This would be a decent article, yet you fail to mention Obama's connections (which aren't as deep anyway). NY Times Ariticle to read: http://www.nytimes.com/2008/09/10/us/politics/10fannie.html

This is just so typical. I hope Obama runs a tv ad SOON...calling out McSame and the Double Talk Express.
Do you hear me Barack? Don't you dare lose this election because your being too nice. Time to play HARDBALL with these guys.

More proof don't to believe one word McCain/Palin say. It is all about being elected. They will not do a thing about this when elected. More of the same. Which isn't much at all.

Transparency and Accountability Removed by Former Sen Phil Gramm - McCain's Financial Adviser

Gramm was the Chairman of the Banking Committee, he pushed through the "Enron Loophole," which allowed investment banks to bypass Federal regulations governing futures trading, the reason why investment banks were able to falsely inflate the prices of oil, wheat, corn and other commodities through massive futures trading, causing the costs of gas, heating oil and food to go through the roof

Gramm also created the Gramm-Leach-Biley Act, that repealed laws separate banking, insurance, & brokerage activities—laws written after the Great Depression to prevent another Wall Street/Banking Industry collapse The value of the dollar has nose-dived, several major economic institutions have failed, Wall Street is unstable, and we are in a worsening economic situation.

Investment banks that gained the most from the Enron Loophole & the Gramm Act contributed more than a million dollars to Gramm's campaign

www.opensecrets.org/politicians/summary.php?cycle=2002&cid=N00005709

How Gramm's three meltdowns sabotage America's conservative principles

http://www.marketwatch.com/news/story/rip-reaganomics-revolution-1981-2011/story.aspx?guid={9B24FFF5-8588-44AD-A59E-227DB7F1DCB5}#comments

The Real Legacy of the Reagan Revolution

www.huffingtonpost.com/robert-scheer/the-real-legacy-of-the-re_b_112994.html

Freddie/Fannie MicMac scammy-wammy, gol-dammie, yet another shining negative example, or warning, about 'the government' and money, just got done reading another story, this one talking about oil royalties and how they get (mis)handled, scandal and sex and drugs and booze there too, is ANYone in our government sober and straight-up and not 'on the take' these days? What really goes on...what really goes on...I will NEVER sign mortgage papers so long as I may live, period.

If there is to be any bailout of FMNA/FHLMC, it should come with the provision that all pre-deregulation controls be returned. All involved should admit it was a huge mistake to deregulate these institution and to tell the American taxpayers of whom will ultimately pay for these mistakes why they did it.

remind everyone about McCain and the KEATING 5 that cost us millions and millions. anyone remember that....talk about it.

All these people care about is money and themselves. Politics is just a way for most of them to make business contacts.

I hope that the so-called "Liberal Mainstream Media" will latch on to this connection, but I surely am not holding my breath...

How much does the State of Alaska tax the oil extracted there and how much does that add to the energy costs of the lower 48?

You get the feeling McCain's favorite movie should be Casablanca? You know, "shocked" to find out there's slime oozing from all of his "friends" while pocketing their checks? I do.

This is perhaps the best reason McCain should not be president. Talk about hypocricy!! He just opens his mouth and the words tumble out and I just don't think he is as honest as he leads people to believe. This clarifys his dishonesty to me. I just hope America wakes up and elects the right person or we are in deeper trouble than we are now.

Feel free to add that Barack Obama ranks third in the amount of money Freddy and Fannie give to senators since 1989. John McCain is no where to be seen in the top 5 whick are all Democrats.

We need more of these type of articles to expose the hyprocracy (better stated as lies)of republican party. Good work.

As an above post points out, Phil Gramm was instrumental in removing the walls between banking, mortgages and the stock markets. Gramm Leach Bilely was a capstone to this effort. Gramm, of course, is on the Bullshit express with John McCain. Bill Clinton also weighed in, helping the Republicans vote down Glass Steagal.

