Obama’s Deregulation Lie – What CHANGE Destroyed The Mortgage Market

How Reckless Mortgages Brought Financial Market to Its Knees

What type of CHANGE is responsible and who brought it about

Thursday, September 18, 2008

The stock market has fallen dramatically from its peak a year ago. The Dow Jones Industrial Average has declined by about 25 percent, a significant drop, though not anywhere near as large as the 36 percent drop that occurred over two months from August to October 1987. Few would argue, though, that the financial market is not in a mess.

Meanwhile the economy has kept growing. In the second quarter of this year from April to June, GDP grew at a fairly fast 3.3 percent. For the first half of this year GDP has grown at about 2.2 percent, near the historical average. Obviously some sectors of the economy have been doing well, while others, such as housing, have been in a real mess.

With the government takeover of Freddie Mac and Fannie Mae as well as other bankruptcies in the financial sector, there are a lot of questions. The strangest fact is that the housing sector is having such problems when the economy otherwise has been doing well. Why have there been so many defaults when the economy has not been in a recession? Defaults have been at historically high rates despite reasonable economic growth and a relatively low unemployment rate of 6.1 percent.

Some, such as James H. Carr, the CEO of the National Community Reinvestment Coalition, argue that the high default rates are a result of “unfair and deceptive practices, steering customers to high price loans . . . High upfront payments made it so that they couldn’t later pay their mortgages.”

DO FACTS SUPPORT THIS ASSUMPTION?

Surprisingly, research done by economists a decade ago in 1998, particularly by Professors Ted Day and Stan Liebowitz at the University of Texas at Dallas, predicted the current problems and tried to warn people of a different cause. Starting during the early 1990s, mortgage-underwriting standards have been consistently weakened. Many of the names involved in the forefront of those changes, Freddie Mac and Fannie Mae as well as Countrywide and Bear Stearns, have been the most prominent financial entities to become insolvent.

Others did not share these economists’ concerns. The Wall Street Journal quoted Congressman Barney Frank in 2003 as criticizing Greg Mankiw, chairman of President Bush’s Council of Economic Advisers, “because he is worried about the tiny little matter of safety and soundness rather than ‘concern about housing.'”

Watch Video of How This Problem Started:

 

The changes in underwriting standards were pushed to accomplish what many called a “noble goal” — an increase in home ownership among poor and minority Americans — but the changes created a time bomb that was set off as soon as property values began to decline. The new rules involved eliminating verification of income or assets, little assurance of the ability to pay the mortgage, and virtually eliminating down payments.

Making it possible for otherwise unqualified people to buy homes increased demand and increased the price of houses. As long as housing prices rose, the problems inherent in not requiring down payments or relaxing other standards were hidden. While prices rose, no one had to default. Instead, if someone was unable to pay the mortgage, the obvious option was to sell the house at a profit. As long as prices continued to rise, people could accurately claim that the new standards did not have an appreciably different default rate than the old standards.

The federal government gives all sorts of subsidies to encourage home ownership. The mortgage deductibility in the income tax is a big subsidy, but that is not the only one. The Federal Housing Administration guarantees mortgages against default. Subsidies given to Fannie Mae and Freddie Mac allow them to charge less in repackaging private mortgages that are then sold to financial institutions.There are also subsidies to certain types of mortgages. The Community Reinvestment Act bans so-called “red lining” — requiring banks to offer mortgages in the entire geographic area in which they operate, not just to do business in suburbs. Loans in profitable areas were then used to subsidize loans in areas where banks were losing money.

Yet, there was another major change that has gotten little attention. Back in 1992, a Boston Federal Reserve study claimed to find evidence of racial discrimination — claiming that minorities got denied mortgages at higher rates than whites even after important factors such as creditworthiness were accounted for. The data used in the study were riddled with typos and other serious errors. For example, of the 3,000 mortgages studied, 50 of the loans supposedly had the banks paying interest to the borrowers, 500 of the mortgages were not even in the data set from which the data was supposedly obtained, and some mortgages were supposedly approved for individuals who had negative net worth in the millions of dollars. When those mistakes were corrected, no evidence of discrimination remained.

