| Sep 18 @ 7:44 PM |
The Housing Crisis
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Say_Yes
Posts: 1,786
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I saw this article & thought that I would pass it along.
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.
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.
For the full story see
Source - NY Times
In response to the initiative Representative Barney Frank said
We see entities that are fundamentally sound financially. . . . And even if there were a problem, the federal government doesn't bail them out."
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Frank, now chairman of the House Financial Services Committee, said that the president's suggestion for a strong, independent regulator of Fannie and Freddie was "inane."
Democratic Senator Thomas Carper of DE said
"If it ain't broke, don't fix it."
Source - Washington Post
Representative Melvin L. Watt, Democrat of North Carolina, said.
”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,”
The measure was opposed by Democratic leaders in the senate, to include Dodd, Clinton, Kerry & Obama, among others. BTW
Fannie Mae and Freddie Mac have also strategically given more contributions to lawmakers currently sitting on committees that primarily regulate their industry. Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president. Sen. Chris Dodd (D-Conn.), chairman of the Senate banking committee, has received the most from Fannie and Freddie's PACs and employees ($133,900 since 1989). Rep. Paul Kanjorski (D-Pa.) has received $65,500. Kanjorski chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, and Freddie Mac and Fannie Mae are government-sponsored enterprises, or GSEs.
FYI, since 1989 the top four contributions by Fannie & Freddie to members of the senate were:
Dodd - $133,900
Kerry - $111,000
Obama - $105,849
Clinton - $75,550
Source - Open Secrets.org
Funny how all of them were opposed to the increased regulation on Fannie & Freddie.
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| Sep 18 @ 7:51 PM |
The Housing Crisis |
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vinnytmd
Posts: 6,004
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Barney Frank should be thrown in prison. He if Chair of the House financial Services Committee and has done nothing.
Of course he would probably not see that as punishment as he would have plenty of guys to satisfy his desires there.
Another Democrat scum bag
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| Sep 18 @ 8:31 PM |
The Housing Crisis
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Say_Yes
Posts: 1,786
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By the way, there was a second effort to reform Fannie & Freddie that was also killed by congress.
Federal Housing Enterprise Regulatory Reform Act of 2005 - Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting.
Amends the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation. Transfers the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation.
Excludes the Federal Home Loan Banks from certain securities reporting requirements.
Abolishes the Federal Housing Finance Board.
Source - Govtrack.us
As a note, the bill was Sponsored by Chuck Hagel - R, NE & it was co-sposored by three others, Elizabeth Dole, John Sununu & John McCain. Of that bill, McCain said
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.
The bill was killed in committee.
The source is the same as the one cited above.
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| Sep 18 @ 8:44 PM |
The Housing Crisis |
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vinnytmd
Posts: 6,004
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I blame much of this on internet stock trading and the relative lax ways of traders.
Before internet trading brokers actually read SEC documents before buying stock for clients. All the SEC requires is that corporations disclose certain info. They DO NOT make judgment on the condition of a company. In the past brokers had research departments that read through financials and issued reports based on the financial condition of the company.
It seem that today all of the good practices of the past have gone by the wayside allowing companies that are borderline insolvent to exist and lure investors.
The SEC requires that 10K (annual reports) and 10Q (quarterly reports) be filed, published and sent to shareholders.
What I find amazing is that one day no one knew that these companies were headed for the $hitter, then the next day the world knows????
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| Sep 18 @ 9:41 PM |
The Housing Crisis
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Nightowl001
Posts: 4,134
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I see I go away for a day or two to work on a new wing spar, and come back to find the spin doctors are out in force. C'mon, Say_Yes. The article you linked to from OpenSource.org starts out saying this: (For an updated chart that includes contributions from Freddie Mac and Fannie Mae's PACs and employees to ALL lawmakers back to 1989, including to their leadership PACs, go here. link goes to All recipients of Fannie and Freddie contributions) and data
All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Name Party Grand Total
Dodd, Christopher D $165,400
Obama, Barack D $126,349
Kerry, John D $111,000
Bennett, Robert F R $107,999
Bachus, Spencer R $103,300
Blunt, Roy R $96,950
Kanjorski, Paul D $96,000
Bond, Christopher R $95,400
Shelby, Richard R $80,000
Reed, Jack D $78,250
It is obvious that FM&FM were attempting to buy influence from everybody... including McCain who got $21,000 (doesn't say from what year(s)). (Senator Clinton's total was $76,000). McCain does get 3 points for hitting one from the outside with the proposed regulatory measures, but we all know it was the Republican-led Congress that killed that in committee. I'm not sure which committee the bill died in, but Richard Shelby, R-AL, was the Senate Banking committee chairman for the 209th Congress, in 2005.
But thinking back, when Clinton originally signed the bill deregulating a lot of this, he was widely praised by conservatives for "reaching across the aisle," and had opposed it, even going so far as to threaten to veto it, until some last-hour marathon meetings. (story here: Clinton signs banking overhaul measures)"This is a bill that is bipartisan, bicameral and tri-institutional," said Rep. Jim Leach (R-Iowa), chairman of the House Banking and Financial Services Committee. He noted that the House, Senate and White House had worked together on the compromise that became law.
Clinton said the measure will "save consumers billions of dollars a year through enhanced competition." He said it also would protect consumers' rights and require banks to expand the availability of funds for community development. Frankly, there is enough stink on this one to go around for anybody and everybody who wants any part of it.
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