Now as we watch Salmon Bros, and Washington Mutual go down, you can thank Phil Gramm and Bill Clinton. Deregulation has two fathers - not one.

At least McCain's staffers are likely to be effective in their future roles. They sure did a great job lobbying. ;)

(sniff...sniff...) Anyone else smell the presence of Tom DeLay? Phew...

Vote for McCain for more of the same. McCain and Palin must think we're all a bunch of dummies that they can hood-wink.

Of course the top 4 recipients of campaign donations from Fannie Mae and Freddie Mac are, in order: Chris Dodd, John Kerry, Barack Obama, and Hillary Clinton.

But hey, its the Republican slime machine that is playing fast and loose with the facts. You can trust Mother Jones.

Obama has also been feeling the strains of this entanglement as many top Democratic party members have ties to the two GSEs. The paper noted that James A. Johnson, the former head of his vice presidential vetting panel was once a chief executive for Fannie Mae along with Franklin D. Raines. Also Maria Echaveste, a top Clinton White House official, once lobbied for Freddie Mac, and William M. Daley, former commerce secretary and top Obama backer, was an in-house lobbyist.

Being a real estate appraiser, I know about the mortgage industry than most. Thanks MJ for reveiling just half of the story!

Freddy and fannie are run by a bunch of dems check them out top to bottom if you follow politics u will find dems all over the slime

i wonder which name Obama took the money was it Barry dunham or barry soetoro the indonesia citizen or was it a different name who know if he has ever told the truth wonder what his name will be tommorow

Let's see. You all point fingers at McCain. Obama received $126,000 from the freddie Mac and fannie mae club. two of fannie mae CEO's,
remember those evil influence peddling ceo's, from fannie mae are Obama economic advisers. Lies lies lies. Like Barack only tells the truth. you can thow the name liar at one side but never when it fits your side. By the way Obama voted for the bill that gave big oil companies tax breaks. McCain voted against it. Look in the mirror people and you will see yourselves.
Obama is hanging out with the normal working class people tonight, barbara striesand and company.........

You forget to mention who took home TENS OF MILLIONS and who was and is now the head of the governing body, Barney Frank. If '06, McCain tried to sponsor a bill to regulate and Franks said "it would hurt poor people" The dem's are at the bottom of this, do not try to tie it to McCain. This is all democrates. If you doubt it, look and see who has RUN both enterprizes for the last 10 years

John Mcain tried to get fannie/freddie reformed with the Federal Housing Regulatory Reform Act of 2005.(look it up) It was blocked by democrats and Obama did'nt even vote on it. Why?
Barack Obama was the #2 recipient of private donations from Fannie Mae/Freddie Mac in all their years of political donations. He was in office only 3 years!
Do the research its on record in the senate.

Enough distortions of fact! From Congressional Record May 25, 2006
http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190

"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."

snip

"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."

There's more. Please go read it.

So McCain tried to get Fannie/Freddie reformed. Guess who voted against it?
Yup, Democrats.

The more Obama and friends try to point the finger at McCain on this one, the more the mainstream media will finally be forced to print the entire truth.

So, please continue sharing only a small part of the story.

Not as deep? Two of Obama's TOP economic leaders are recent CEO's of Fannie Mae, Franklin RAines and Jim Johnson. If that isn't deep, how about Obama being one of the very TOP recipients of monies from Freddie Mac and Fannie Mae?

It never ceases to amaze me when voters read some article and make a decision without exerting a little energy to find out THE ENTIRE TRUTH. It just reflects people to lazy and too blind to find out if what they want to believe is true or partly true. Filtering information to only support what you want to be true is certain destruction.

well before we get on mccain lets ask a question...what's worse, lobbying congress on behalf of freddie or fannie, or being an ELECTED OFFICIAL who took money from fannie and freddie and then refused to sign any legislation that would have reformed the practices of both freddie and fannie. Obama received the 3rd most contributions among all reps or senators combined. Mccains staffers who are FORMER lobbyists were employed to do a job for freddie and fannie...Obama sold his soul and accepted money in an effort to get elected.