Professor Liebowitz told FOX News that Lawrence Lindsey, then a member of the Federal Reserve’s Board of Governors, “was warned about these errors in this study but the Fed ignored them.”

The Boston Fed still used the study to produce a manual for mortgage lenders that said: “discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower–income minority applicants.”

So what were some of the “outdated” criteria?

Credit History: Lack of credit history should not be seen as a negative factor…. In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower–income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts….

Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower-income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. . . .

Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.

Accepting these new criteria was hardly voluntary. The Fed warned the banks:

“Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor’s net worth in class actions.”

And mortgage lenders followed these rules. Liebowitz explained to FOXNews.com that these changing financial standards “encouraged speculation — potential homeowners could gamble on the price of homes going up without using any of their own money. Remember, 25 percent of homes being purchased were purchased for speculation.”

Others dispute Liebowitz’s claim that these changes in rules mattered. For example, James Carr notes that it “may seem on paper that these are a curious thing to count [welfare and unemployment benefits] as income, but they simply didn’t matter.”

One lender singled out by Fannie Mae for special praise for following these new criteria was Countrywide:

Countrywide tends to follow the most flexible underwriting criteria permitted under [Government Sponsored Enterprises] and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the [Government Sponsored Enterprises] programs. When necessary — in cases where applicants have no established credit history, for example — Countrywide uses nontraditional credit, a practice now accepted by the [Government Sponsored Enterprises].

Or take a 1998 sales pitch from Bear Stearns, which also followed the Boston Fed manual:

Credit scores. While credit scores can be an analytical tool with conforming loans, their effectiveness is limited with [Community Reinvestment Act] loans. Unfortunately, [Community Reinvestment Act] loans do not fit neatly into the standard credit score framework… Do we automatically exclude or severely discount … loans [with poor credit scores]? Absolutely not.

Given these lending practices mandated by the Fed and encouraged by Fannie Mae and Freddie Mac, the resulting financial problems for financial institutions such as Countrywide and Bear Stearns are not too surprising.

Liebowitz told FOX News that “such reckless behavior by [Fannie Mae and Freddie Mac] has lead to their financial meltdown and to the financial problems for the whole country. During Franklin Raines’ chairmanship of Fannie Mae, they were a major proponent of relaxing standards.”

 


 

John Lott is the author of Freedomnomics and a senior research scientist at the University of Maryland.

http://www.foxnews.com/story/0,2933,424945,00.html

Opposition To Bailout Increases – Where is the Oversight?

Many economists skeptical of bailout                    

Avi Zenilman Sun Sep 21, 8:58 AM ET

Many of the same economists and opinion-makers who’d provided a bipartisan sheen of consensus to Treasury Secretary Henry Paulson‘s  previous moves have quickly begun casting doubts on the wisdom of a policy that would allow Treasury to purchase without oversight hundreds of billions of dollars of difficult-to-price assets from financial institutions.

Under the proposal, Paulson would not have to report to Congress until December, and the only safeguard for taxpayers was a provision that the “Secretary shall take into consideration means for — (1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer.”

Skepticism toward the plan reflected more than the predictable desires of the left to spread the wealth to Main Street or of the right to reject government bailouts, although those sentiments were also expressed.

“We need to take a bold move. In that sense I think Paulson is right,” Luigi Zingales, a Professor at the University of Chicago School of Business who wrote a widely circulated short essay titled “Why Paulson is Wrong,” told Politico.

Zingales fears  that the Treasury bailout would effectively turn the entire financial sector into a Government Sponsored Enterprise, complete with the same murkiness and moral hazard that sunk Fannie Mae and Freddie Mac. “It might achieve the final outcome, but it will do so at an enormous cost,” he said. “All the troubles we’ve seen with Fannie and Freddie would be seen again and again across the entire financial sector.”

