Obama puts critics of financial overhaul on notice! Just more of the same old ****. Video of “Regulators reporting to Congress”

Have you read this …….

WASHINGTON – President Barack Obama said Saturday that current financial rules exploit consumers and he put critics of his proposed overhaul on notice: “While I’m not spoiling for a fight, I’m ready for one.”

Obama used his weekly radio and Internet address to defend his recent proposal, which is intended to prevent a repeat of the breakdown that has sent the U.S. economy reeling. But such major changes face a fight in Congress and opposition from some leaders in the banking and insurance industries.

In the address, Obama focused on a consumer watchdog office that he wants to set up.

“This is essential,” Obama said. “For this crisis may have started on Wall Street. But its impacts have been felt by ordinary Americans who rely on credit cards, home loans and other financial instruments. http://news.yahoo.com/s/ap/20090620/ap_on_go_pr_wh/us_obama_consumers

It is generally agreed that the current financial crisis started in the mortgage industry and the primary entities responsible for the collapse were Fannie Mae and the Federal Reserve. Yes, the same Federal Reserve Obama wants to give more power too.

Do you know how many “Federal Regualtors” were employed to “over see” Fannie Mae in the last deacade?  Two hundred, full time regulators. Were they asleep at the wheel?  Heck No! They did their jobs and then were ignored by Congress when they reported the misdeeds they uncovered.

The video below is a sample of one group of regulators reporting to Congress on this very issue ……

Franklyn Raines – CEO of Fannie Mae, later entered into a plea deal on charges of cooking the book …..

Note that a question was asked in the video, “why should Congress trust OFEO?” (the Regulatory Agency) who both discovered and alerted Congress to the misdeeds  – The real question is can the people trust “politically motivated” Polticians who ignore the Regualtors who are already in place.  

What did the Congress suggest – changes in Fannie Mae?  Heck No. Listen to Congresswoman Maxine Waters – the Regulators were “to blame” for trying to stop Fannie Mae – yep tose are Rep. Waters word the Regulators were to balme for trying to Fannie from starting this crisis. Presented with evidence of the problem Barney Frank denies a problem existed – listen to his words above and listen to him later try to deny these very same words below …

Take this article, from the Boston Globe, as a uniquely honest example of reporting on the topic ….

 The Boston Globe

Frank’s fingerprints are all over the financial fiasco

 

‘THE PRIVATE SECTOR got us into this mess. The government has to get us out of it.”

That’s Barney Frank’s story, and he’s sticking to it. As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by “bad decisions that were made by people in the private sector,” Frank said; the country is in dire straits today “thanks to a conservative philosophy that says the market knows best.” And that philosophy goes “back to Ronald Reagan, when at his inauguration he said, ‘Government is not the answer to our problems; government is the problem.’ “

In fact, that isn’t what Reagan said. His actual words were: “In this present crisis, government is not the solution to our problem; government is the problem.” Were he president today, he would be saying much the same thing.

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits — many of whom have been learning lately just how pitiless the private sector’s discipline can be — they weren’t the ones who “got us into this mess.” Barney Frank’s talking points notwithstanding, mortgage lenders didn’t wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so – or else.

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

For a history of the Federal Reserves’ active participation and the Feds “active regulatory activity” that started this mess see this article: http://johnrlott.tripod.com/op-eds/FoxNewsMortgagesReg091808.html

The last thing America needs is more regulation from the same people who “regulated” the colapse into being in the first place. Amercia needs to get the Politican out of our wallets and 401ks and let America get back to work. Higher taxes and additional, corrupt regulation, won’t create more jobs. It will mean a weaker economy.

Additional Regulation won’t work if Congress can ignore the Regulators who are already in place …… while they take cash from the regulated ……..

and using their offices to work sweetheart deals (Senator Chris Dodd and Countrywide Bank) with those being regulated ….

Before you respond that Fox News is biased – check out this report from NBC …

Angello Mazillo, CEO of Countrywide has been charged with fraud and insider trading …..

http://money.aol.com/article/sec-charging-ex-countrywide-ceo-mozilo/481893?bId=MoneyBoard&tId=mfida481893&bpId=%2F&sort=3&pg=4

We don’t need more regulations that the crooked Politicians refuse to enforce …. We need fewer crooked Politicians.

THE US ECONOMY: Separating The Political BS From The Truth

A new rush of news commentaries hit this pat weekend – describing the “dire straights” of the US economy. (No “dire straights” is not a reference to the 1970’s English Rock Band, but to – “dire straights” – a state of extreme distress, Thanks for the humoress comments referencing the band – I must have a eclectic set of readers) A relatively small number were thoughtful pieces, dedicated to discussing the FACTS and potential solutions. The overwhelming remainder were chockful of incorrect data aimed at achieving political agendas and “lowering expectations” at the cost of helping the average American.

