abelard's home latest changes & additions at abelard.org link to document abstracts link to short briefings documents quotations at abelard.org, with source document where relevant click for abelard's child education zone economics and money zone at abelard.org - government swindles and how to transfer money on the net latest news headlines at abelard's news and comment zone
socialism, sociology, supporting documents described Loud music and hearing damage Architectural wonders and joys at abelard.org about abelard and abelard.org visit abelard's gallery Energy - beyond fossil fuels France zone at abelard.org - another France

fanny mae and freddie mac -
the best politicians money can buy?

It is totally false to claim that the banking collapse caused by Fannie Mae and its relations was not foreseen. President George Bush, Senator McCain, and Fed. bosses Greenspan and Benanke all fought strenuously to head off the shipwreck, while the Democrat Party opposed them at every step.

Fannie Mae and Freddie Mac

click for money and economics zone at abelard.org

This page helpful?
Like it ! Share it !
fanny mae and freddie mac - a history
fanny mae and freddie mac - the best politicians money can buy?
fanny mae and freddie mac - clearing up the mess
fannie mae / freddie mac - a round-up/summary
bank systemic contagion marker GDP 1: gross domestic product [GDP]
first and second round effects of external prices rises on inflation marker GDP 2: GDP and other quality of life measurements
supply-side economics - laffer curves and 'trickle down'

the mechanics of inflation : The great government swindle and how it works

the sum of a geometric sequence: or the arithmetic of fractional banking
on stimulus spending and multipliers

top ten fannie mae ‘contributions’ recipients
sweetheart deals
dramatis personnae
the fannie mae/freddie mac hired guns
obama’s advisors and cronies eating at the fannie mae trough
crisis,what crisis? is bush seeking to buy up junk loans at knock down prices?
relevant book reviews

Top ten recipients of Fannie Mae ‘contributions’

In 1996, Fannie Mae expanded the Fannie Mae Foundation enormously, turning it into a slush fund for left-wing causes and left-wing politicians. The Foundation has already given away over ½ billion dollars, promoting left-wing causes and buying influence. Here are some of the top beneficiaries among politicians:

  1. Dodd, Christopher J
    Senate D-CT $133,900

  2. Kerry, John
    Senate D-MA $111,000

  3. Obama, Barack
    Senate D-IL $105,849

  4. Clinton, Hillary
    Senate D-NY $75,550

  5. Kanjorski, Paul E
    House D-PA $65,500

  6. Bennett, Robert F
    Senate R-UT $61,499

  7. Johnson, Tim
    Senate D-SD $61,000

  8. Conrad, Kent
    Senate D-ND $58,991

  9. Davis, Tom
    House R-VA $55,499

  10. Bond, Christopher S 'Kit'
    Senate R-MO $55,400

Source: opensecrets.org

“Our data goes back to 1989, where applicable. In Obama's case, our data includes his 2004 campaign for the Senate, his tenure in the Senate and his 2008 presidential fundraising--in other words, all contributions to Obama from Fannie Mae and Freddie Mac associated with his entire congressional career.”

Thus Obama has collected his winnings over a shorter time than most. There is more data and various interesting notes at the opensecrets.org link.

Marker at abelard.orgMarker at abelard.orgMarker at abelard.org

sweetheart deals

Various Democrats were involved in sweetheart deals on large mortgages.

Obama received heavy assistance with his house purchase from convicted felon Rezko. Obama also received a $1.32 million loan from Northern Trust at a special, lowered rate.

Democrat senator Christopher Dodd, chairman of the Banking Committee, gained special rates from Countrywide.

Democrat Kent Conrad, chairman of the Budget Committee and member of the Finance Committee, was another beneficiary of Countrywide.

James A. Johnson was forced to resign as head of Obama’s Vice-Presidential Search Committee when his sweetheart deal with Countrywide was exposed.

Strangely, Obama still sails on, ludicrously claiming to be the candidate to bring change to Washington. There were more of these loans made to relevant politicians by Countrywide, who as a group became known as “Friends of Angelo” [Angelo Mozilo].

It is illegal for Federal employees to receive gifts due to their official positions. This includes loan terms not usually available to the general public.

Marker at abelard.orgMarker at abelard.orgMarker at abelard.org

Dramatis personnae

Fannie Mae is the Democrat’s Enron, - Dick Morris.

Fannie Mae have been spending huge amounts of money promoting themselves and influence-peddling. The sewer includes false accounting and other sharp practice, aimed at enriching the actors and pushing left-wing causes.

“Frank Raines, Fannie Mae’s CEO [1999 - December 2004] , collected $90 million in bonuses and salary.