President Bush is “asking for a huge amount of power,” said Nouriel Roubini, an economist at New York University who was among the first to predict the crisis. “He’s saying, ‘Trust me, I’m going to do it right if you give me absolute control.’ This is not a monarchy.” (Roubini told the New York Times that despite these concerns, he also thought the plan could help stave off a recession.)

Paul Krugman, the Princeton University economist and liberal columnist for The New York Times who had until now been cautiously supportive of Paulson’s and Federal Reserve Chairman Ben Bernanke’s efforts to prop up the system, wrote that the new plan would be a taxpayer rip-off. “I hate to say this, but looking at the plan as leaked, I have to say no deal,” he wrote on his blog at 4:46 p.m. Saturday. “Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.”

Yves Smith, a longtime banker and contributor to the influential finance blog Naked Capitalism, published an angry post there titled, “Why You Should Hate The Treasury Bailout Proposal”:

“Given that continuing to buy U.S. assets will come under increasingly harsh scrutiny overseas, the U.S. needs to bend over backwards to devise a plan that at least looks credible in terms of directing the funds that come from taxpayers and lenders to their highest and best uses and implementing reforms that will restore active and prudent oversight of financial firms,” she wrote. “The administration’s demand for a free pass, even if Congress unwisely goes along, is likely to backfire with our foreign creditors.”

Gregory Mankiw, a professor at Harvard University and a former chairman of Bush’s Council of Economic Advisers who was the economic guru for Mitt Romney’s campaign, favorably linked to Smith’s post under the headline “A Blank Check” and approvingly quoted a correspondent who wrote, “Has more money ever been given with fewer restrictions on how it is used? Ever?”

Sebastian Mallaby, the center-right economic columnist for The Washington Post and scholar of the modern financial system, was equally dubious. “The plan is being marketed under false pretenses,” he wrote in his Sunday column, rejecting comparisons of the plan to the Resolution Trust Corporation, which the government formed in response to the savings and loan crisis to purchase and sell off the bad loans made by bankrupted thrifts.

“The administration proposes to buy up bad loans before the lenders go bust,” Mallaby noted, keeping the banks alive but doing little to solve the problem infecting the markets. “Bad loans are weighing down the financial system precisely because private-sector experts can’t determine their worth. The government would have no better handle on the problem.”

Justin Fox, Time magazine’s top financial writer and columnist, also worried about the lack of an upside for the taxpayer. “What I still can’t figure out is how Treasury hopes to structure the bailout so there’s at least a chance of getting a fair return on that risk-taking,” he wrote on his blog.

“How on earth will these things be priced?” Portfolio’s Felix Salmon asked about the bad debt Paulson plans to purchase. He also pointed out that Treasury would need to stock its office with bond-trading professionals. “All we know so far is that it’s going to be set up as a reverse auction, but that raises more questions than it answers.” 

One notable proponent of the plan was The Financial Times’ unsigned Lex column, which acknowledged the lack of oversight but mostly praised the plan:

“This bailout is necessary and the bill should be pushed through quickly. … Nor is the package necessarily a disaster for the taxpayer or the U.S. dollar. If the Treasury buys assets well, and confidence is restored, there is [a] chance that Mr. Paulson could win fund manager of the year.”

Zingales, though, writes in “Why Paulson Is Wrong” that “For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of a few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists.”

http://news.yahoo.com/s/politico/20080921/pl_politico/13689

The Fannie Mae Five – Five Key Players Who Broke The System- UPDATED

Five Key Players In Washington who had chances to prevent the Financial Crisis but who, by their actions or inactions helped to bring down Wall Street.