McCain quote from 2005 supporting a bill blocked by Democrats"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.

Hey you liberals. Please don't try to start this blame crap with freddie and fannie. OBAMA HAS THE TRUE SUSPECT AS ECONIMIC ADVISORS RIGHT NOW!! One former Fannie CEO,made 80 MILLION in 6 years from FANNIE MAE.
The chickens WILL come to roost on OBAMA

Oh nebraska, it is interesting that you cannot see that Obama IS the same, not just more of it. He is a liar, thug and he is trying to spin this but it cannot work when the people around HIM are as crooked as any have ever been

HAHAHA, Bring in old Billy C too. Who started this whole thing? HIM. Freddie and Fannie has been run both withing and without by his cronnies!!! Old Barny and the boys have made MILLIONS, no HUNDREDS OF MILLIONS off the cow

I love you MoJo, but come on; The Obama campaign took Fannie money and ran with it. This dishonesty was a bipartisan effort. See the Slate article.

http://www.slate.com/id/2200160/

I'm sure now is not the time for Obama to atone for his sins, but he might have to answer for this.

OH Jim,on 9/10
Like I am going to believe ANYTHING from the huffington post? you just made your who argument null and void by quoting that RAG.
When Enron went bankrupt, liberals tried to smear Bush via guilt by association, even though he hadn't anything to do with the crimes, which occurred when Clinton was president, and his Justice Dept. thoroughly prosecuted wrongdoers.
Liberals love to bleat about "greed," but they're silent about the greed displayed by political hacks appointed by Clinton, then chosen by Obama, that helped cause the meltdown of these companies.

This is the WHOLE story
On May 23, 2006, as a jury in Houston deliberated the case against top Enron executives Kenneth Lay and Jeffrey Skilling, a little-known regulatory agency in Washington, the Office of Federal Housing Enterprise Oversight (OFHEO), released a study with the dryly bureaucratic title “Report of the Special Examination of Fannie Mae.” The document received far less attention than the news from Enron, but its conclusions were stunning. In meticulous detail, it outlined a culture of corruption at the Federal National Mortgage Association — better known as Fannie Mae — that rivals the most serious corporate scandals in recent years. In this case, however, the main players are Washington insiders — some of them prominent veterans of the Clinton administration — and the scandal’s effects could ripple through Congress for years.

Fannie Mae is the biggest single source of money for mortgages in the United States. From 1998 to 2004, the years covered by the OFHEO investigation, it was headed by former Clinton budget director Franklin Raines, whose top management team included former Clinton Justice Department official Jamie Gorelick, sometimes mentioned as a future attorney general in a Democratic administration. During that period, the report says, Raines and his team grossly overstated Fannie Mae’s earnings — to the tune of $10.6 billion — for the purpose of paying themselves big bonuses. “By deliberately and intentionally manipulating accounting to hit earnings targets,” the report says, “senior management maximized the bonuses and other executive compensation they received, at the expense of shareholders.”

In doing so, the report says, Raines and his team steered Fannie Mae far afield from its original mission, transforming it from a stable business into a risky one. Fannie Mae has its roots in the New Deal, when it was established to increase the amount of money available for mortgages. Over the years, its main business has been to issue debt and then use the proceeds to buy mortgages from lenders, allowing those lenders to give out new mortgages. Originally a government agency, Fannie Mae went private in 1968, with the goal of “increasing the availability and affordability of homeownership for low-, moderate-, and middle-income Americans,” according to its mission statement.

But Fannie Mae is not just any private institution. It is congressionally chartered, meaning its existence is established in law, it does not have to pay state and local income taxes, and it is not subject to bankruptcy laws. It can borrow money at a lower rate than anyone else except the federal government itself. Given all that, there is a public perception that Fannie Mae is a rock-solid government institution. “There is an implied guarantee,” says Sen. John Sununu, a member of the Senate Banking, Housing, and Urban Affairs Committee who has sponsored legislation to reform Fannie Mae. “Investors think they are the next best thing to Treasuries.”...

