Want to know what is NEXT ?

[Woody]

The Fannie and Freddie bonuses is the next BIG thing. These were much bigger. The names of those who got these bonuses are being demanded.

This along with the names of Dodd and Obama when the Democrats single handedly pushed the loop hole for the bonuses. These will be the big issues ahead of us.

If you think the approval for the Demos are low now ... Just wait for this to come out.

[bonnie]

The Fannie and Freddie bonuses is the next BIG thing. These were much bigger. The names of those who got these bonuses are being demanded.

This along with the names of Dodd and Obama when the Democrats single handedly pushed the loop hole for the bonuses. These will be the big issues ahead of us.

If you think the approval for the Demos are low now ... Just wait for this to come out.

It would be almost funny to see Barney Frank go after this one. His livi in companion raked in millions.

Maybe Barney Frank will air the record when he postured and ridiculed Bush declaring Fannie Ma and Freddi Mac to be financially sound and operating just as should be.

Who is demanding the names??

[Woody]

A judge has just ruled that Merrill Lynch must release all the names of those who received bonuses. This also is huge. There were 1.6 Billion and yes that is 'B' as in Billion Dollars of bonuses for them.

This thing is snow balling. Fannie and Freddie is next. People are out raged. It is not just Redwood that is making a BIG deal out of this Neil. Most of the country is concerned according to the polls. Time for Neil to dump his partisanism and get on board.

[lazarus]

Barney Frank, Barney Frank, Barney Frank, Barney Frank! Fannie Freddie, Fannie Freddie! Fannie Freddie!

LOL!

Next Week it will be Chris Dodd, Chris Dodd, Chris Dodd!

teehe

[Woody]

Barney Frank, Barney Frank, Barney Frank, Barney Frank! Fannie Freddie, Fannie Freddie! Fannie Freddie!

LOL!

Next Week it will be Chris Dodd, Chris Dodd, Chris Dodd!

teehe

I don't think we should wait to crucify Chris Dodd. His local papers are doing it right now. But I do agree we have much to do. There are lots in the Party that need it.

[there buster]

Quote:

Barney Frank, Barney Frank, Barney Frank, Barney Frank! Fannie Freddie, Fannie Freddie! Fannie Freddie!

Next Week it will be Chris Dodd, Chris Dodd, Chris Dodd!

It should be. They are the prime culprits in this financial mess.

No Barney Frank, no Chris Dodd, no Fannie and Freddie craziness.

No Fannie and Freddie pushing bad, bad loans, and securitizing bad mortgages, no housing bubble.

No housing bubble, no AIG problems, no financial crisis.

[Woody]

Exactly. Very concise. Well said.

[Neil D]

This thing is snow balling. Fannie and Freddie is next. People are out raged. It is not just Redwood that is making a BIG deal out of this Neil. Most of the country is concerned according to the polls. Time for Neil to dump his partisanism and get on board.

Of course people are outraged...

It's just that all this hype is gonna get someone killed. All ready, there are threats to those who recieved the bonuses AND THIER FAMILYS. By law, and contract, these people did nothing wrong....this shows that the enviroment of Finance, where bonuses become a regular part of the compensation, is in dire need of reform.

But with this hype that you like to foment here, along with snide remarks about how Obama is responsible, who knows where the next Hinkley or Oslo or McVey will come and destroy some part of our goverment....All because of irresponsible media hype....

Now, about the culture of finance- something that Obama has been saying all along. What we are seeing, is the clash of cultures, the culture of Washington, and the culture of Finance clash...The american people are siding with the culture of Washington, as it is more in lines with thier morals. And you are correct, Redwood, in that it is wrong to sink the company while still recieving lots of money. I think we have a story about that...I think we will remember it as "The goose and the golden egg"...

[lazarus]

Redwood

before you get too exited check out some info that LEVINRUSHHANIITYINGRAMBORTZ wouldn't dare give you!!!!

WASHINGTON -- As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

-More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

-Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

-Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks - not Fannie and Freddie - dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

Fueled by low interest rates and cheap credit, home prices between 2001 and 2007 galloped beyond anything ever seen, and that fueled demand for mortgage-backed securities, the technical term for mortgages that are sold to a company, usually an investment bank, which then pools and sells them into the secondary mortgage market.