Senator Christopher Dodd,

Democrat from Connecticut. Dodd has been in the Senate for 28 years. Dodd has served as Chairman of the Democratic National Committee. Dodd is Chairman of the Senate Banking Committee. As Chairman he had responsibility for acting as a “watch-dog” of Fannie Mae and Freddie Mac. Dodd has responsibilty for assisting in the selection of the CEO’s who run Fannie Mae and Freddie Mac.  Dodd was a leading contender to be Obama’s Vice Presidential selection until his receipt of VIP loans from Countywide Financial were disclosed. http://www.nydailynews. com/news/us_world/2008/06/14/2008-06- 14_dems_deny_knowing_loans_had_vip_rates.html

It has been reported that Dodd received $7,000,000 in loans from Countywide. Dodd’s Committee was responsible for overseeing Banks in the United States. Countrywide is one of the leading culprits responsible for the lending policies that brought on this Crisis. Countrywide is under FBI investigation for Securities Fraud. http://www.nydailynews.com/news/us_world/2008/06/14/2008-06-14_dems_deny_knowing_loans_had_vip_rates.html

The Government Watchdog Group, The Center For Responsive Politics, reports that Senator Dodd received more campaign contributions from Fannie Mae and Freddie Mac than any other Senator.

Dodd voted against two proposed laws that would have strengthened oversight of Fannie Mae. Laws that could have stopped the current crisis long before it reached this proportion. http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190  http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A58272-2002Jul11&notFound=true 

Dodd was a consistent opponent of the attempts to increase regualtion over Fannie Mae and Freddie Mac. Dodd opposed similar legislation that would have prevented the Enron collapse. Enron & Fannie Mae are examples of what happens when proper Accounting Practices are ignored. Both organizations collapsed. Dodd opposed accounting practices that would have prevented “NINJA” or “Liar” loans. To read about specific accounting practices see: http://www.foxnews.com/story/0,2933,424945,00.html

Wikipedia, a non-partisan web site, states the following about Dodd; The Center for Public Integrity  criticized Dodd for “being the leading advocate in the Senate on behalf of the accounting industry.”[11][12] Political consultant and commentator Dick Morris wrote that Dodd had received more from accounting firm Arthur Andersen than any other Democrat and bore responsibility for trying to shield accounting firms from investor fraud liability in cases such as the Enron scandal.[13] Arthur Anderson was forced to surrender its license to conduct CPA business in the US.  http://en.wikipedia.org/wiki/Christopher_Dodd.

Representative Barney Frank

Democrat Massachusetts, Frank has been in Congress for 27 years.    As Chairman of the House Financial Services Committee, Frank “sits at the center of power”.  http://en.wikipedia.org/wiki/Barney_Frank 

In 2003, Frank rejected Bush administration and Congressional Republican efforts for the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. [29]   of the 1980’s. Under the plan a new agency would have been 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.[30] http://en.wikipedia.org/wiki/Barney_Frank

The site where this boast is posted, suggests that his action in opposing the regulation is a “badge of honor”. Imagine that – Barney Frank, the de-regulator.

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

WATCH FRANK MAKE THE COMMENTS:  http://www.foxnews.com/video-search/m/21012738/mortgage_meltdown_timeline.htm?q=financial+mess+timeline  

The legislation in question was aimed at creating additional “watchdogging” of Fannie Mae and Freddie Mac, watchdogging that would have prevented this Crisis. Frank also opposed the “watchdog” reforms presented by John McCain in 2002 and 2006. http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-   

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A58272-2002Jul11&notFound=true

Frank has consistently opposed any attempt to reform the practices at Fannie Mae or Freddie Mac. Frank has been described as “The Patron Saint of Fannie Mae”. http://www.stltoday.com/forums/viewtopic.php?p=6069270

Read specific examples of Frank’s obstruction of reform here: http://www.foxnews.com/story/0,2933,424945,00.html 

In 2002, shortly before accounting irregularities were exposed at both companies, Frank said, “I do not regard Fannie Mae and Freddie Mac as problems,” reported the Wall Street Journal. After the Freddie Mac accounting scandal in 2003, Frank said, “I do not think we are facing any kind of a crisis.” http://mpinkeyes.wordpress.com/2008/09/17/barney-frank-and-chuck-schumers-role-the-fannie-mae-failure/   

Jim Johnson   

WATCH VIDEO REPORT: Johnson back with Obama Campaign:    

 
 
 
 

 