Jamie Gorelick, its vice chair [1997-2003], “[...] former Clinton administration assistant attorney general (and Janet Reno’s designated handler), made $25 million in salaries and bonuses after becoming vice chairman at Fannie Mae!” [Outrage, p.221]

Jim Johnson, its former CEO [1991-1998], got $2.9 million

[Daniel Mudd, CEO 2003 - present, late 2008]

“Hundreds of liberal nonprofits were given $35 million a year in grants” [Outrage by Dick Morris, p.6]

“And the Democrats rallied round. "This hearing is about the political lynching of Franklin Raines," said Congressman William Lacy Clay (D-MO), Congressman Barney Frank (D-MA) agreed: "I see nothing here that suggests that safety and soundness are an issue." ” [Outrage, p.234-235]

See Barney Frank in the video below of the 2004 hearings:
[from position 4:51/8:37]


Marker at abelard.org

greenspan warned about the looming danger of fannie mae

6 April 2005
As I concluded last year, the GSEs need a regulator with authority on a par with banking regulators, with a free hand to set appropriate capital standards, and with a clear and credible process sanctioned by the Congress for placing a GSE in receivership, where the conditions under which debt holders take losses are made clear. However, if legislation takes only these actions and does not limit GSE portfolios, we run the risk of solidifying investors' perceptions that the GSEs are instruments of the government and that their debt is equivalent to government debt. The GSEs will have increased facility to continue to grow faster than the overall home-mortgage market; indeed since their portfolios are not constrained, by law, to exclusively home mortgages, GSEs can grow virtually without limit. Without restrictions on the size of GSE balance sheets, we put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership.”

For more see greenspan and bernanke warning against systemic problems with the ‘demo’ mess at fannie mae and freddie mac, which includes an excellent summary of the problems by Ben Benanke.

Marker at abelard.org

25 May, 2006 - John McCain:
“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.” [1]

Clinton desultorily admitting the responsibility of the Democrats for the mess:

25 September 2008 - Bill Clinton:
“I think the responsibility the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me, when I was President, to put some standards and tighten up a little Fannie Mae and Freddie Mac.” [Quoted from “Bill Clinton on the Economic Crisis” TV interview, ABC News].

related material
republican senator charles hagel on the democrat corruption of fannie mae, 26/01/2005

Marker at abelard.orgMarker at abelard.orgMarker at abelard.org

The fannie mae/freddie mac hired guns

“Among the companies' past advocates are Mr. McCain's campaign manager, Rick Davis, a longtime lobbyist; Mr. McCain's confidant and adviser Charlie Black, whose firm worked for Freddie Mac for several years ending in 2005, and the deputy campaign finance chairman, Wayne L. Berman, a vice president for Ogilvy Worldwide and a former Fannie Mae lobbyist. Mr. Davis previously was head of the Homeownership Alliance, a coalition of banks and housing industry interests led by Fannie and Freddie to stave off regulations.

“The group was formed to counter another organization, FM Watch, an alliance of financial institutions and lobbying associations that wanted to even the playing field against Fannie Mae and Freddie Mac, by challenging the implicit government guarantee that allowed the two firms to borrow funds at lower interest rates.

“Six members of the Republican lobbying firm Fierce Isakowitz & Blalock, all Fannie Mae lobbyists, have given Mr. McCain $13,250, records show.

“ 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.” [Quoted from nytimes.com]

Marker at abelard.org

“Davis, fresh from running McCain's 2000 presidential campaign, was brought in and remained president of The Homeownership Alliance until 2005, when it was wound up as the companies looked to save costs, former executives said.

“Bounds noted that during that time, McCain backed legislation which increased oversight over the companies' accounts and executive pay packets. But it did nothing to deal with their unusual status as government-supported private firms.” [Quoted from timesonline.typepad.com]

Note that all Republicans, at this time, voted for regulation of Fannie Mae and Freddie Mac, while Democrats all voted against such regulation.

Marker at abelard.orgMarker at abelard.orgMarker at abelard.org

Obama’s advisors and cronies eating at the fannie mae trough

“Obama's outspoken criticism of Mozilo's exceptionally high compensation is again under attack as hypocritical in view of the preferential loans to Raines and Johnson and the degree to which Countrywide's failed sub-prime loans contributed to the government takeover of Fannie Mae and Freddie Mac and last week's mortgage-related crisis on Wall Street.”

“WND also reported Raines and two other top Fannie Mae executives agreed to pay $24.7 million, including a $2 million fine, to settle a civil lawsuit filed in December 2006 that accused them of manipulating Fannie Mae earnings, allowing executives to pocket hundreds of millions in bonuses.

“As part of the settlement, Raines was also forced to give up Fannie Mae stock options valued at $15.6 million

“Johnson was appointed to head Obama's vice-presidential selection committee, but he was forced to step down when a controversy surfaced in June concerning alleged millions in questionable real estate loans he had received on favorable terms from Countrywide.