Several major publications carried headlines on this past weekend touting the current economic picture as “the worse ever”, one even claimed that for the first time ever, the US had topped 10 Million in unemployed. The import of the stories? Things have never been this bad ever before. The truth is quite a different matter. Of course we have been here before and in situations much worse than this, in fact we have been here many times ……… and I’m not talking about ancient history.

If you take the time to review the facts, the degree to which the New Administration and its supporters will lie to the public is astounding. The New Administration is already putting its political legacy ahead of the American people …..  and it hasn’t taken office yet.

My reason for these comments – Obama’s willngness to demagouge the issues at the expense of the average American. (Websters: demagouge – a leader who makes use of popular prejudices and false claims and promises in order to gain power. 

http://www.merriam-webster.com/dictionary/demagogue)

Lying about the true state of the economy, to serve ones own political purposes, is an act of demogoguery. If the lies falsely inflate the health of the economy, the lies could prevent needed action from being taken. When lies are told to exagerate the problems in the economy, false remedies can be approved with truly unfortunate results to follow. You’d like an example – False claims were made about the “discrimantory” practices of American mortagge lenders – the cure to these lies – NINJA & Liar Loans and the collapse of the banking/finance industry. Obama and his aids are certainly guilty of misrepresenting  the current economy and its true historical perspective. 

Exagerating the ills of the economy for political gain has only negative consequences for the economy and the working people who are affected most directly by the current conditions. Exagerating how bad things are, never created a new job, got someone hired, spurred investment or encouraged someone  to open a new business in the United States.    

The intent of this post is limited – to compare the New Administration’s claims, and those made by its surrogates, with the facts and to ask why the President-elect keeps saying he may not be able to complete his tasks in a “first-term”. After all, his party has control of both Houses of Congress.

The issue of whether his policies are right for America will be discussed another day. Let me simpy make this short suggestion before moving on from that topic – It is my beleif that his polices are not right for America – that America, absent a “dire emergency”, would not agree with many of his proposals – and that is why the New Admninistration is trying to create as many “dire emergencies” as they can manufacture – regardless of whether the “dire emergencies” are supported by facts. In times of emergency people are willing to surrend their rights and surrender their money ….. emergencies are powerful political tools for the dishonest.  

The current economic conditions need immediate attention – but before you can cure the disease – you need to make sure you have the correct diagnosis ……. the wrong medicine can kill the patient quicker than the disease would if the disease were left alone. Or, in other words, pouring kerosine on the fire won’t put the fire out.

You may have seen the following headlines, or very similar headlines, over this past weekend,   

“Government figures released Friday showed that the US Unemployment Rate in October rose to 6.5 percent, its highest level since 1994.” http://news.yahoo.com/s/afp/20081109/ts_alt_afp/uspoliticsobama_081109005144

10.1 Million Unemployed in U.S. – The Gainesville Sun: Saturday, 11-8-2008                 The nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century ….. About 10.1 million people were unemployed in October, the most since the fall of 1983. “October’s [2008] jobless rate was the highest since March 1994″…………. The jobless rate was 4.8 percent just one year ago [October 2007].                       http://www.gainesville.com/article/20081108/NEWS/811070259/1003/NEWS?Title=10_1_million_unemployed_in_U_S_

These articles are aimed at creating a “dire emergency” which will be turned into “political capital” to manufacture support for the New Adminsitrations programs and are not an honest analysis of what the numbers mean or what harm to America’s future prosperity may follow from misusing these numbers. Again, I’d suggest you consider how the banking/financial services mess started – manipulating numbers on loans ….

These same publication were, just weeks ago, extolling the virtues of a return to the economic days of the Clinton Administration – In fact the headlines in today’s papers state, Obama building new team with veterans from Clinton era and “Obama, Candidate of Change, Looks to Old Hands From Clinton Era”. http://news.yahoo.com/s/bloomberg/au5kqtuqgkhu

The article above does note that, “October’s [2008] jobless rate was the highest since March 1994” ……. well 1994 was smack in the middle of Clinton’s first term as President. A term when the Democrats controlled the White House, Senate and House of Representatives. It was during this “Congress” that President Clinton and the Democrats approved the changes that led to NINJA & Liar Loans. http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm 