A former aid to Walter Mondale, a former executive at Goldman Sachs and Lehman Brothers, Johnson was an Executive Assistant for Vice President Walter Mondale (1977-1981) and a U.S. Senate staff member. Johnson also helped screen running mates for Democratic presidential nominees Walter Mondale in 1984 and John Kerry in 2004.
http://www.associatedcontent.com/article/781141/barack_obama_taps_former_fannie_mae.html

The National Review suggested – “Look at the former Fannie Mae Chief Obama choose for the job (selecting Biden). …. specifically, look at the Office of Federal Housing Enterprise Oversight’s May 2006 report on mismanagement and corruption inside Fannie Mae, and you’ll see some interesting things about Johnson. Investigators found that Fannie Mae had hidden a substantial amount of Johnson’s 1998 compensation from the public, reporting that it was between $6 million and $7 million when it fact it was $21 million.”  http://corner.nationalreview.com/post/?q=NWM3MDFkM2QwNzRjODk3NWZhZTc3OGIxNDQ4Nzc2NDc=

While he was at the in charge at Fannie Mae, Johnson acknowledged his goal, “”We are on course to meet the $1 trillion target we set, we’re ahead of schedule on the 11 initiatives put in place to carry out the commitment, and our efforts already have fundamentally transformed how millions of American families now gain access to the mortgage credit system.” The Trillion dollar commitment included the use of “NINJA” and “Liar Loans” http://www.highbeam.com/doc/1G1-18094342.html

In order to meet this 1 trillion target, Johnson oversaw  the implementation of the accounting schemes that came to light during his successor, Franklyn Raines, term as Fannie CEO.  http://www.minnpost.com/stories/2008/06/03/2078/obama_turns_to_trusted_political_insider_jim_johnson_for_key_campaign_role

Johnson also took preferential loans from Countrywide while serving as CEO at Fannie MAE. The same type of loans, from the same bank, as those taken by Senator Chris Dodd. http://online.wsj.com/public/article_print/SB121321030258665089.html

Post-Enron, the Sarbanes-Oxley law, requires disclosure of this type of “special deal” loan. No disclosure was made by Johnson. http://online.wsj.com/article/SB121314375651462773.html?mod=opinion_main_review_and_outlooks . Countrywide Financial Corporation is a diversified financial marketing and service holding company engaged primarily in residential mortgage banking and related businesses. In 1997 Countrywide spun off Countrywide Mortgage Investment as an independent company called IndyMac Bank.[1] Federal regulators later seized IndyMac Bank. http://en.wikipedia.org/wiki/Countrywide. A criminal investigation has been launched by the FBI into possible Securities Fraud violations by Country Wide. The fraud involves the resale of subprime moragaes to the financial markets, including Fannie Mae.                                  http://www.latimes.com/business/la-fi-countrywide9mar09,0,2300832.story  http://www.boston.com/business/articles/2008/03/09/fbi_begins_criminal_inquiry_into_countrywide_paper/   http://www.usatoday.com/money/companies/2008-03-09-countrywide-probe_N.htm

Johnson hid part of his income, received preferential loans from a major lender invoved in this crisis and fostered the implementation of accounting practices that masked the sub-prime losses by stating the losses as assets. 
Johnson went on to work for the Obama campaign. The Obama campaign denies any current involvement, however, one press report notes that Johnson helped prepare Obama for an economic speech last week. http://forestbrowne.newsvine.com/_news/2007/09/17/967528-obama-reappraise-wall-street-values– 
Franklin Raines
Raines was a former member of the Carter and Clinton Administrations. In the Carter Administration Raines served as Associate Director for Economics and Government in the Office of Management and Budget and Assistant Director of the White House Domestic Policy Staff , in the Clinton Administration Raines served as the Director of the U.S. Office of Management and Budget. http://en.wikipedia.org/wiki/Franklin_Raines 
Raines was Chairman and CEO at Fannie Mae. 
 