According to the report, Raines became obsessed with propping up Fannie Mae’s earnings per share, or EPS, even if he had to use creative accounting to make it happen. Raines set a series of increasingly higher EPS goals that, if met, would trigger bonuses for the executive team that far surpassed what they received in salary....

It worked. Fannie Mae met its EPS goals, and Raines rewarded his top executives — and most of all himself — with unheard-of amounts of money.

Even though his salary never topped $1 million, Raines’s total compensation shot from $6.48 million in 1998 to $8.52 million in 1999, to $13.89 million in 2000, to $18.86 million in 2001, to $18.20 million in 2002, to $24.15 million in 2003, all on the strength of EPS bonuses. Investigators found that of the $90.12 million Raines was paid in that six-year period, more than $52 million came from EPS bonuses.

Gorelick’s situation was similar. OFHEO found that she took home $26.46 million in the period from 1998 to 2002 (she left in that year, so she wasn’t there for the entire period under investigation). Of that figure, nearly $15 million came from EPS bonuses.

Of course, it wasn’t legit. “Fannie Mae reported extremely smooth profit growth and hit announced targets for earnings per share precisely each quarter,” the OFHEO report says. “Those achievements were illusions deliberately and systematically created by [Fannie Mae’s] senior management with the aid of inappropriate accounting and improper earnings management.”

In other words, they cooked the books. And to make matters worse, according to OFHEO, when regulators began to catch on to what was happening, Raines and his team then “sought to interfere” with the OFHEO investigation by trying to get Congress to start up a separate probe of OFHEO. Fannie Mae also lobbied Congress to cut OFHEO’s funds unless it got rid of the top official in charge of investigating Fannie Mae.

YOUR BLOG HEADLINE IS CORRECT, THAT YOU COULD AD OBAMA TO THE LIST. I WOULD BE WORRIED IF IT WAS ANY OTHER POLITICIAN. MCCAIN HAS ENOUGH OF A HISTORY OF GOING ON HIS OWN. BUT OBAMA HAS NOTHING LIKE THAT. YOU CANT VOTE PRESENT IN THE WHITE HOUSE AS HE DID TO MANY TIMES IN THE STATE SENATE OF IL.. THE WSJ POINTS OUT THAT EVEN THOUGH OBAMA WAS ONLY IN THE SENATE A FEW YEARS HE BEHIND ON THE CHAIRMAN OF THE COMMITEE CHRIS DODD RECEIVED THE MOST CONTRIBUTIONS FROM FANNIE AND FREDDIE SINCE 89'. THIS PROBABLY EXPLAINS FRANK RAINS AND MR JOHNSON BEING ON HIS STAFF. RAINS HIMSELF MADE OVER 90 MILLION FROM FRED/FANN. MCCAIN WAS WERE ON THIS LIST? SO DONT WORRY ABOUT MCCAIN....

Thank you, Chris, for stopping by to shout at everyone.

There's a caps-lock key somewhere on your keyboard. Often, it's along the lefthand edge. It has an 'off' position as well as an 'ON' position.

Please learn to operate it.

You can find all over the public record.... Top money reciepients in Senate past 8 years... #1 Christopher Doss... #2 Barrack OBAMA ...

Mind you that Obama has been in senate only two years when this report was prepared in 2007 vs Doss eight years. If you claculate money per year, OBAMA will be at least four times higher than anyone else. CHECK YOUR FACTS BEFORE POSTING, PLEASE!

You can find the massive donations from Freddie and Fannie for McCain on the list of contributions to the Repub National Committee. That's where the big money goes.

Unfortunately the RNC opts to only report quarterly so those figures and names won't be available until Oct. 15th.

Pretty clever, huh?

The DNC reports monthly.

Another thing if you look at the lists, not just the company name but the job position is available. There is a difference if the donation comes from the executives or from the low level employees.

