Some of you know about Barack Obama’s recently uncovered connections to Fannie Mae and Freddie Mac. This clip – a mixture of CSPAN and Fox News clips – explains it better:
1) Barack Obama was in the same room, and listening to the same speech in 2005 when he was being sworn in. He listened to the interim head of Fannie Mae (Daniel Mudd) call Democrats and Congressional Black Caucus “family”.
2) He listened to the interim CEO of Fannie Mae talk about Fannie Mae’s woes. “Putting our house in order,” as he put it.
3) Obama’s Jim Johnson (VP search committee) was formerly employed by Fannie Mae.
4) Obama received the second largest number ($126,349) of political contributions from Freddie Mac and Fannie Mae, despite his relatively short period of time in the US Senate. This is contrasted with Chris Dodd (Democrat) and John Kerry (also a Democrat) who have spent decades in the Senate.
In short: Obama knew there were problems with Freddie Mac and Fannie Mae and did nothing.
I take that back: he did do something. He took their campaign contributions.
This is in STARK contrast to John McCain, who warned people about the problems with the two troubled GSEs back on May 15th, 2006:
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.
Gee…I wonder why the press isn’t making a big deal out of this?