About 70 percent of all U.S. mortgages are in this secondary mortgage market, according to the Federal Reserve.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac - who in turn pressured banks and other lenders - to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

http://www.mcclatchydc.com/251/story/53802.html

[bonnie]

How many in the mortgage industry do you know? I mean personally and well. Do you know who passed the non-verification and non-qualifying laws that allowed almost anybody if they were breathing a mortgage? For a long time some of these same people have been saying it would blow and blow big

How long have you worked in the housing or mortgage industry?

What did anyone think would happen when you did not need to verify or qualify?

[lazarus]

How many in the mortgage industry do you know? I mean personally and well.

426! And there's Sean who works out at my Gym!

Quote:

Do you know who passed the non-verification and non-qualifying laws that allowed almost anybody if they were breathing a mortgage?

Barney Mac!

Quote:

How long have you worked in the housing or mortgage industry?

3 weeks when I was 22.

So do you have any facts to refute what I have previously posted?

[bonnie]

Originally Posted By: bonnie

How many in the mortgage industry do you know? I mean personally and well.

426! And there's Sean who works out at my Gym!

Quote:

Do you know who passed the non-verification and non-qualifying laws that allowed almost anybody if they were breathing a mortgage?

Barney Mac!

Quote:

How long have you worked in the housing or mortgage industry?

3 weeks when I was 22.

So do you have any facts to refute what I have previously posted?

New York Times 2003.....

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By STEPHEN LABATON

Published: Thursday, September 11, 2003

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. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

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. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.

The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.

At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.

Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.

After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.

''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.

Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.

Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''

The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.

Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.

''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''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.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

[bonnie]

We have been headed down the tube for a long time. The private sector is not responsible for the regulations or lack of them

Los Angeles Times

May 31, 1999

Minorities' Home Ownership Booms Under Clinton but Still Lags Whites'

By Ronald Brownstein

May 31, 1999

It's one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of African Americans owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites.

These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. By this spring, those figures had jumped to 46.9% of blacks and 46.2% of Latinos.

That's a lot of new picket fences. Since 1994, when the numbers really took off, the number of black and Latino homeowners has increased by 2 million. In all, the minority homeownership rate is on track to increase more in the 1990s than in any decade this century except the 1940s, when minorities joined in the wartime surge out of the Depression.

This trend is good news on many fronts. Homeownership stabilizes neighborhoods and even families. Housing scholar William C. Apgar, now an assistant secretary of Housing and Urban Development, says that research shows homeowners are more likely than renters to participate in their community. The children of homeowners even tend to perform better in school. Most significantly, increased homeownership allows minority families, who have accumulated far less wealth than whites, to amass assets and transmit them to future generations.

What explains the surge? The answer starts with the economy. Historically low rates of minority unemployment have created a larger pool of qualified buyers. And the lowest interest rates in years have made homes more affordable for white and minority buyers alike.

But the economy isn't the whole story. As HUD Secretary Andrew Cuomo says: "There have been points in the past when the economy has done well but minority homeownership has not increased proportionally." Case in point: Despite generally good times in the 1980s, homeownership among blacks and Latinos actually declined slightly, while rising slightly among whites.

All of this suggests that Clinton's efforts to increase minority access to loans and capital also have spurred this decade's gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat "redlining" by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac--the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments--or with mortgage payments that represent an unusually high percentage of a buyer's income. That's made banks willing to lend to lower-income families they once might have rejected.

But for all that progress, the black and Latino homeownership rates, at about 46%, still significantly trail the white rate, which is nearing 73%. Much of that difference represents structural social disparities--in education levels, wealth and the percentage of single-parent families--that will only change slowly. Still, Apgar says, HUD's analysis suggests there are enough qualified buyers to move the minority homeownership rate into the mid-50% range.

The market itself will probably produce some of that progress. For many builders and lenders, serving minority buyers is now less a social obligation than a business opportunity. Because blacks and Latinos, as groups, are younger than whites, many experts believe they will continue to lead the housing market for years.

