Wednesday, September 17, 2008

Obama, The Senator from Fannie Mae

Open Secrets shows that Barack Obama was the second highest benefactor of donations from Fannie Mae and Freddie Mac, at $126,000. The only politician with more was Senator Chris Dodd. That is just the tip of the iceberg.

Obama's top advisors and money-raisers were from Fannie Mae:

"You look at Obama's economic advisers, the guys he has counted on from day one and who have raised him a ton -- and I mean a ton -- of money: Franklin Raines and Jim Johnson, both of them are waist to neck deep in the mortgage debacle."

Both Raines and Johnson have served as CEO of Fannie Mae, with Raines taking over from Johnson. Both are key political and economic advisers to Obama.

"How can Obama go out with a straight face and saw it was Republicans who made this mess, when it is his key advisers who ran the agencies that made the big mess what it is?" says a Democrat House member who supported Sen. Hillary Rodham Clinton. "It's his people who are responsible for what may well be the single largest government bailout in history. And every single one of them made millions off the collapse that are lining Obama's campaign coffers."

In such matters, there is always the factor that money was spread around to both sides, but McCain had according to Open Secrets a smaller level of contributions. The real question is: Who has the judgment to do the right thing based on their previous actions regarding these institutions and who who lead them?

  • John McCain attempted to control Fannie Mae and warned about the potential costs to taxpayers. He said in 2006: "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." - John McCain, May 25 2006
  • Barack Obama has been advised in his Presidential bid by two ex-Fannie Mae CEOs, both having left in scandal. In the case of Raines, it was reported in 2004: "Although Fannie Mae chief Franklin Raines was fired for bungling its books, he’ll get a $26 million parachute — not counting a monthly pension of $116,300 for life. The 55-year-old Washington, D.C. insider and his CFO J. Timothy Howard left their jobs last week under a cloud of suspicion that the execs undermined the financial soundness of Fannie Mae, creating losses of up to $9 billion." NY Post, Dec 28, 2004
  • Obama said and did nothing to point out the malfeasance of these Obama supporters and advisors, and he's had the intention of leaning on these men who created this mess to somehow advise him on how to fix it.
  • Obama and Jack Reed of RI held up any serious reform of Fannie Mae in order to cut out a “low income trust fund” that Fannie had to pay money into to offer loans to bad credit risks. The NILCH (National Institute for low income housing) had a press release that featured Reed and Obama talking about what a wonderful program that was, in May of this year. They were buying votes with Fannie Mae all the while McCain was calling for divesture of some loans in order to shore up Capital Reserves.
  • Obama was not the only Democrat in the tank for Fannie Mae: ‘’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.’’
  • The bailout of Fannie Mae will cost taxpayers more than $250 billion

Obama has been the Senator from Fannie Mae, a say-nothing do-nothing guy when it comes to this GSE. McCain proposed a way to fix the situation. He was rebuffed, in part because of these Democrats who were in the thrall of Fannie Mae's corrupt contribution gravy train.

That is a pity.

McCain was right about the Iraq surge, the President listened and turned that around. To the discredit of those in Washington, McCain was not listened to on this matter and we are paying the price now. One thing is for certain. Senator Obama, the Senator from Fannie Mae, does not have the right answer to this crisis any more than he had the right answer in Iraq.

PS. Non-shocker, Rush agrees with me. Shocker, so does Robert Reich (quoted by Rush):

In the latter years of the Clinton administration -- when I was not there any longer, I should add -- there was an attempt by Alan Greenspan and Bob Rubin and a few others to deregulate financial markets, and they did. They split commercial banking off from investment banking. And many people say, "Well, that was the beginning of the problem," and then, of course, in 2003-2004, Alan Greenspan reduced short-term interest rates to the point where every single bank wanted to lend money. I mean, if you could stand up straight you could get a bank loan because there was so much pressure to get that money out the door. Money was so cheap. So, yes, there is some responsibility on Democrats, some responsibility on Alan Greenspan and the Fed.

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