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Thread: Touch decision coming (Barack Obama and ties to Fannie Mae)

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    Elite Member tkdgirl's Avatar
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    Default Touch decision coming (Barack Obama and ties to Fannie Mae)

    FOR ALL THE talk about energy, taxes and health care, the first economic policy challenge to face the next president could be coping with a crisis at Fannie Mae and Freddie Mac -- and the related job of reforming them to make sure they never put the global financial system at risk again.

    Republican John McCain, long a skeptic of the two government-sponsored enterprises, has said that, if the government must bail them out, it should fire their current boards and managers en route to full privatization. Until now, Democrat Barack Obama has been more circumspect, agreeing with Mr. McCain that taxpayers should come before shareholders and managers but offering few concrete ideas about the ultimate dispensation of the companies. But this week he's given an encouraging hint of fresh thinking about the problem.

    This is not an easy one for the Illinois senator because of the companies' close ties to his party. To be sure, both Republican and Democratic politicos have held well-paid positions in the two firms or have partaken of the tens of millions that they spend on lobbying. But a few Republicans, such as Mr. McCain and Sen. Richard C. Shelby (Ala.), who has been chairman and ranking Republican on the Senate Banking Committee, have taken them on over the years, warning about their use of an implicit government guarantee to pursue private profits. Meanwhile, Democrats were not only politically but intellectually committed to the companies, seeing them as innovative public-private institutions that have been a boon to homeownership. In the current crisis, their biggest backers have been Democrats such as Senate Banking Committee Chairman Christopher J. Dodd (Conn.) and House Financial Services Committee Chairman Barney Frank (Mass.). Two members of Mr. Obama's political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.


    Now, however, Mr. Obama may be inching away from the conventional wisdom. On Monday, he hinted for the first time that he thinks the GSEs' current model is unsustainable. "I think long-term what we have to do is, we have to go ahead and make a decision, if these are public entities, then maybe they ought to get out of the profit-making business," Obama said at a campaign appearance in Davenport, Iowa. "And if they're private entities, that we don't bail them out." He added: "We're going to have to structure that carefully how we make that transition in order that we don't get the housing market even more spooked than it already is." Some Democrats, such as former Treasury secretary Lawrence H. Summers, have "gone ahead and made a decision"; Mr. Summers has basically echoed Mr. McCain's call for eventual privatization. But, however hedged, Mr. Obama's comment shows that he understands the stakes and that he is moving in the direction of economic reality.

    Tough Decision Coming - washingtonpost.com
    Last edited by tkdgirl; September 19th, 2008 at 11:55 AM.

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    Elite Member louiswinthorpe111's Avatar
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    Quote Originally Posted by tkdgirl View Post
    Now, however, Mr. Obama may be inching away from the conventional wisdom. On Monday, he hinted for the first time that he thinks the GSEs' current model is unsustainable. "I think long-term what we have to do is, we have to go ahead and make a decision, if these are public entities, then maybe they ought to get out of the profit-making business," Obama said at a campaign appearance in Davenport, Iowa.
    Ok, this is totally inaccurate because Obama wasn't in Davenport Iowa on Monday. I know because I live in Davenport, Iowa, and Obama hasn't been here in about a month.

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    Elite Member tkdgirl's Avatar
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    Quote Originally Posted by louiswinthorpe111 View Post
    Ok, this is totally inaccurate because Obama wasn't in Davenport Iowa on Monday. I know because I live in Davenport, Iowa, and Obama hasn't been here in about a month.
    The article is from August. Forgot to post the link.

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    Elite Member Grimmlok's Avatar
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    Republican John McCain, long a skeptic of the two government-sponsored enterprises, has said that, if the government must bail them out, it should fire their current boards and managers en route to full privatization.
    HAHA that's a load of shit.
    I am from the American CIA and I have a radio in my head. I am going to kill you.

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    Elite Member kingcap72's Avatar
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    This is not an easy one for the Illinois senator because of the companies' close ties to his party.
    The Republicans, including McCain, have close ties to Fannie Mae, too.

    Freddie Mac and Fannie Mae political donations

    Employees of the mortgage giants give almost $4.3 million to federal elected officials and their various campaign committees since 2005.