It was the freddie and fannie CEO Johnson who was on the list of advisers for Obama and Obama happened to receive the second highest contribution from these companies. Only Chris Dodd received more. And McCain's contribution came from low level employees.

Bonnie:just heard on cnn that that is not true, be careful with the truth....last week McCain's camp claimed Obama was consulting with Freddie Mac exec, that also not true, read above it was McCain & staff, just on cnn that was not true either & Obama said he talked briefly with him for less than 5 min. somehow we gotta stick to the facts guess that's not possible in this campaign!!!!

McCain got plenty from Fannie and Freddie, he just knew how to hide it.

"The New York investor Geoffrey T. Boisi, a member of Freddie Mac’s board, contributed more than $70,000 to Mr. McCain and Republican Party committees working for his election. Both he and Richard F. Hohlt, a Fannie Mae lobbyist, are among the McCain “bundlers” who have raised $100,000 to $250,000 from others, according to the campaign Web site."

You can definitely tell the liberals on this site. They are the ones that will NOT face the facts. McCain lobbied hard for passage of reforms and warned Pres. Clinton and the dems this day would come. They blocked him because they were being paid off by the bunch of rascallions that are now Obama's aides. If ANY OF YOU would do the research on the bill mentioned in about 100000 posts all over the net, you would see that the blame squarely falls on the dems for this mess. They wanted freddie and fannie to give money away to their friends and now we all have to reap what they sowed.

I think it is so funny that the Dems are blaming Graham, Bush and the Repubs for this and they give a pass to Barney Frank, Chris Dodd and several of Obama's advisors. Anyone who is fair and objective will see that Fannie Mae and Freddie Mac was a cash cow for Dem's running for President as the top two receivers of funds from them were Dodd and Obama. I saw where some lib was shooting off about the 800,000+ dollars that one of McCains advisors received and he conveniently left out the Millions and millions that Raines and the other bozo that advises Obama received. Libs are such hypocrits! McCain/Palin 08

Dave K. Thank you for putting the author of this blog and the uneducated dems in thier place with truth and accuracy!

The article forgot some names in its aim to set blame:

Franklin Raines - Fannie Mae CEO, Obama Economic Adviser
Jim Johnson - FannieMae CEO, Obama Economic Adviser
Rahm Emanuel - Obama backer, who served on the Board of Directors for Freddie Mac - and opposed EVERY reform proposed by the Bush Administration that would have affected Fannie Mae
Fannie Mae and Fredie Mac were created under the Clinton Administraion
Barney Frank
Paul Krugman
Jaime Gorelic

To all you folks that have sought the truth on this matter, and are not in the least bit - fooled by the propaganda - BRAVO!

It's nice to see.

But I know even after reading soooo much data revealing that Fannie and Freddie were cooked by Democrats, the facts will be stridently denied by the Left.

Does anyone know what faulty intellectual mechanisms account for this mass self-delusion?
I mean, these facts are readily available for crying out loud.
And this has all happened in the last decade, not during the middle ages. It's almost certain that if you're reading these things, you were an aware adult when the events were actually happening.

Amazing.

Isn't this the kind of oversight/takeover that Bush purposed back in 2003 and was voted down by Democrats "who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing."

Honestly this problem goes all the way back to Clinton. Who allowed for this lax regulation and oversight of Freddy and Fannie. The republicans were the ones who attampted to fix it.

Read the article from the NY Times dated 2003.
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

Obama is pissing the wind right now. He knows about the problem, because he is the problem. These are the kind of relaxed regulations he asked for when he was a city planner.

I'm going to add my two cents, mainly because that's all I have left. :)

I really appreciate everyone who has left a post, from the right and left. It just shows me that we've, that is us lowly, powerless citizens, have a lot of work to do to clean up the mess in our government. I am sick and tired of all the politicians robbing us blind, dems and repubs alike. Who is going to stand up for us taxpayers and yell "no more."

