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October 12, 2008

McCain Letter Demanded 2006 Action on Fannie and Freddie. What did Obama do?

Topics: Political News and commentaries

I find it mind-boggling that the Republicans, and especially John McCain since he's the one running for president, are being blamed by Obama and the media for what they themselves are responsible for and what John McCain and the Republicans tried to prevent in the first place. And it's not like there's not more than sufficient evidence to substantiate John McCain's position and his efforts. Take for exampe the letter in the extended post and at Human Events demanding regulatory action on Fannie Mae and Freddie Mac.

Human Events offers this introduction:

Sen. John McCain's 2006 demand for regulatory action on Fannie Mae and Freddie Mac could have prevented current financial crisis, as HUMAN EVENTS learned from the letter shown in full text below.

McCain's letter -- signed by nineteen other senators -- said that it was "...vitally important that Congress take the necessary steps to ensure that [Fannie Mae and Freddie Mac]...operate in a safe and sound manner.[and]..More importantly, Congress must ensure that the American taxpayer is protected in the event that either...should fail."

Sen. Obama did not sign the letter, nor did any other Democrat.

In fact, not only did Senator Barack Hussein Obama not sign the letter, and although he had only three years in the Senate, he became the second largest recipient of Freddie Mac and Fannie Mae campaign contributions:
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, 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.

Here's the letter demanding action:


Here's what John McCain said on 25 May 2005, speaking to the Senate:

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.

The legislation was blocked by Democrats, with the assistance of a few Republicans.

Related: WND: "Fannie Mae, Freddie Mac execs now offering advice to Obama -
Senator's links to mortgage giants also include campaign contributions

Posted by Richard at October 12, 2008 11:15 AM

Big deal. The vast number and value of sub-prime loans were made by Commercial Mortgage Companies. Commercial Mortgage Companies!

Democrats called repeatedly for tighter regulation of Commercial Mortgage Companies. Republicans repeatedly turned it down.

Here is an excellent, detailed article on the Financial Crisis, saying that Fannie and Freddie were but a small part of the cause of the crisis.

Posted by: smrstrauss at October 12, 2008 4:52 PM

Interesting article there, but it's a bit like putting the horse in front of the cart, and skirts around what drove the train of disaster that we ended up with. And if you fail to see the initiating role that the Democrats and Fannie and Freddie played in driving the train - and yes, along with Republicans that simply went along with them, then no amount of persuasion from the stand point of common sense is going to convince you.

And if you somehow find Obama having an iota of experience in government management and running an economy and or actually believe that the Democrat's low income housing programs wasn't the primary cause of our problem (juxtaposed with near-fraudulent oil speculation), there's no amount of common sense that can convince you otherwise there either.

I find your thoughts on this and accepting the presentation in the article you refer to in blind faith entirely wrong and driven more by emotion or naivite', and it is my belief that you've made up your mind on the basis of agenda-driven facts and articles by writers who themselves have an agenda - instead of taking a step back and looking at the problem through facts and common sense.

However, this is just my opinion, and you have every right to have your own, regardless of whether I agree with you or not. That's one of the reasons I'm over here fighting for your right to be wrong as hell and believe and say anything you so desire.

God Bless America, Semper Fi, and God help us if our electorate is so naive as to fall for the Obama campaign's massive con job on America. One need only look at the comments by misguided but well intentioned commenters to know we sure could use all the help common sense folks can muster up come November.

Posted by: Mike in Iraq at October 12, 2008 8:42 PM

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