    September 9, 2008

    The federal takeover of mortgage giants Freddie Mac and Fannie Mae may stabilize the economy and help the housing industry. But politicians could take a hit, particularly Democratic presidential nominee Barack Obama.

    Employees of the government-sponsored firms, which own or guarantee half of the nation's mortgages, have donated almost $4.3 million to federal elected officials and their various campaign committees since 2005.

    Obama is the largest individual recipient at about $112,000, federal campaign finance reports show.

    One reason Obama has collected the most is that he has raised far more than any other federal candidate, $390 million so far. The mortgage money has not influenced Obama's stands, a campaign aide said.

    The candidate has "consistently supported stepped-up regulation for Fannie Mae and Freddie Mac to ensure that instead of rewarding speculators who relied on the government to reap massive profits, taxpayers and struggling homeowners are protected," the aide said.

    Republican nominee John McCain has taken $16,400 from Freddie and Fannie employees since 2005. McCain campaign manager Rick Davis is past president of the Homeownership Alliance, an advocacy group whose members included Freddie and Fannie. In that role, he defended the companies against increased regulation.

    Obama's running mate, Joe Biden, took just one donation, for $500, from one Freddie employee.

    McCain's running mate, Sarah Palin, is Fannie- and Freddie-free, having never run for federal office.

    Freddie Mac and Fannie Mae political donations - Los Angeles Times

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    Elite Member witchcurlgirl's Avatar
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    It's not a load of shit that Mccain tried to regulate Fannie and Freddie...

    I know that people don't like McCain, but facts are facts:

    The Federal Housing Enterprise Regulatory Reform Act was introduced in 2005, co -sponsered by McCain,Elizabeth Dole, Sununu and Hagel.

    McCain's statement in 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



    GovTrack: Senate Record: FEDERAL HOUSING ENTERPRISE REGULATORY REFORM... (109-s20060525-16)



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    Elite Member ManxMouse's Avatar
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    [Republican John McCain, long a skeptic of the two government-sponsored enterprises, has said that, if the government must bail them out, it should fire their current boards and managers en route to full privatization. ]

    In other words....more deregulation, which got us into this shit storm to begin with. Bloody amazing!
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    Elite Member Grimmlok's Avatar
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    Yeah, McCain's pontificating on the whole Fannie Mae thing rings a tad bit hollow.. sort of like that 'anti torture' legislation he got passed, and then was suddenly silent when Bush did away with it with a signing statement.

    John McCain's campaign manager, Rick Davis, also has ties to Fannie Mae, though less directly.


    Davis, was president of the Homeownership Alliance, a Fannie Mae and Freddie Mac-led advocacy group which has tried to fend off regulation sought by large private banks and mortgage lenders.

    The front story of the Homeownership Alliance is that it sought to make home ownership affordable to the broadest possible range of people and feared that that this mission would be compromised if Congress stepped in with too many rules.

    The back story, according to critics, is that Fannie Mae and Freddie Mac feared that Congressional meddling would lower their healthy profits.

    The issue really hasn't been who could buy a home. It's been more about the playing field for the vast mortgage market.

    Fannie and Freddie are publicly-traded companies, but they are federally-chartered, which creates the widespread impression that if they really screw up, the government will bail them out.

    Private banks don't operate with that perception and so, they argue, their costs of doing business are higher.

    For years, banks' Hill allies, mostly Republicans, including Richard Baker, of Louisiana, have sought 'reforms' to level the playing field.

    Davis, who has a 25+ year pedigree as a lobbyist and Republican political consultant, was hired in 2000 and the Homeownership Alliance was ginned up, to help Fannie and Freddie build support to rebuff Baker's efforts. The organization dissolved about two years ago.

    Obama, McCain's ties to Fannie Mae: The Swamp
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    Elite Member Fluffy's Avatar
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    Quote Originally Posted by ManxMouse View Post
    Republican John McCain, long a skeptic of the two government-sponsored enterprises, has said that, if the government must bail them out, it should fire their current boards and managers en route to full privatization.
    In other words....more deregulation, which got us into this shit storm to begin with. Bloody amazing!
    Yup! And McCain is always for deregulation.

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