McCain and Housing Regulation
Hrm... there's talk of a bill that was never passed (hell never even made it past committee) called the "FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005", sponsored by Chuck Hagel. One of its co-sponsors was none other than John S. McCain III. So it was tabled and never voted on, and it's spreading like wildfire from the right wing pundits that McCain tried to regulate and solve the bad mortgage problem back in 2005, and that the Democrats killed it. Now, I think that on its face, McCain should be given some credit for this, especially since he spoke on the bill. Here's what he 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
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.
Now, Democrats alone could not have killed this bill in 2005. Democrats did not control either house of Congress and thus did not have a majority to kill the bill in committee. Any failure to immediately pass or introduce the bill to the floor would fall on at least some Republicans. As it was not passed by the end of the legislative session, it was cleared from the books, effectively killed (and cleared) by inaction before the Democrats took over in 2006. That's not to say that the Democrats would have done anything about it (see Barney Frank quote on 2nd page), but who knows?
Also, as I understand it, Fannie and Freddie were not the only culprits in this housing and financial industry fall, and this bill seems to be directed only to Fannie and Freddie as GSE's. From what I have read, the subprime mess was already in full swing by the time this bill was introduced, and if so aimed, it would only have hit two of the problem entities, leaving the wholly private industry to police itself.
Anyway, if anyone knows anything more about this, I'd appreciate the info. I'm interested to find something OTHER than information from right wing trolls who inexplicably blame the failure of this bill on Obama, who has never been a member of the Committee on Banking, Housing, and Urban Affairs. (Though he did receive sizable campaign contributions from Fannie Mae and Freddie Mac in his bid for the Senate.) Or they blame Chris Dodd, who now chairs the Committee, but did not when the bill died (see above). That does not mean I'm looking for left wing bias, but rather facts. I find that people like to talk past each other on the Internet, and when this is brought up, the lefties cite the Gramm-Leach-Bliley Act as the "real" culprit.
I should be doing homework. And oh yeah, anyway, Chuck Hagel (the bill's sponsor) supports Obama.
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
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.
Now, Democrats alone could not have killed this bill in 2005. Democrats did not control either house of Congress and thus did not have a majority to kill the bill in committee. Any failure to immediately pass or introduce the bill to the floor would fall on at least some Republicans. As it was not passed by the end of the legislative session, it was cleared from the books, effectively killed (and cleared) by inaction before the Democrats took over in 2006. That's not to say that the Democrats would have done anything about it (see Barney Frank quote on 2nd page), but who knows?
Also, as I understand it, Fannie and Freddie were not the only culprits in this housing and financial industry fall, and this bill seems to be directed only to Fannie and Freddie as GSE's. From what I have read, the subprime mess was already in full swing by the time this bill was introduced, and if so aimed, it would only have hit two of the problem entities, leaving the wholly private industry to police itself.
Anyway, if anyone knows anything more about this, I'd appreciate the info. I'm interested to find something OTHER than information from right wing trolls who inexplicably blame the failure of this bill on Obama, who has never been a member of the Committee on Banking, Housing, and Urban Affairs. (Though he did receive sizable campaign contributions from Fannie Mae and Freddie Mac in his bid for the Senate.) Or they blame Chris Dodd, who now chairs the Committee, but did not when the bill died (see above). That does not mean I'm looking for left wing bias, but rather facts. I find that people like to talk past each other on the Internet, and when this is brought up, the lefties cite the Gramm-Leach-Bliley Act as the "real" culprit.
I should be doing homework. And oh yeah, anyway, Chuck Hagel (the bill's sponsor) supports Obama.