By Gary P Jackson
Let’s take a trip back to the “good old days” when George W Bush was President and Republicans controlled Congress.
All of us remember the collapse of the mortgage industry and the billions of dollars lost. We also remember this was because of mismanagement and outright fraud at Fannie Mae and Freddie Mac. The top executives at these two quasi-government agencies were stealing the money hand over fist, and thanks to the Carter era “Community Re-investment Act” that was later supercharged by Bill Clinton, making high risk loans to people who had absolutely no ability to repay these loans.
We’re still suffering from the results of this mess. It was the misdeeds by those who ran Fannie and Freddie that caused the financial collapse of 2008. The economy is still in shambles thanks to this.
The Bush administration tried on numerous occasions to fix this problem, starting in 2003. As usual, the democrats pulled out the race card, and proceeded to demonize anyone who dared to stop the madness. This from 2004:
This was in 2004. Notice all of them say nothing was wrong with Fannie Mae and Freddie Mac.
As John Gibson points out these agencies were corrupt, and basically slush fund to pay off democrats [and some Republicans] so they could keep their scheme going. To keep stealing, to keep wasting taxpayer money.
Notice, Barack Obama, who had only been in the Senate a short time, was second only to Chris Dodd in the money received.
In 2005 Congress once again tried to regulate Fannie and Freddie, and once again met steep resistance from the democrats. On May 25, 2006 John McCain spoke forcefully in support of the legislation and against the evils and corruption at Fannie and Freddie:
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.
This was a full two years before the collapse. Ed Morrissey has a good article here.
While the Republicans were doing their jobs: sounding the alarms, and trying to stop this, where was Newt Gingrich?
Well, good old Newt was taking a $300,000 pay-off from Freddie Mac, to help STOP the Republicans: [emphasis mine]
Internal Freddie Mac budget records show $11.7 million was paid to 52 outside lobbyists and consultants in 2006. Power brokers such as former House Speaker Newt Gingrich were recruited with six-figure contracts. Freddie Mac paid the following amounts to the firms of former Republican lawmakers or ex-GOP staffers in 2006:
*Sen. Alfonse D’Amato of New York, at Park Strategies, $240,000.
*Rep. Vin Weber of Minnesota, at Clark & Weinstock, $360,297.
*Rep. Susan Molinari of New York, at Washington Group, $300,062.
*Susan Hirschmann at Williams & Jensen, former chief of staff to House Majority Leader Tom DeLay, R-Texas, $240,790.
[ …. ]
The records obtained by the AP reflect growing concern within Freddie Mac over a chorus of criticism from Republicans worried that Freddie Mac and Fannie Mae had grown too big. The two companies owned or guaranteed over $5 trillion in mortgages.
The Bush administration and Federal Reserve Chairman Alan Greenspan were sounding the alarm about the potential threat to the nation’s financial health if the fortunes of the two mammoth companies turned sour. They did eventually, when they took on $1 trillion worth of subprime mortgages and when their traditional guarantee business deteriorated. Commercial banks regarded Freddie Mac and Fannie Mae as competitors and were anxious to pick up business that would result from scaling back the two companies.
Pushing back, Freddie Mac enlisted prominent conservatives, including Gingrich and former Justice Department official Viet Dinh, paying each $300,000 in 2006, according to internal records.
Gingrich talked and wrote about what he saw as the benefits of the Freddie Mac business model.
Read more here.
The “Freddie Mac business model” consisted of stealing the investors blind and making irresponsible loans. Did Newt actually think Freddie Mac’s business was sound, or was he just earning his $300,000?
We’ve talked about the many betrayals of Newt Gingrich, and this is yet another. While his former colleagues in Congress were trying to actually do their jobs, something that might have saved the Republic from one of the worst economic meltdowns in history, good old Newt sold his soul to the very people who would destroy our economy, for a few pieces of silver.
As the 2012 Republican presidential candidates continue to look less and less appealing, some are starting to fall for Newt’s pretty words and big promises.
Without a true leader in the bunch, no one to really get excited about, many conservatives are falling into the deadly pattern of listening to flowery speeches instead of researching the records of the candidates. Suddenly beating Obama is more important than electing an honest man who will actually bring the reform necessary for the nation to survive.
We must defeat Obama, for sure, but putting in another life-long politician, whose integrity can be bought for a pittance, ain’t gonna get it done. Newt Gingrich is not a man of principle. He’s someone who is always ready to bring aid and comfort to those who would destroy our country. Especially if there is money to be made while doing it.
It would be an incredible mistake to elect a man like Newt. A man who can’t be trusted in any situation.