“A Washington Post profile published July 17 said Raines was then playing a role advising the Obama presidential campaign on mortgage and housing policy.”

Marker at abelard.org

This stuff gets interesting. One side is trimming to the edge of lying.

In an attempt to confuse issues, the Left is trying to make some equivalence between the Fannie Mae Foundation political slush funding scam and the fact that there are a few ‘lobbyists’ working among the thousands on the McCain campaign.

Lobbyists are merely PR types who work as hired guns. That is, they represent a company one week, a politician another and an educational institute next, rather in the manner of lawyers or fund raisers. There is no logical connection between a lawyer hired by more than one organisation, and an organisation singlemindedly attempting to buy political infuence.

In my view, this must be separate from money to candidates designed to effect political pull or legislation.

I can see a case for paying money into an account for a campaign. Perhaps it should then be legally required that the candidate recuses from associated law-making.

It gets even more difficult as in a case like the above, where any money flowing to McCain seems not to have influenced his approach to legislation.

It is estimated the FMS [Financial Management Service] receives about $11 billion subsidies each year from government. They pay no taxes and receive beneficial rates from the Fed. They have less stringent capital requirements. They do not have to file with the SEC [Securities and Exchange Commission]. They have been falsifying their accounts.

Five of the thirteen board members are government appointees.

Twenty-one most senior executives received $245 million over a five-year period [Fortune magazine].

Marker at abelard.orgMarker at abelard.orgMarker at abelard.org

Crisis, what crisis? is bush seeking to buy up junk loans at knock down prices?

junk bonds - definition:

“A bond rated 'BB' or lower because of its high default risk.

“ "Also known as a "high-yield bond" or "speculative bond".

“ These are usually purchased for speculative purposes. Junk bonds typically offer interest rates three to four percentage points higher than safer government issues.”

How mortgage-backed securities, including sub-prime mortgages and junk bonds, work. [Flash required]

Marker at abelard.org

24 September 2008 - from George Bush’s statement:

“Second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. Yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages. The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that happens, money will flow back to the Treasury as these assets are sold. And we expect that much, if not all, of the tax dollars we invest will be paid back.”

Marker at abelard.orgMarker at abelard.orgMarker at abelard.org

These books contain a whole series of summaries of corruption in USA politics. Dick Morris has brought out two, soon to become three, books concentrating in much detail on US goverment corruption. The first is Outrage. It includes a useful short chapter on Fannie Mae of nearly 20 pages. The second, Fleeced, has been at the top of the bestseller lists for several weeks.

My view of Dick Morris is that he is the most astute political analyst on the planet - though his judgement does sometimes go wobbly/emotional when the Clintons are concerned. Some of his books approach potboiler status. See also Behind the Oval Office : Winning the Presidency in the Nineties by Dick Morris

Outrage by Dick Morris

Outrage: How Liberals, Congress, Unions, Drug Companies, Big Oil, Banks, Lobbyists, Corporations, the United Nations, the World Bank, the INS, the TSA, ... Ripping Us Off... and What to Do About It
by Dick Morris and Eileen McGann

Harper Paperbacks, 2008, pbk
ISBN-10: 0061373931
ISBN-13: 978-0061373930
$10.85 [amazon.com] {advert}

ReganBooks,U.S., 2007, hbk
ISBN-10: 0061195405
ISBN-13: 978-0061195402
£13.49 [amazon.co.uk] {advert}

Fleeced by Dick Morris

Fleeced: How Barack Obama, Media Mockery of Terrorist Threats, Liberals Who Want to Kill Talk Radio, the Do-Nothing Congress, Companies That Help Iran, and Washington Lobbyists for Foreign Governments Are Scamming Us ... and What to Do About It
by Dick Morris and Eileen Mcgann

$10.85 [amazon.com] {advert}
£11.19 [amazon.co.uk] {advert}

HarperCollins , 2008, hbk
ISBN-10: 0061547751
ISBN-13: 978-0061547751

Catastrophe by Dick Morris

Catastrophe by Dick Morris

Harper, 2009
ISBN-10: 006177104X
ISBN-13: 978-0061771040

$16.19 [amazon.com] {advert}

Meltdown [title in the UK]
to be published on 1 Jul 2009 by HarperCollins
£14.44 [amazon.co.uk] {advert}

end notes

  1. “Sen. John McCain [R-AZ]: 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.” John McCain, 25 May, 2006 [Quoted from govtrack.us]

Who is Barak Obama?

advertising disclaimer

New translation, the Magna Carta

email abelard email email_abelard [at] abelard.org

© abelard, 2008, 24 september

all rights reserved

the address for this document is https://www.abelard.org/economics/fannie_mae_freddie_mac2.php

2530 words
prints as 7 A4 pages (on my printer and set-up)

latest abstracts information quotations   headlines resources interesting about abelard