THE DEMS DID IT~FINANCIAL CRISIS IN AMERICA

The Dems did it!
Sunday, October 5, 2008


When Barack Obama, Nancy Pelosi, Harry Reid, and other upstanding Democrats point to the “failed policies” of the Bush administration as the cause of the current chaos in the financial markets, they are deliberately trying to transfer the spotlight from their own party’s mistakes. The current crisis can be traced directly to President Clinton’s revision of the 1977 Community Reinvestment Act (CRA).

The revision essentially required banks to expand their loan portfolios, to include more low-income customers. Bank examiners rated banks on their compliance with these revisions. Community organizations such as ACORN (Association of Community Organizations for Reform Now) were empowered to comment on bank compliance. Banks quickly learned that a generous donation to these organizations was easier than defending themselves against complaints filed by these organizations. Loans made to low-income borrowers were immediately sold to Fannie Mae and Freddie Mac, whose policies also were revised to allow the purchase of these loans.

The task of revising Fannie Mae’s regulations fell to Herb Moses, Director of Product Initiatives, who was also the homosexual “lover” of Rep. Barney Frank, who was a member of the House Banking Committee which had oversight of Fannie Mae. These policy revisions were, in hindsight, spectacularly stupid. Rather than income verification, and standard debt-to-income analysis, a welfare check stub, or enrollment in a credit-counseling program were acceptable as “proof” of ability to make mortgage payments.

Freddie Mac specialized in the repackaging of these mortgages into securities which carried the federal government’s seal of approval, and resold them through the financial markets.

The structure of disaster was almost complete. The Clinton administration directed federal agencies to expand credit, particularly home loans, to low-income buyers. ACORN, and other community organizations were empowered to promote loans and encourage banks to make them, and Fannie and Freddie were instructed to buy the loans. The Federal Reserve joined the parade by reducing interest rates to help facilitate these loans.

No wonder the housing market exploded.

Countrywide, once heralded as the nation’s largest CRA lender, with $600 billion in sub-prime mortgages, was among the first to fall. Lehman Brothers, an eager buyer of Freddie Mac securities, also collapsed. Then fell Fannie Mae and Freddie Mac; the ripples are still rippling across the financial markets.

As early as 2004, the Bush administration tried to increase regulation of Fannie and Freddie, but ran into stiff opposition from Democrats, especially from Barney Frank, who was afraid that lending activities would be sacrificed in the name of market risk. Now, Frank is blaming the Republicans for failing to enact reforms that he and his party blocked.

During the high-flying days at Fannie and Freddie, more than $200 million was spent on lobbyists and political contributions. Chris Dodd, Democrat Chair of the Senate Banking, Housing and Urban Affairs Committee, collected $165,400. Barack Obama received $126,349, and Barney Frank got $42,350, of the $4.2 million the two housing giants gave to Congressmen.

Clearly, the Democrats caused the problem by insisting that mortgage money be made available to people who could not qualify for a mortgage under normal banking procedures. Democrats, led by Barney Frank and Chris Dodd, blocked Republican efforts to tighten the regulations that governed Fannie and Freddie. Now, Democrats point the finger of blame at the Republicans.

The current crisis is yet another example of the mess government makes when it indulges in social engineering by trying to manage a free market. The declaration that all people have a “right” to housing was a popular theme among liberals in the 1990s. So popular, in fact, that in 1994, a lame-duck Democratic Senate ratified a U.N. treaty which effectively adopted the obligation to provide housing to everyone. Relaxation of the lending requirements at Fannie and Freddie was one way of meeting this new U.N. obligation.

The division in Congress, and in the country, about what caused the problem and what to do about it is a bright line between the people who believe government power must be limited by the people who are governed, and the people who believe government must limit the power of people who are governed. The people who subscribe to unlimited government power have achieved ascendency in Congress, and in the country. This philosophy results in disaster.

On the other hand, people who believe that the power of government must be limited by the people who are governed, may see the urgency of getting angry, active, and involved in government at every level. The people who share this belief are the people who have the power to unseat socialist politicians and unleash another era of freedom and prosperity.

JUST DEMOCRATS DESTROYING AMERICA~FREDDIE AND FANNY ARE JUST FINE ?? LoL

DEMOCRATS IN THEIR ON WORDS DEFENDING FREDDIE MAC AND FANNIE MAE~CROOKS !!

The REAL truth about Fannie Mae & Freddie Mac failures !

I FOUND THIS ARTICLE QUITE INTERESTING !!

ELECTION 2008
Fannie Mae, Freddie Mac execs now offering advice to Obama
Senator's links to mortgage giants also include campaign contributions

Fannie Mae headquarters in Washington, D.C.
NEW YORK – Campaign contributions from Fannie Mae and Freddie Mac made to Barack Obama may backfire if the Democratic presidential hopeful wages an aggressive campaign to cast blame on rival John McCain and the Republicans in Congress for the mortgage-related losses that forced the U.S. Treasury to take over the quasi-governmental mortgage giants.