But with discrimination in the banking system not yet eradicated, maintaining the momentum of the 1990s will also require a continuing nudge from Washington. One key is to defend the Community Reinvestment Act, which the Senate shortsightedly voted to retrench recently. Clinton has threatened a veto if the House concurs.

The top priority may be to ask more of Fannie Mae and Freddie Mac. The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer. Although Fannie Mae actually has exceeded its target since 1994, it is resisting any hike. It argues that a higher target would only produce more loan defaults by pressuring banks to accept unsafe borrowers. HUD says Fannie Mae is resisting more low-income loans because they are less profitable.

Barry Zigas, who heads Fannie Mae's low-income efforts, is undoubtedly correct when he argues, "There is obviously a limit beyond which [we] can't push [the banks] to produce." But with the housing market still sizzling, minority unemployment down and Fannie Mae enjoying record profits (over $3.4 billion last year), it doesn't appear that the limit has been reached.

All signs point toward a high-velocity collision this summer between two strong-willed protagonists: HUD's Cuomo and Fannie Mae CEO Franklin D. Raines, the first African American to hold the post. Better they reach a reasonable agreement that provides more fuel for the extraordinary boom transforming millions of minority families from renters into owners.

[bonnie]

Just a little info on how this started and got so ugly. Home ownership is not a God given right because I live in the country.

After working,sometimes two jobs and saving and buying within our means it is a privilege we earned. We have been headed down this road for almost two decades. Now it must be the sub prime lenders that wrote the regs

New York Times..

Fannie Mae Eases Credit To Aid Mortgage Lending

By STEVEN A. HOLMES

Published: Thursday, September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

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. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

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.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

[bonnie]

Little more current but same players........

By Jerome R. Corsi

© 2009 WorldNetDaily

Fannie Mae headquarters in Washington, D.C.

NEW YORK – Campaign contributions from Fannie Mae and Freddie Mac made to Barack Obama may backfire if the Democratic presidential hopeful wages an aggressive campaign to cast blame on rival John McCain and the Republicans in Congress for the mortgage-related losses that forced the U.S. Treasury to take over the quasi-governmental mortgage giants.

A review of Federal Election Commission records back to 1989 reveals Obama in his three complete years in the Senate is the second largest recipient of Freddie Mac and Fannie Mae campaign contributions, behind only Sen. Christopher Dodd, D-Conn., the powerful chairman of the Senate banking committee. Dodd was first elected to the Senate in 1980.

According to OpenSecrets.com, from 1989 to 2008, Dodd received $165,400 in Fannie Mae and Freddie Mac campaign contributions, including contributions from PACs and individuals, followed by Obama, who received $126,349 in such contributions since being elected to the Senate in 2004.

In contrast, McCain warned of the coming mortgage crisis as he pressed in 2005 for regulatory reform of Fannie Mae and Freddie Mac.

"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," McCain said on the floor of the Senate in 2005, speaking in favor of the Federal Housing Enterprise Regulatory Reform Act of 2005.

McCain pointed out Fannie Mae's regulator had stated 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 bill passed the House but was never brought up for a vote in the Senate, largely because of Democratic opposition to change in the Fannie Mae and Freddie Mac regulatory structure that remained in place until the Treasury takeover two weeks ago.

As evidenced by the failure to pass the Federal Housing Enterprise Regulatory Reform Act of 2005, the Democrats in Congress have repeatedly fought back Republican Party efforts to reform the two mortgage banking giants.

Instead, Democrats in Congress have sought to preserve the quasi-governmental status of the mortgage giants, seeing Fannie Mae and Freddie Mac as places to locate former top Democratic Party operatives, where they have earned millions in compensation, despite a continuing series of financial scandals. Enron-like accounting manipulation, for example, boosted earnings to a level at which massive executive bonuses could be paid.

In the aftermath of the U.S. government takeover, attention has focused on three Democrats with close ties to Obama who served as Fannie Mae executives: Franklin Raines, former Clinton administration budget director; James Johnson, former aide to Democratic Vice President Walter Mondale; and Jamie Gorelick, former Clinton administration deputy attorney general.

All three Obama-related executives earned millions in compensation from Fannie Mae.