Frankly, both presedential candidates and their running mates suck. In a country of 300 million people we can't come up with better candidates? Surely there are people out there who are smarter, are good leaders, and possess the ability to fix what's wrong. Maybe we have to go to the brink to pull our heads out of our polarized thinking to be able to move forward.

If You were The Boss... which team would you hire?
>
> With America facing historic debt, multiple war fronts,
> stumbling health care, a weakened dollar, all-time high
> prison population, skyrocketing Federal spending, mortgage
> crises, bank foreclosures, etc. etc., this is an unusually
> critical election year.
>
> Let's look at the educational background of the
> candidates and see what they bring to the job:
>
> Obama:
> Occidental College - Two years.
> Columbia University - B.A. political science with a
> specialization in international relations.
> Harvard - Juris Doctor (J.D.) Magna Cum Laude
>
> Biden:
> University of Delaware - B.A. in history and B.A. in
> political science.
> Syracuse University College of Law - Juris Doctor (J.D.)
>
> vs.
>
> McCain:
> United States Naval Academy - Class rank 894 out of 899
> (meaning that, like George Bush, McCain was at the bottom of
> his class)
>
>
> Palin:
> Hawaii Pacific University - 1 semester
> North Idaho College - 2 semesters - general study
> University of Idaho - 2 semesters - journalism
> Matanuska-Susitna College - 1 semester
> University of Idaho - 3 semesters - B.A. in journalism
>
> Now, which team are you going to hire to lead the most
> influential nation in the world? Obama of course.
>
>
>
>
>

Certainly the Republicans are not without blame, but what about a few inconvenient facts:

President Clinton signed the Gramm-Leach-Bliley Act of 1999 repealing 66 years of consumer protections, after he had it re-written to include "requirements that banks make loans to minorities, farmers, and others who have had little access to credit."

Former Fannie Mae chief Franklin Raines was President Clinton’s director of the Office of Management and Budget. He has had a connection to the Obama campaign

Former Fannie Mae chief James Johnson is a prominent Democrat who was an adviser to 2004 Democratic presidential nominee John Kerry and was selected by Obama to help vet his vice presidential prospects.

President Clinton appointed William M. Daley to the Fannie Mae board in 1993. Daley was chairman of Al Gore's 2000 presidential campaign and Clinton’s secretary of commerce from 1997 to 2000. Daley is the son of former Chicago Mayor Richard J. Daley and brother of current Chicago Mayor Richard M. Daley.

Sen Barney Frank (D., Mass.) and Sen. Chuck Schumer (D., N.Y.) were strong supporters of Fannie Mae and Freddie Mac and protected them from stronger regulatory oversight. 2003:
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Sen. Chris Dodd (D., Conn), chairman of the Senate Banking and Urban Affairs Committee has consistently sought to allay fears about Fannie and Freddie, saying they were fundamentally sound.

Jamie S. Gorelick was Deputy Attorney General during the Clinton administration. Although Gorelick had no background in finance, she joined Fannie Mae in 1997 as vice chair and departed in 2003. Federal investigators say that Fannie Mae's management directed employees to manipulate accounting and earnings to trigger maximum bonuses for senior executives from 1998 to 2003

The top five recipients of Fannie Mae and Freddie Mac campaign contributions (1989-2008) are Democrats: Dodd, Kerry, Obama, Clinton and Kanjorski. Obama has only been in office a short while.

Odd that the article is about McCain and Fannie Mae & Freddie Mac, yet DOES NOT MENTION that McCain cosponsored legislation -which the Democrats blocked - to regulate those organizations.

McCain said, in 2006: "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."

Obamna voted "not present" as usual. AWOL.

Read this and weep. Republicans have been trying to STOP Freddie/Fannie going back to 2002. And no Rep did not have veto proof.
Listen to Sean Hannity tonight and listen to the House tapes regarding the Democrats lieing that Freddie and Fannie were pefectly fine. I didn't know you all were socialists because that is what you will get with Obama this Bail out was the first stage of Socialism.

