democrats please just stop demanding all these extra things that only complicate the problems? In Sunday's New York Times:
Ms. Pelosi said Democrats would also insist on “enacting an economic recovery package that creates jobs and returns growth to our economy.”
Jesus F. Johnson, is she a complete idiot or what? Oh, sorry, I'm still dealing with some residual poison. ;-) How about we just try to solve this one huge problem first before we start adding all these conditions and extras that will only complicate and impede progress? Growing jobs is important, but let's get this mortgage situation under control first. And as soon as the government-secured mortgages can get properly straightened out and distributed/sold to financial institutions that can actually handle them, then the broader "economic recovery" can be addressed. Sometimes it's necessary to prioritize and handle one thing at a time, instead of trying to kill fifty birds with one stone.
Truth be told, I tend to agree that there needs to be a serious restructuring of how corporations and financial institutions do business. In my utopian ideas it wouldn't be necessary for the government to regulate so much because all the businesses would naturally want to be ethical, fair, and responsible for their own behavior and the consequences of that behavior. But I know that is only an idealistic fantasy and that a lot of people won't regulate themselves without force or fear of severe penalties.
My own ideas are fairly radical, and maybe even "liberal" depending on how you define it. ;-) I've never believed that the corporate business model is really that good because it inherently encourages too-risky behavior without tough enough consequences. Inevitably when a corporation fails, especially the very large ones, it becomes a private profit-public loss situation because the "owners" aren't held accountable for the losses. The value of their ownership in the company is often not at all related to any real, physical assets. Their wealth is just an illusion based on an assumption of future performance. It's just a bad model to begin with, although I do know and somewhat appreciate some of the "pro" arguments for it. But any other purely private business just can't survive or function by doing things in the same way as corporations, and they can't rely on public money for bailing them out when they screw up.
Let's look at this $700,000,000,000 that the government wants to "liquidate" the whole mess, which apparently accounts for only about 10% of all mortgages in the US (though I haven't found any solid numbers on that so it could be inaccurate). Well, I'd say 10% isn't really that much, but because of the fucked up ways that the banks overinflated the values of them and lent much more money than what the actual collateral was worth, the problem seemed to exponentially grow somehow. Anyway, if I've done my math right, which I probably didn't because every time I try to use real numbers I mess up for whatever reasons ;-), every single man, woman, and child in the US either owes the government over $2000, or you might could say they each will own $2000 worth of other people's houses until the mortgages are paid off.
Okay, I suppose the socialists might be cheering about this movement into that direction. But frankly, I don't like it, although logically and rationally and morally speaking no one can place any claims, or liens as they call them, on our mortgage because ours isn't in any kind of trouble. It's just between us and our credit union. I just hope that all those other supposedly 90% of people like us will actually see some "return" on our investments in other people's properties. I'd say it would be fair for the government, as soon as they are able (if ever?), to send us a dividend of that $2000+ per person plus interest (but definitely not at a "sub-prime" rate). ;-) What's good for the goose is good for the gander, so to speak. Or to be a little more "charitable" they could just give us future tax credits for those amounts, including some percentage of interest.
Does anyone really think it's a good idea to trust the current Congress to improve anything? Regardless of your political leanings it should be very clear that these people who are supposed to be "public servants" paid with our money have done a piss-poor job. In fact, I think we should have many of them charged with "high crimes and misdemeanors" and bribery (in the guise of lobbyists' payments). A good explanation of what "high crimes and misdemeanors" means in this context is found in an article by Jon Roland:
... the key to understanding it is the word "high". It does not mean "more serious". It refers to those punishable offenses that only apply to high persons, that is, to public officials, those who, because of their official status, are under special obligations that ordinary persons are not under, and which could not be meaningfully applied or justly punished if committed by ordinary persons.
Our Congress is sworn in and under the obligation to uphold their Oath of Office. This puts the responsibility on them to act on our behalf. I would lead an insurrection if that's what it would take to get all those corrupt bozos out of office. I am a conservative, but I'm a rebel too. Perhaps a revolutionary conservative is a paradox, but here I am anyway. ;-)
As for all those "executives" of these failed and brink-of-failing financial services companies, I think they should be charged with several serious crimes. Stop it with this namby-pamby fiddle-farting around with some big bailout that we can't really afford. Throw the bastards in jail for practically treasonous fraud. Yes, treasonous is a very strong word, but if you believe that the failings of these companies without (and possibly even with) a bailout will actually lead to the complete collapse of the US, and possibly global, economy, then okay, that looks awfully serious to me. They've essentially weakened our country's security in every way.
At least treat them like drug-dealers and seize all their property that they gained from their criminal activities. Make them pay for the mess they created. Of course, that wouldn't be enough to cover it all, but at least it would be something coming from the criminals who caused it. Back in the good old days, people like that would have been dealt with quickly. They certainly wouldn't be rewarded for their betrayals and treachery.
I hope that everyone who reads this will see the truth. And spread the word. I mean really. We're actually the bosses here. So let's act like it.
Amen, go in peace. :-)
Update: Shortly after finishing this and posting it, I heard on the news that the FBI is investigating Fannie Mae, Freddie Mac, Lehman Bros., and AIG. Praise the lord! I hope they are investigating some Congress members too. (of both parties, whoever has been instrumental in allowing the banking fraud to continue)