Raines was forced to retire from this position at Fannie Mae  when Regulators discovered severe  irregulaties in accounting activities. At the time of his departure The Wall Street Journal noted, Raines, who long defended the company’s accounting despite mounting evidence that it wasn’t proper, issued a statement conceding that “mistakes were made and that he would assume responsibility as he had earlier promised. Reports indicate the company was under growing pressure from regulators to shake up its management in the wake of findings that the company’s books ran afoul of generally accepted accounting principles for four years.” http://www.washingtonpost.com/wp-dyn/content/discussion/2006/02/23/DI2006022301805.html
Fannie Mae had to reduce its surplus by $9 billion because $9 billion in liabilities were listed as assests. http://www.economist.com/finance/displaystory.cfm?story_id=E1_PVQGGTT 
 
Raines total compenstaion package while he was at Fannie exceeded $90 Million. http://www.politico.com/news/stories/0708/11781_Page2.html    
 
 

 

The Goverment filed suit against Raines when the depth of the acounting scandel became clear.” http://housingdoom.com/2006/12/18/fannie-charges/.

The Government noted, “The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public. The Notice explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner.”  http://housingdoom.com/2006/12/18/fannie-charges/

http://www.youtube.com/watch?v=Aq7DGTggpx0

The Court fined Raines $3,000,000 and fined Fannie Mae $400,000,000. http://en.wikipedia.org/wiki/Franklin_Raines

In June 2008 The Wall Street Journal reported that Franklin Raines was one of several public officials who received below market rates loans at Countrywide Financial. http://en.wikipedia.org/wiki/Franklin_Raines. Raines joined Jim Johnson and Christopher in receiving the VIP loans.

Raines has been reported to be an Economic Advisor in the Barack Obama Campaign. At present the Obama Campaign denies that Raines is associated with the Campaign. At least two web sites have re-written prior bigraphies on Raines. The Wikipedia Biography on Raines has been rewritten, deleting a claim that Raines was an Obama Advisor.  http://en.wikipedia.org/wiki/Franklin_Raines  The Web site “Top Blacks, Positive Profiles of People of Color” has not only rewritten the Raines profile to delete such a reference, the profile is no longer available at the site. http://www.topblacks.com/Home.aspx

Tim Howard

Was the Chief Financial Officer of Fannie Mae. Howard, “was a strong internal proponent of using accounting strategies that would ensure a “stable pattern of earnings” at Fannie. In everyday English – he was cooking the books.  http://www.signonsandiego.com/uniontrib/20041230/news_lz1ed30bottom.html  http://www.usatoday.com/money/companies/regulation/2004-09-24-fannie-cfo_x.htm

The Government Investigation determined that,  “Chief Financial Officer, Tim Howard, failed to provide adequate oversight to key control and reporting functions within Fannie Mae,” http://www.usatoday.com/money/companies/regulation/2004-09-24-fannie-cfo_x.htm

On June 16, 2006, Rep. Richard Baker, R-La., asked the Justice Department to investigate his allegations that two former Fannie Mae executives lied to Congress in October 2004 when they denied manipulating the mortgage-finance giant’s income statement to achieve management pay bonuses. http://www.usatoday.com/money/industries/banking/2006-06-14-fannie-execs_x.htm

Investigations by federal regulators and the company’s board of directors have since concluded that management did manipulate 1998 earnings to trigger bonuses. Howard, like Raines, resigned under pressure in late 2004.                                        http://www.usatoday.com/money/industries/banking/2006-06-14-fannie-execs_x.htm  http://michellemalkin.com/2004/09/23/the-fannie-mae-freddie-mac-racket/?print=1

Howard’s Golden Parachute was estimated at $20,000,000. http://accounting.smartpros.com/x46646.xml

The following Articles describe the role of “political ideology” in the Financial Crisis – How Politics fueled the crisis:

Professor Stan Liebowitz: The Real Scandal – http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

Professor Thomas J DiLorenzo: The CRA Scam and its Defenders: http://www.mises.org/story/2963

John R Lott, Jr : Analysis – Reckless Mortgages Brought Financial Market To Its Knees http://www.foxnews.com/story/0,2933,424945,00.html

BREAKING NEWS

BREAKING NEWS VIDEO: $100,000 Obama Grant Under Investigation – Reports Chicago Sun Times

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