@Advocate,
Advocate apparently does not know that the current economic crisis had its roots in Fannie Mae and Freddie Mac.
Point 1-
UPDATED: Barack Obama’s Fannie Mae, Freddie Mac Connection
Posted on 19 September 2008
Lehman Brothers collapse is traced back to Fannie Mae and Freddie Mac, the two big mortgage banks that got a federal bailout a few weeks ago.
Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs.
A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama.
Now remember, he’s only been in the Senate four years, but he still managed to grab the No. 2 spot ahead of John Kerry decades in the Senate and Chris Dodd, who is chairman of the Senate Banking Committee.
Fannie and Freddie have been creations of the congressional Democrats and the Clinton White House, designed to make mortgages available to more people and, as it turns out, some people who couldn’t afford them.
Fannie and Freddie have also been places for big Washington Democrats to go to work in the semi-private sector and pocket millions. The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gorelick Clinton Justice Department official worked for Fannie and took home $26 million. Big Democrat Jim Johnson, recently on Obama’s VP search committee, has hauled in millions from his Fannie Mae CEO job.
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pOINT 2-
September 25, 2008
Barney Frank opposed regulating Fannie Mae and Freddie Mac in 2003, but no one reminds him
Frank 'no crisis.' The New York Times reported on Sept. 11, 2003:
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
McCain warning. On the other hand, McCain on May 25, 2006, backed specific legislation to regulate Fannie Mae and Freddie Mac, a year before Frank finally caved in and called for reform only after it was too late.
President Clinton put it best today to Chris Cuomo of ABC News:
"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 on Fannie Mae and Freddie Mac."
Frank and others like him might have had good intentions in pushing Fannie Mae and Freddie Mac to make home loans for low-income, high-risk customers. But from the 1990s to 2007, the Democrats simply closed their eyes to the mounting threat that these reckless, highly secretive operations posed to our entire financial sys
Update: More information that Barney Frank was destabilizing Fannie Mae as early as 1991:
Although Frank now blames Republicans for the failure of Fannie and Freddie, he spent years blocking GOP lawmakers from imposing tougher regulations on the mortgage giants. In 1991, ... the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.
Three years later, President Clinton’s Department of Housing and Urban Development tried to impose a new regulation on Fannie, but was thwarted by Frank.
The Boston Globe, Nov. 22, 1991:
The federally chartered mortgage company Fannie Mae yesterday agreed to modify its rules restricting purchases of two-family and three-decker homes -- rules that housing advocates contend unfairly exclude low- and moderate-income families from buying homes in Boston.
After a nearly three-hour meeting with members of the Home Buyers’ Union, a local advocacy group, and representatives of Mayor Flynn and Rep. Joseph P. Kennedy 2d (D-Mass.), Fannie Mae officials agreed to substantially alter rules to allow what one termed “hundreds if not thousands” of buyers a chance to own two-family homes and three-deckers. …
Fannie Mae national spokesman David Jeffers said yesterday that the mortgage company restricted purchases of mortgages on multi-family homes after it saw many such mortgages go into default during the real estate slowdown.
He said the default rate on mortgages on two-family homes is twice that of single-family homes, and the rate for three-deckers is five times the rate for single-family dwellings.
But Jeffers said that after discussions with area homeowners, housing advocates, Kennedy and Rep. Barney Frank (D-Mass.), Fannie Mae officials agreed to purchase the mortgages made under the state’s “soft second” program, the primary source of mortgages for first-time homebuyers of low and moderate units.
After a speech this week, Rep. Barney Frank (D-Mass.), the House Financial Services Committee's ranking member, let fly with characteristic bluntness regarding the Government Sponsored Enterprises’ (GSEs) $4.5 billion combined lines of credit with the U.S. Treasury. When asked whether he would consider revoking the lines of credit to the two Wall Street powerhouses, Frank frankly replied, “I would take a look at it. I don't think it (the line of credit) makes a lot of difference.”
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Then. The New York Times, Sept. 30, 1999, reporting that the Clinton administration was sewing the seeds of a national financial disaster:
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. …
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
Then. The New York Times on Sept. 11, 2003, reporting on President Bush’s proposal to end the high-risk lending by Fannie Mae and Freddie Mac, and noting that Rep. Barney Frank opposed Bush’s call for reform:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. …
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken.