Fannie, Freddie, and Revolving Door Politics

Unorganized Draft Number 1.  Hopefully I can improve on this...

OK, right up front, I consider myself part of the "vast right wing conspiracy".  I watch Fox News.  And this morning I drank my coffee from a "McCain Palin" mug.  If any of that turns your stomach, you might as well find another blog to read now, because you're not likely to believe anything written here.

Still here?  . . . OK.  Let's move on.

I believe that Democrats are more responsible for the current economic crisis than Republicans, but I have no doubt that there is corruption on both sides of the aisle.  I would love it if we could oust every congressional member whose motives with regard to Freddie_&_Fannie (F&F)
are not pure.  If you can find a talking head on television who isn't completely biased, you just might hear them say that an underlying problem with the whole F&F bail out is the proverbial fox  guarding the hen house.

I have read articles arguing that Obama, Dodd, Kerry, Frank, and other Democrats are the root of the problem.  The proof that is offered is a list of Fannie-Freddie contributions to the various congressmen.  Fannie & Freddie Money List

As I see it, there is conflict of interest in at least 3 areas:

1. Fannie & Freddie are permitted to spend money on congressional lobbyists.
2. Some members of F&F board of directors are made by presidential appointment, with approval by congress. Which only makes it easier for . . .
   
3. . . . "friends of" presidential and congressional to end up as CEO or other high $alary jobs at F&F (or other banking, mortgage, investment firms that wish to curry favor from congress or the White House.)
   

Yes, the money from PACs and other lobbying efforts is part of the problem.  I think that anybody higher on this list is more likely to be playing the quid pro quo game.  In particular, I cannot see how anybody can justify that members of the Senate and House committees responsible for oversight of F&F can be on this list at all.  In particular, Senator Chris Dodd, who as chairman of the Senate Banking Committee is number one on the list!  Fannie and Freddie is not the only instance where Dodd has a conflict of interest.  Check out the CountryWide scandal.
Republicans are fond of pointing out that the top 3 are all Democrats, and we Republicans are especially happy to point out that Obama captured the number 2 spot in a few short years.  For my part, I offer this instead.  There are 5 Democrats and 5 Republicans in the top 10.  Even though there is a small chance of persecuting an innocent congressman, I would be perfectly happy to oust the top 5 Republicans on the list as long as the top 5 Demonrats get the boot also.

But, the list is only a small indicator, a mere hint at where the corruption lies.  If you want to find the corruption, you need to follow the money.  And while $165,000 may seem like a lot to you or me, the really big money is made by the scoundrels who work at F&F.  Franklin Raines comes out of the Clinton White House, gets indicted and convicted for leading the fraudulent accounting practices at Fannie so that he gets bigger bonuses and walks away with $90 million in six years!

Hey Franklin! You get 90 million, and you can only afford to kick back a few thousand to Dodd?

Democrats often claim that the economic crisis is the fault of the Bush administration, usually made on the basis that "Bush did nothing" or was completely for "no regulation".  Not true.
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Bush adiministration tries to fix Fannie & Freddie in 2003.
Democrats oppose.
Barney Frank specifically says that Freddie & Fannie are fine.
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New York Times
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September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print



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Bush administration warns in the budget in 2005
Note the following passage from the 2005 budget: Fannie, Freddie and other GSEs "are highly leveraged, holding much less capital in relation to their assets than similarly sized financial institutions. . . . A misjudgment or unexpected economic event could quickly deplete this capital, potentially making it difficult for a GSE to meet its debt obligations. Given the very large size of each enterprise, even a small mistake by a GSE could have consequences throughout the economy."
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102841.html

In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie's lobbyists set out to weaken it.
This op-ed misidentified a House bill to reform Fannie Mae and Freddie Mac that was pulled from consideration before a vote. It was H.R. 2575, in 2003. The bill mentioned in the column, H.R. 1461, passed the House in 2005 but was not voted on in the Senate.
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McCain’s attempt to fix Fannie Mae, Freddie Mac in 2006
FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005
Democrats block banking reform again.
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http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/
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.

McCain saw it coming in 2006:

"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."

How did the 2 candidates and other congressmen vote on it?  They didn't, it never made it out
of the Senate banking committee controlled by Democrats lead by, now chairman, Chris Dodd.
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http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190#sMonofilemx003Ammx002Fmmx002Fmmx002Fmhomemx002Fmgovtrackmx002Fmdatamx002Fmusmx002Fm109mx002Fmcrmx002Fms20060525-16.xmlElementm0m0m0m
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For anybody who claims that they don't trust a "right wing" website, here's a link to the copy
in the Library of Congress:
http://thomas.loc.gov/cgi-bin/query/D?r109:16:./temp/~r1095Vm6sc::
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Note that LoC does *not* list McCain as a consponsor, but does show that he is on the record
for the statments above.
Actually, if you read the entire agenda for the day, you will find that Hegle asked for McCain's name to be added as a cosponsor -- but for some reason it does not show in LoC archives.



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Where was Dodd?
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102841.html
Dodd plays politics when he asks "Where was the admintration over the last 8 years?"
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