My “informant” on another blog, hapi22, who writes very well-informed pieces, e-mailed this to the group today:
No one in the U.S. Senate can say he or she wasn’t warned about the coming Fannie Mae and Freddie Mac meltdown.
On May 25, 2006, Sen. John McCain stood up in the Senate and made the following statement.
“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 co-sponsor 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.”
McCain had joined with Senators Charles Hagel (Sponsor), Elizabeth Dole, and John Sununu (Cosponsors) to enact the Federal Housing Enterprise Regulatory Reform Act of 2005 (S. 190),
The bill (S.190) stalled in the Senate Banking, Housing, and Urban Affairs Committee and expired at the end of the 109th Congress.
On Apr 12, 2007, S.190 was re-introduced in the Senate (with a new bill number) as S.1100: Federal Housing Enterprise Regulatory Reform Act of 2007.
It, too , is stalled in the Senate Banking, Housing, and Urban Affairs Committee, chaired by Chris Dodd (recipient of the MOST money from Fannie Mae and Freddie Mac. Obama comes in Number Two as having rec’d the most money from Fannie Mae and Freddie Mac.) http://savagepolitics.com/?p=1884
Is it ANY wonder that this bill (S.1100) regulating mortgage market enterprises is STALLED in the Banking, Housing, and Urban Affairs Committee?
Geez, what a surprise.
S.190: Federal Housing Enterprise Regulatory Reform Act of 2005, at: http://www.govtrack.us/congress/bill.xpd?bill=s109-190
Here is the “Congressional Research Service Summary” of S.190: http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab;=s…
And here’s the full text of S.190: http://www.govtrack.us/congress/billtext.xpd?bill=s109-190
McCain’s senate statement re: S.190: http://www.govtrack.us/congress/record.xpd?id=109-s20060525-1…
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S.1100: Federal Housing Enterprise Regulatory Reform Act of 2007, at: http://www.govtrack.us/congress/bill.xpd?bill=s110-1100
Summary of S. 1100 at: http://www.govtrack.us/congress/bill.xpd?bill=s110-1100&tab;=…
Full text of S.1100 at: http://www.govtrack.us/congress/billtext.xpd?bill=s110-1100