Exactly how bad was 1994, that we are now comparing the “worst economic picture in our lifetimes” to that year. (I believe 1994 falls within “our lifetimes”). When 1994 came to a close, the Anuual unemployment rate for the year was 6.1%. Current projections suggest that when 2008 comes to a close, the annual unemployment number for the year will be 5.6 % – one full point higher than last year and 1/2 point lower than in Clinton’s 1994. (Translation – The unemployment percentage was 11.2% higher in 1994 than it is projected to be at the end of this year -2008). http://www.bls.gov/cps/prev_yrs.htm  

For those who might be curious about the remaining years of Clinton’s first term – here is the data;

1993 – Clinton Year 1: Unemployment 6.9% (A yearly average, 1/2 point (0.5%) higher than our currently monthly number).                                                                                                                                                            1994 – Clinton Year 2 – 6.4% – a yearly number nearly identical to the current monthly number, if the current “monthly” unemployment rate indicates immediate and “dire consequences”, how should we describe  1994.                                                                                                                                                                                                      1995 – Clinton Year 3 – 5.6% – a number identical to the projected unemployment rate for this year. (2008)                                                                                                                                         1996 – Clinton Year 4 – 5.4%.

The Average Annual Unemployment during Clinton’s first term in Office was 6.08 %. 

My point in making this comparison – I’m not contending the Economy in Clinton’s frist term was great, nor did that Economy reflect any type of “dire emergency” that warranted trillions of dollars in bailouts that the taxpayers would have to repay – back then the economy didn’t reqiure the socialization of American, did it? I’m not contending that the Bush economy is in stellar shape, it isn’t, the economy needs a change of direction – but, considering the fact that Bush’s detractors discuss the success of the Clinton Administration with one breath and denounce Bush with the next – I’m suggesting the data doesn’t support that type of comparison or hype. They are, after all, bringing back many of the Clinton Management Team.

Some of you may be asking, “Wasn’t the economy “better” during Clinton’s second term (1997 – 2000)? The unemployment numbers during Clinton’s second term were; 1997 – 4.9%, 1998 – 4.5%, 1999 – 4.2%, 2000 – 4.0%. The Average Unemployment number for Clinton’s second term – 4.4% representating a substantial improvement over his first term. The unemployment number for Clinton’s second term is simply, incredible. He deserves a great deal of credit, but remember President Clinton shared power – during Clinton’s last 6 years in office the Republicans controlled the House of Representatives and the Senate. He still deserves credit.    http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm  

How does Clinton’s second term compare to the last 4 years under Bush (2005 – 2008). 2005 – 5.1%, 2006 – 4.6%, 2007 – 4.6%, 2008 – 5.6% (projected) Average Unemployment in Bush’s second term is 4.9% a full half point higher (0.5%) than Clinton’s second term and a 1.1 % lower than Clinton’s first term. Bush’s first term averaged 5.5% unemployment: (2001 – 4.7%, 2002 – 5.8%, 2003 – 6.0, 2004 – 5.5%).  

The head to head comparison between Clinton & Bush on the economy and unemployment rates, based on facts, not political spin – looks like this:

1st – Clinton’s first term, 1997 – 2000,  4.4% average unemployed                    

2nd – Bush’s current term, 2005-2008, 4.9% average unemployed                             

3rd – Bush’s 1st term, 2001- 2004, 5.5% average unemployed                                         

4th – Clinton’s 1st term, 1993- 1996, 6.1% average unemployed 

Clearly, the current economic conditions come nowhere near replicating the Great Depression, in fact, right at this moment, things are not quite as bad as they were at the end of Clinton’s first term in office, nor are they as “good” as at the end of Clinton’s second term. The current economic conditions reflect, roughly, an average day in the Clinton administration.

If in 4 years Clinton could turn things around from a 6.1% unemployment at the end of his first term to a 4.4% at the end of his second, (he did so working with a Republican Congress) why is it that Obama can’t get it done while working with his fellow Democrats who are in control of the House & Senate?  

The News Media articles are based on the following statement, which is accurate, “The unemployment rate rose by 0.4 percentage point to 6.5 percent in October, and the number of unemployed persons increased by 603,000 to 10.1 million.  Over the past 12 months, the number of unemployed persons has increased by 2.8 million, and the unemployment rate has risen by 1.7 percentage points.” [From 4.8 to 6.5%] http://www.bls.gov/news.release/empsit.nr0.htm The article does not mention the substantial number of people who became unemployed due to the weather. Yes, the weather. Hundreds of thousands have been temporarily unemployed due to Octobers Hurricanes. You will see an improvement in the jobless numbers, without any underlying substantial change in the economy, when people return to work after the strom damage is repaired.   