Johnson earned $21 million in just his last year serving as Fannie Mae CEO from 1991 to 1998; Raines earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004; and Gorelick earned an estimated $26 million serving as vice chair of Fannie Mae from 1998 to 2003, according to author David Frum, a fellow at the American Enterprise Institute.

All three have been involved in mortgage-related financial scandals.

In 1998, according to the Washington Post, Gorelick, as Fannie Mae vice chairman, received a bonus of $779,625, despite a scandal in which employees falsified signatures on accounting transactions to manipulate books to meet 1998 earning targets. The moves, in turn, triggered multi-million-dollar bonuses for top executives.

Gorelick was embroiled in another controversy over an alleged conflict of interest when a 1995 memo she authored as deputy attorney general surfaced while she was a member of the 9/11 commission.

The memo, which became known as the "Gorelick Wall," appeared to establish barriers that barred federal anti-terrorist criminal investigators from accessing various federal records and databases that may have assisted them in their criminal investigations.

According to the Associated Press, Raines and several other Fannie Mae top executives were ordered in a civil lawsuit to pay nearly $31.4 million for manipulating Fannie Mae earnings over a period of six years to trigger their massive bonuses.

Raines was also forced in the settlement to give up Fannie Mae stock options valued at $15.6 million.

Last year, the Securities and Exchange Commission alleged Freddie Mac had engaged in accounting fraud from 2000 to 2002, imposing a $50 million fine on the company and on four executives fines for amounts ranging from $65,000 to $250,000.

Raines currently advises Obama on housing policy.

Johnson was appointed to head Obama's vice presidential selection committee, until a controversy concerning an alleged $7 millions in questionable real estate loans he received on favorable terms from failed sub-prime mortgage lender Countrywide Financial surfaced and forced him to step down.

WND previously reported a panel chaired by Elena Kagan, dean and professor of law at Harvard Law School, speculated at the June two-day meeting of the American Constitution Society that Gorelick was a possible attorney general cabinet appointment if Obama should be elected president.

The decision by the U.S. Treasury to take over Freddie Mac and Fannie Mae could end up costing the U.S. taxpayer as much as $100 billion, although the extent of losses at the two giant mortgage companies

remains to be determined.

According to the Wall Street Journal, Freddie and Fannie own or guarantee about $5.2 trillion worth of mortgages.

The riskiest loans held by Freddie and Fannie are known as "Alt-A" and sub-prime mortgages, worth about $780 billion, or about 15 percent of the total portfolio.

The federal government takeover of Freddie and Fannie passes to U.S. taxpayers the contingent liability for failures in the entire $5.2 trillion loan portfolio held by the two mortgage giants.

Over the past four quarters, Freddie and Fannie have suffered losses of about $14 billion, as the mortgage market has been hit by a wave of defaults and foreclosures not seen in the U.S. since the 1930s.

[Dr. Shane]

A good friend of mine that is a member of our local church worked as a mortgage banker for a few years. This was about 5 years ago. He told me that he was making loans to people that didn't have enough money to rent an apartment and he was sell them a brand new house. Was he a bad guy for doing that? Of course not. He was operating within the law and doing exactly what the politicians had intended bankers to do.

[bonnie]

A good friend of mine that is a member of our local church worked as a mortgage banker for a few years. This was about 5 years ago. He told me that he was making loans to people that didn't have enough money to rent an apartment and he was sell them a brand new house. Was he a bad guy for doing that? Of course not. He was operating within the law and doing exactly what the politicians had intended bankers to do.

Those that we are close to the mortgage business have more than once said, If the applicant is upright and still breathing they qualify.

Now some of same are being bailed out if they lied on their mortgage app and will receive a 1,000.00 a year for five years to further pay down the principal they lied to obtain. That is after they have received the power to rewrite a valid and binding contract to suit what they believe to be fair

[Jeannieb43]

How many in the mortgage industry do you know? I mean personally and well. Do you know who passed the non-verification and non-qualifying laws that allowed almost anybody if they were breathing a mortgage? For a long time some of these same people have been saying it would blow and blow big

How long have you worked in the housing or mortgage industry?

