He also tried to do something about it then but it was blocked by Democrats in the banking committee led by senior Democrat, Chris Dodd, the number one pig at the handout trough from their lobbyists, the number two pig at that trough, Barack Obama. President Bush had pushed for tighter oversight of the runaway mortgage giants in 2004 and was thwarted then also by the Democrats. Ed Morrisey has much more on this including this hard hitting speech from John McCain on the Senate floor.
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.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
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. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
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.
I urge my colleagues to support swift action on this GSE reform legislation.
Franklin Raines made millions of dollars as CEO of Fannie Mae while cooking the books to make them look like they were turning a profit and is currently a top adviser to Barack Obama on the economy and housing. Tim Johnson also made millions as CEO there and briefly was in charge of vetting Obama's VP pick. When McCain speaks of corruption on Wall Street and in Washington this is what he is talking about and has sought to reform. Where was Obama, racing Chris Dodd to the money trough, not helpng McCain reform the system just enjoying the perks.
I wonder if Mitt Romney would be available to help straighten all this out. John McCain appears to be far more savvy about economics and the financial markets than he lets on. I am sure this issue will come up in the debates the first one being next Friday and McCain should be able to shred Obama on this.