Additional unemployment data follows for your consideration. One piece of additional background data that needs to be considered before a “fair” or “meaningful” comparison of any of this data can be made is the US population totals over the last several decades. The population of the US continues to grow substantially every decade. Many of the new Americans are immigrants. How might population growth affect how we view unemployment numbers? It takes a smaller percent of the population to reach 10 million every decade. As America gets bigger and bigger, 10 million gets smaller.           

US Population Totals

1970 – 203 Million People

1980 – 236 Million People

1990 – 248 Million People

2000 – 281 Million People

2008 Estimate 305 Million

2010 Estimate 315 Million

2020 Estimate 356 Million

http://www.usapopulationmap.com/race_2010.html

There are approximately 80 Million more Americans living in the US in 2008 than in 1980. That is an increase of 35%.  

In 1990 the US Population was 248 Million people, today it is 305 Million, an increase of 57 Million or  23%. The point I’m trying to make, a fair and meaningful comparison of the total number of people who are unemployed should take into the consideration the total number of people in the population.  10 Million in 1983 is equivalent to 13.5 million today. 10 million in 1990 is the equivalent of 12.3 million today.  

It is fundamently wrong to dismiss the need to consider population growth. Example A: If President-elect Obama is elected to a second term, at the end of his second term the US population is projected to be 356 million. If President Elect Obama’s economic strategies are successful and they produce an unemployment rate equal to the best single year ever achieved by President Clinton (4.0% in 2000) it will still be likely that even given that great success, there will be 10 Million unemployed at the end of Obama’s second term. Is the number, 10 Million, by itself, a fair or meaningful way to measure  whether the next President has a remarkable accomplishment, or is a total failure? Population growth must be part of the equation.  

Unemployment – Annual Averages – Total Unemployed:

1970 – 1974 Average Unemployed – 5.4% (7.6 Million Unemployed) – Inflation Rate 6.6%    http://www.bls.gov/opub/cwc/cm20030124ar05p1.htm    

1975 – 1979 – Average Unemployment – 7.9%  (Average 11.2 Million Unemployed) – Annual Average Inflation Rate 8.1  http://www.bls.gov/opub/cwc/cm20030124ar05p1.htm  

1980 – 7.5% – Unemployment – high month of 10.5 Million and low month of 8 Million – http://www.bls.gov/opub/mlr/1981/02/art1full.pdf     21.4 Million people were unemployed at some time in 1980. http://www.bls.gov/opub/mlr/1982/04/art5exc.htm

1981 –  First half 1981 7.4% – 10.48 Million Unemployed – http://www.bls.gov/opub/mlr/1981/08/art1full.pdf

1981 – Full year average – 7.6% – 10.76 Million Unemployed  – http://www.bls.gov/cps/prev_yrs.htm 

1982 – 7.2% – On Average 10.2 Million people were unemployed during 1982. Peaking at 12 Million unemployed in December 1982. (a monthly number – like the one quoted in the article) http://www.bls.gov/opub/mlr/1984/02/art4exc.htm

1983 – 9.6% – Unemployment rate drops 2.5% to 8.2% in December 1983 [from 10.7% in December 1984 –  7.5 % http://www.bls.gov/opub/mlr/1984/02/art1full.pdf   11 Million “full” unemployed, 7 Million more “partially unemployed” – http://www.bls.gov/opub/mlr/1983/06/art1exc.htm     

1985 – 7.2%, 1986 7.0%  (http://www.bls.gov/opub/mlr/1987/02/art1full.pdf) – Over 10 Million unemployed in both years.

1987 – 5.9 % – 8 Million Unemployed – http://www.bls.gov/opub/mlr/1988/02/art6full.pdf

1st half 1988 – a 14 year low of 5.5% –  7.45 Million Unemployed  http://www.bls.gov/opub/mlr/1988/08/art3full.pdf

1988 Full Year – 5.5% – http://www.bls.gov/cps/prev_yrs.htm

1989 – 5.3%, 1990 – 5.6%, 1991 – 6.8%, 1992 – 7.5%. http://www.bls.gov/cps/prev_yrs.htm              

1993 – 6.9%, 1994 – 6.1%, 1995 -5.6%, 1996 – 5.4%, 1997 – 4.9%, 1998 – 4.5%, 1999 – 4.2%,  2000 – 4.0%, 2001 – 4.7%, 2002 – 5.8%, 2003 – 6.0%, 2004 – 5.5%, 2005 – 5.1%, 2006 – 4.6%, 2007 – 4.6. 2008 – (projected) 5.6%  http://www.bls.gov/cps/prev_yrs.htm

 

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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