What did anyone think would happen when you did not need to verify or qualify?

My daughter was a mortgage loan underwriter until four years ago when she quit work to stay home with her babies. She had been in the business fifteen years, and her last job was with Bank of America. She never underwrote subprime loans. They had to make the loans appealing on the secondary market, so they had to fit the requirements of Fannie Mae and Freddie Mac.

Her last loans were all multimillion-dollar construction loans, to builders of housing developments.

[Her expertise is standing her in good stead right now, which happens to be a great time to REfinance a home mortgage. She knows when a broker or lender is trying to hoodwink her or do a "bait and switch." So she and her husband have just now locked in a 4 5/8% 30-year fixed mortgage (something rare for "kids" their ages in this Southern California market) after spending five years with an interest-only mortgage because the properties had ballooned out of sight.]

[bonnie]

Originally Posted By: bonnie

How many in the mortgage industry do you know? I mean personally and well. Do you know who passed the non-verification and non-qualifying laws that allowed almost anybody if they were breathing a mortgage? For a long time some of these same people have been saying it would blow and blow big

How long have you worked in the housing or mortgage industry?

What did anyone think would happen when you did not need to verify or qualify?

My daughter was a mortgage loan underwriter until four years ago when she quit work to stay home with her babies. She had been in the business fifteen years, and her last job was with Bank of America. She never underwrote subprime loans. They had to make the loans appealing on the secondary market, so they had to fit the requirements of Fannie Mae and Freddie Mac.

Her last loans were all multimillion-dollar construction loans, to builders of housing developments.

[Her expertise is standing her in good stead right now, which happens to be a great time to REfinance a home mortgage. She knows when a broker or lender is trying to hoodwink her or do a "bait and switch." So she and her husband have just now locked in a 4 5/8% 30-year fixed mortgage (something rare for "kids" their ages in this Southern California market) after spending five years with an interest-only mortgage because the properties had ballooned out of sight.]

It doesn't take 15 years to determine if you can repay a mortgage on a home you cannot afford to begin with.

I am sure working for Bank of America she did not write subprime mortgages. I don't believe they processed subprime mortgages. Especially multi-million dollar construction loans.Construction loans are written differently and have different requirements.

Regardless subprime mortgage lenders did not write the regulations that allowed for non-qualifying non verification.

Bait and switch is a convenient excuse for those that wanted a house they could not afford. If they are that ignorant of what they are signing they best not be signing.

Why would anyone with knowledge of the mortgage industry working for a mortgage company be paying on a interest only loan?

When do people begin to take responsibility for their own actions? Or lack of them?

[bonnie]

Cuomo Says BofA Interfering with Bonus Investigation

NY Attorney General Wants Bank to Reveal Who Received Hundreds of Millions in Bonuses

By RICHARD ESPOSITO and MADDY SAUER

March 11, 2009

In some of the harshest language to date in an already contentious fight over the public's right to know which Merrill Lynch high fliers netted hundreds of millions in bonuses on the eve of the failing firm's merger with Bank of America, New York Attorney General Andrew Cuomo accused the bank of undermining his authority, interfering with his investigation and attempting to influence the government's witnesses, according to court documents.

Photo: Cuomo Says BofA Interfering Bonus Investigation: NY AG want bank to reveal who received hundreds of millions in bonuses.

New York Attorney General Andrew Cuomo charged Bank Of America with undermining his authority, interfering with his investigation of Merrill Lynch bonuses and attempting to influence the government's witnesses, according to court documents.

"Bank of America simply wants to play by a different set of rules from those applicable to any other subject of an investigation," Cuomo's office argued in papers filed today in New York State Supreme Court. The papers were filed in order to oppose Bank of America's motion to keep confidential the amounts of bonuses paid to top Merrill earners just weeks before its merger.

"Bank of America has cooperated with the attorney general's investigation into Merrill Lynch bonuses and will continue to do so," spokesman Scott Silvestri said in a statement. "Regarding the bonus information requested, Bank of America has continually offered to provide that information subject to reasonable confidentiality."

Cuomo's office today said that the bank has not demonstrated that it had ever "treated the information in a confidential manner."