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By STEPHEN LABATON
Published: September 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 industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.
Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.
The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.
The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.
After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.
''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.
''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.
The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.
At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.
Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.
After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.
''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.
Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.
Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''
The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.
Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.
''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

Thank you for the balance Laura.

By the way, Melissa H. wonders where you are :)

I know we're not talking about legislation here, but there were plenty of Democrat GSE supporters attacking Republicans for requesting GSE regulation because "there is nothing wrong with them".

If you ignore the inflammatory text in this video, the politicians comments speak for themselves:

http://www.youtube.com/watch?v=_MGT_cSi7Rs

Oh for Pete's sake! McCain was innocent of that keating mess..move on. there is so little to attack mccain on after 28 years in the senate. Obama got all kinds of earmarks, don't think we don't know that. "An Organizers job is to rub raw the ssores of discontent and mount a socialist revolution"...Saul"red"alinsky/marxist mentor: B.H. Obama Guess this will never see print.

I can't believe your statement got past the Liberals. Hooray for you!

Just because someone votes against a particular bill, doesn't mean he or she is voting against the main thrust of the bill. Many Congressmen and Senators object to the 'tag-alongs'--ammendments squeezed in at the last moment that have nothing to do with the bill itself. So, if you're advocating 'getting the whole story', you might want to look at what ammendments were part of the bill, instead of saying "yep, party XYZ voted against it" wholesale.

You might want to check out who's advising McCain: two of his top advisors were LOBBYISTS for Fannie and Freddie.

Amen!

I think Hollywood and all of its extremely wise ( and rich contributors to the Obama camp ) celebrities is a very good barometer of the character of Obama!! He is definately bought and paid for. Oprah be praised-you will rule one way or the other!

Educate yourself from somewhere other than a blog. Obama himself is the 2nd largest recipient in congress of Fannie and Freddie money. The largest recipient was Senator Dodd and he recieved that money over 9 years. Obama has only been in the senate for 3. John McCain tried to stop the corruption going on in Freddie and Fanny back in 2005 but the democrats stopped the bill

Educate yourself from somewhere other than a blog. Obama himself is the 2nd largest recipient in congress of Fannie and Freddie money. The largest recipient was Senator Dodd and he recieved that money over 9 years. Obama has only been in the senate for 3. John McCain tried to stop the corruption going on in Freddie and Fanny back in 2005 but the democrats stopped the bill

For the record, this financial crisis was born bread and raised by the Democratic party, the republicans,including John McCain, tried to stop it all along. Educate yourself!

Thank God you didn't drink the punch. I am glad there are still people out there that educated themselves. Do you think we can ever reach them?

In 2002 McCain voted for the Sarbanes-Oxley Act, which passed the Senate without opposition.[53] In 2007, however, McCain stated that he regretted his vote in favor of Sarbanes-Oxley,[54] which strengthened financial reporting requirements for publicly held companies but which has been the subject of complaints from businesses.

In 1999, McCain voted FOR the Gramm-Leach-Bliley Act, which passed in the Senate by a vote of 54-44.[52] The deregulation bill loosened restrictions on the activities of banks, brokerage houses, and insurance companies.

Countrywide and its employees have contributed $1.3 million to political parties, candidates and committees since the 1990 election cycle, according to the CRP. Nearly 60 percent of that went to Republicans and 40 percent to Democrats.

Corporations cannot give to candidates, so the center's list adds up contributions from Fannie and Freddie employees and their families. Obama has received a lot of money during his presidential campaign, though, and Fannie and Freddie don't make his list of top 20 companies. (The top three companies with employees donating to Obama are Goldman Sachs, University of California, and Citigroup, according to the center.)