A review of Federal Election Commission records back to 1989 reveals Obama in his three complete years in the Senate is the second largest recipient of Freddie Mac and Fannie Mae campaign contributions, behind only Sen. Christopher Dodd, D-Conn., the powerful chairman of the Senate banking committee. Dodd was first elected to the Senate in 1980.

According to OpenSecrets.com, from 1989 to 2008, Dodd received $165,400 in Fannie Mae and Freddie Mac campaign contributions, including contributions from PACs and individuals, followed by Obama, who received $126,349 in such contributions since being elected to the Senate in 2004.

In contrast, McCain warned of the coming mortgage crisis as he pressed in 2005 for regulatory reform of Fannie Mae and Freddie Mac.

"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," McCain said on the floor of the Senate in 2005, speaking in favor of the Federal Housing Enterprise Regulatory Reform Act of 2005.

McCain pointed out Fannie Mae's regulator had stated 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 $10.6billion accounting scandal.

The bill passed the House but was never brought up for a vote in the Senate, largely because of Democratic opposition to change in the Fannie Mae and Freddie Mac regulatory structure that remained in place until the Treasury takeover two weeks ago.

As evidenced by the failure to pass the Federal Housing Enterprise Regulatory Reform Act of 2005, the Democrats in Congress have repeatedly fought back Republican Party efforts to reform the two mortgage banking giants.

Instead, Democrats in Congress have sought to preserve the quasi-governmental status of the mortgage giants, seeing Fannie Mae and Freddie Mac as places to locate former top Democratic Party operatives, where they have earned millions in compensation, despite a continuing series of financial scandals. Enron-like accounting manipulation, for example, boosted earnings to a level at which massive executive bonuses could be paid.

In the aftermath of the U.S. government takeover, attention has focused on three Democrats with close ties to Obama who served as Fannie Mae executives: Franklin Raines, former Clinton administration budget director; James Johnson, former aide to Democratic Vice President Walter Mondale; and Jamie Gorelick, former Clinton administration deputy attorney general.

All three Obama-related executives earned millions in compensation from Fannie Mae.

Johnson earned $21 million in just his last year serving as Fannie Mae CEO from 1991 to 1998; Raines earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004; and Gorelick earned an estimated $26 million serving as vice chair of Fannie Mae from 1998 to 2003, according to author David Frum, a fellow at the American Enterprise Institute.

All three have been involved in mortgage-related financial scandals.

In 1998, according to the Washington Post, Gorelick, as Fannie Mae vice chairman, received a bonus of $779,625, despite a scandal in which employees falsified signatures on accounting transactions to manipulate books to meet 1998 earning targets. The moves, in turn, triggered multi-million-dollar bonuses for top executives.

Gorelick was embroiled in another controversy over an alleged conflict of interest when a 1995 memo she authored as deputy attorney general surfaced while she was a member of the 9/11 commission.

The memo, which became known as the "Gorelick Wall," appeared to establish barriers that barred federal anti-terrorist criminal investigators from accessing various federal records and databases that may have assisted them in their criminal investigations.

According to the Associated Press, Raines and several other Fannie Mae top executives were ordered in a civil lawsuit to pay nearly $31.4 million for manipulating Fannie Mae earnings over a period of six years to trigger their massive bonuses.

Raines was also forced in the settlement to give up Fannie Mae stock options valued at $15.6 million.

Last year, the Securities and Exchange Commission alleged Freddie Mac had engaged in accounting fraud from 2000 to 2002, imposing a $50 million fine on the company and on four executives fines for amounts ranging from $65,000 to $250,000.

Raines currently advises Obama on housing policy.

Johnson was appointed to head Obama's vice presidential selection committee, until a controversy concerning an alleged $7 millions in questionable real estate loans he received on favorable terms from failed sub-prime mortgage lender Countrywide Financial surfaced and forced him to step down.

WND previously reported a panel chaired by Elena Kagan, dean and professor of law at Harvard Law School, speculated at the June two-day meeting of the American Constitution Society that Gorelick was a possible attorney general cabinet appointment if Obama should be elected president.

The decision by the U.S. Treasury to take over Freddie Mac and Fannie Mae could end up costing the U.S. taxpayer as much as $100 billion, although the extent of losses at the two giant mortgage companies remains to be determined.

According to the Wall Street Journal, Freddie and Fannie own or guarantee about $5.2 trillion worth of mortgages.

The riskiest loans held by Freddie and Fannie are known as "Alt-A" and sub-prime mortgages, worth about $780 billion, or about 15 percent of the total portfolio.

The federal government takeover of Freddie and Fannie passes to U.S. taxpayers the contingent liability for failures in the entire $5.2 trillion loan portfolio held by the two mortgage giants.

Over the past four quarters, Freddie and Fannie have suffered losses of about $14 billion, as the mortgage market has been hit by a wave of defaults and foreclosures not seen in the U.S. since the 1930s.

Good video too !