The court paper's cited Bank of America CEO Ken Lewis' testimony in which Lewis acknowledged that he had never, in 40 years at BofA, ever instructed anyone to keep their compensation confidential.

"This is not peripheral information. It is directly relevant to the central unanswered question: Why were Merrill and Bank of America officers and directors determined to pay out these bonuses before the end of the year, despite all the precedents and prudence counseling against making these 11th hour payments?" the court papers stated.

Debate Over Bonuses a Hot Button Issue

The ongoing wrangle over the disclosure of bonus information is the hot button issue as investigators probe if Merrill Lynch or Bank of America, or either firm's employees, violated securities laws when the $3.6 billion in bonuses was doled out by Merrill on the eve of its merger with Bank of America.

Merrill's bonuses were historically paid following the close of the calendar year, but the 2008 bonuses were paid in December, just weeks before the merger was finalized, and in a year the firm lost almost $28 billion.

Despite the poor performance of the firm, 696 Merrill employees received bonuses of more than $1 million. Four top employees were given bonuses totaling $121 million.

Cuomo's office is seeking to determine if any laws were violated in the way bonuses were paid on an accelerated schedule by a team that included former Merrill CEO John Thain and Bank of America officials.

Thain had to be served two subpoenas before he answered any questions on the bonuses. During his first deposition, he cited direction from Bank of America as the reason he would not answer. A judge ordered him to testify and said the information would remain confidential until at least Friday, when he would rule on the issue.

Last week, Thain testified before Cuomo's investigators and told him what he knew about bonus recipients and the amounts they netted. But Cuomo's probers want to complete that list – and get as much information as they can on at least the top 200 earners at the firm.

[bonnie]

Regardless of whether the bonuses to anyone are justified by onlookers or SDA's in general I would expect SDA's be a little gun shy of having the government have so much power. Overturning legal contracts and publically targeting a specific group, even wanting the names of their children

We may not all see end time events the same but I do know many of you here saw George Bush as a threat to our freedoms.

Strangely,now Obama holds to more than one of the sins of George Bush. Last I heard he even holds to the idea of George Bush on wiretapping.

But he is expanding the power of the government far beyond that. Scary that so many are saying "Yes, go for it"

How does he or maybe someone here wants to take a stab at explaining his approval and agreement the bonuses should go forward and now,OOPS,the citizens are mad. We have to pretend we are outraged and appalled and knew nothing of this.

Everyone is so happy the rich are finally going to get it. Tax those heathens and teach them a lesson.

If the government takes and the citizens agree and champion the writing of laws and making it retroactive to target a specific group, how will you react when it is you?

As you celebrate their just rewards remember they in time will be coming for you

Watch as he taxes the heathen rich and the self employed that make an obscene adjusted gross of 250,000.00 When that is not enough he will be after lower and lower income earners.

Harming the very ones that Obama expresses so much concern over.

When cap and trade goes into effect it is going to affect utilities and anything energy related. Think the utility companies are going to eat it,guess again. The poor buys gas,uses utilities etc. What will the get even with the rich do for them?

Think insurance is expensive,wait if the vets have to buy their own.First the government is going to have to intrude again and force the insurance companies to accept them, no matter the cost. Obama to the rescue as he kicks our vets in the teeth. Can someone figure out how they will receive treatment once the cap has been reached? Do you think the insurance companies are not going to recoup as much as possible while minimizing the financial damage. That spells those they can charge that are not such a high risk.

We have only begun to watch the systematic destruction of the constitution. Only begun to pay the cost of his punishment of the rich.

[lazarus]

I am not saying that F & F does not share any responsibility for the crisis we are now in but simply that clearly the private sector share much of the blame. To insist otherwise is simply to repeat GOP talking points.

Fannie and Freddie, the main vehicle for Clinton's multicultural housing policy, drove the explosion of the subprime housing market by buying up literally hundreds of billions of dollars in substandard loans—funding loans that ordinarily wouldn't have been made based on such time-honored notions as putting money down, having sufficient income, and maintaining a payment record indicating creditworthiness...This created the problem we are having today.