The New York Times looked at contributions from Fannie and Freddie's boards of directors and lobbyists, who are technically not employees. That analysis found Fannie and Freddie-related contributors gave $169,000 to John McCain and his related committees, compared with $16,000 to Obama and his related committees.

to champane, regarding McCain trying to stop the corruption in 2005: the bill was put forward in 2005 by 3 sponsors (McCain wasn't one of them). It was "ordered to be reported with ammendment" to committee 6 months later. McCain signed on as a cosponsor 10 months after that, in May 2006, after the bill had sat in the Republican controlled (chair and majority membership) committee for all that time. It never did leave the committee for a floor vote, and was cleared ("killed") at the end of the 109th session in Jan 2007. A bill only needs a simple majority vote to leave the committee - the 60% rule only comes into play in the full Senate to invoke cloture (i.e. end a fillibuster)

Note that the cumulative 20 year total of campaign contributions to ALL congress members amounts to "only" $4.85M. On the other hand, the LOBBYING money spent by Fannie/Freddie over only the last decade amounts to over $170M.

So McCain signed onto a dying regulation bill in May 2006. Obama warned publicly of a coming housing crisis in March 2007.

If McCain was so prescient about the crisis, why didn't he actually PUSH for the bill's passage rather than just reading a statement into the Congressional Record in support? Similar admonishments apply to Obama and the Democrats. There's plenty of blame to go around, trying to affix it to one party or one individual is ludicrous.

p.s. PDXDave: Obama obviously didn't vote "not present", because the bill was never brought up for a vote.

p.p.s. Justin: I've seen a number of variations of who the largest recipients are, including Obama as variously #1,2,or 3, but nowhere have I seen H.Clinton listed higher than 12th.

Try to stick to the facts, otherwise your potentially valid other points just lose credibility.

Between McCain and Palin there is not once ounce of intellect that comes out of their mouths. They just sensationalize everything to get the popular vote.
Further, neither one of them is corruptless. (Keating 5 for McCain, where he took gifts, jet rides and holiday for him and his family to Bahamans and alleged expenses cheating for Palin + many other things currently being investigated) I believe all politicians are corrupt - it is like poverty - it is relative.
Thanks Susan

Top Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Dodd @ $133,900
Kerry @ $111,000 and
Obama @ $105,849 yet i noticed your paper chose to talk about McCain's campaign having received money. Sorry if I don't have faith in Mother Jones investigative journalism. You will definitely slant all to the left.

The current economic crisis is the result of greed and incompitence on Wall Street and not by Fanny and Freddy.
Federal housing data show that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the current crisis. John(Mr.DeRegulator) McCain and his (and his party's) ideology is the main cause of the recklessness of Wall Street which led to this mess.

We The People have got to quit worrying about the people in the private sector PERIOD. If they didn't break the law. Lobbyists...WHO CARES! Who did those lobbyists GREASE?!?!

FOLLOW THE MONEY PEOPLE!

The Community Reinvestment Act ultimately led to this whole nightmare. LOOK IT UP YOURSELF! Bush tried to reign in Freddie and Fannie 8 times. Count them EIGHT times! What organizations got the most from the CRA?!? The money flows to ACORN!!!!!! It was a socialist idea that brought about a problem that ONLY a SOCIALIST SOLUTION could fix. Now we happen to have a SOCIALIST presidential candidate that has extensive ties to both ACORN and FANNIE MAE money. And now we see voter fraud (Yes real voter fraud) being perpetrated by one of the organizations that got all the money. And the swing state itself that has the BIGGEST MOST GIGANTIC Loophole that allows VOTER FRAUD was placed their by the very same candidate! And the very same organizations are the one's pointing the loophole out to every single democrat they meet.

These facts alone bring up some serious questions. But when you see that the leaders of Fannie, you know the CEO's (the real bad guys), are running that very same presidential candidate's campaign....

The hell with lobbyists. IMPEACH OBAMA NOW!!!!!!!!!!!!!!!!!!!!!!!!!!!

"at least 20 McCain fundraisers have lobbied for Fannie Mae and Freddie Mac, pocketing at least $12.3 million over the last nine years"
12.3m divide by 20 then divide by 9. that's about 70k per person per year. doesn't seem like a lot.

I beleive you are right could you by chance tell me where you got your info.
signed a desperate Independent in a State full of jack off Libs.