But there's a problem with Mica's (and IBD's) explanation. The "multicultural housing policy" the editorial refers to is the 1977 Community Reinvestment Act, which encouraged the extension of credit to poor people and minorities. Conservatives—like the writers of the IBD editorial—say the CRA "led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos." But the vast majority of subprime loans were made by institutions that were not subject to the CRA, and studies have shown that the act has actually increased the amount of responsible lending to poor families. The comptroller of the currency, conservative economist and Fed governor Randall Kroszner, as well as Fed chair Ben Bernanke, have all said the CRA is definitively not to blame for the current crisis.

But just because the CRA and its poor and minority beneficiaries didn't cause the meltdown doesn't mean Fannie and Freddie don't share part of the blame. Wall Street created the secondary mortgage market, packaging, repackaging, and reselling mortgages and parts of mortgages. So in June 2005, as securities backed by subprime loans became an increasingly large percentage of the mortgage market, Fannie and Freddie executives were faced with a choice. They could stick with the secure, fixed rate mortgages that they were chartered to hold. Or they could move into the subprime market, where, as one confidential presentation to Fannie Mae CEO Daniel Mudd put it, the real "revenue opportunity" was. In the presentation, Mudd was told his corporation could "stay the course" or "meet the market where the market is." Mudd and then-Freddie Mac CEO Richard Syron ignored warnings from risk managers in their own companies and moved into subprime. And, instead of staying the course, they drove their companies off a cliff.

Despite the fact that the companies had to be rescued, the Fannie and Freddie CEOs defended their disastrous decision to expose their companies to the subprime market, claiming they had to "follow the market" when banks and other investors moved increasingly to subprime. "Fannie Mae did not cause the current crisis," said Franklin Raines, who was CEO of Fannie Mae from 1999 to 2004. "If anything, Fannie Mae played catch-up to the banks and investment banks who drove the securitization of the most toxic subprime mortgages." Raines' defense was typical of all four CEOs, and Waxman echoed it. "It is a myth to say they were the originators of the subprime crisis," he said. "Fundamentally, they were following the market, not leading it."

Following instead of leading, however, does not absolve the companies or their CEOs of responsibility for their actions. Both companies were warned by their risk officers that buying "no income, no assets" or NINA loans and other subprime products was irresponsible and foolhardy. Freddie Mac fired its chief risk officer. Fannie Mae simply ignored its risk officer. Instead of heeding the warning, both companies continued to invest in subprime loans, and documents released at the hearing show that as late as 2007 Fannie Mae executives were talking about wanting to go "down the credit spectrum." By increasing the demand for products that turned out to be fundamentally worthless, Fannie and Freddie made the problem worse, and now, as Waxman emphasized, "their irresponsible decisions are...costing the taxpayers billions of dollars."

Congress certainly deserves some of the blame, too, as Rep. Darrell Issa (R-Calif.), soon to be the committee's ranking Republican, pointed out. "We have to recognize that what we've done with the GSE's hasn't worked," Issa said. "We in the Congress have to look in the mirror, because part of the blame is on our doorstep." But perhaps it's not as simple as assigning blame to any one group or entity. There's plenty of blame to go around. Rep. Elijah Cummings (D-Md.), emphasized that point when he read part of a Thomas Friedman column from late November:

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.

Sure, Fannie and Freddie had no business buying up subprime mortgages so that they could take advantage of a "revenue opportunity." But a lot of other people didn't have any business doing what they were doing: the hedge funds that went for so long without regulation, the federal regulators who turned a blind eye, the credit rating agencies who got paid to say [censored] was gold, the companies like AIG that took obscene risks on complicated credit instruments, the investment banks like Lehman Brothers that facilitated all the irresponsible transactions. Since October, they've all been called before the House oversight committee to be held to account. Just like the Fannie and Freddie CEOs who testified today, they all said, "it's not my fault. No one could have seen this coming." Mark Souder, a Republican from Indiana, summarized the problems with holding hearings on the financial crisis best. "Nobody takes responsibility for anything," he said. "It gets very frustrating to figure out what to do next if nobody's responsible for anything."

http://www.motherjones.com/mojo/2008/12/gops-fanniefreddie-fixation