A Free Voice

Proof the Democrats (NOT THE REPUBLICANS) are responsable Fannie Mae & Freddie Mac
September 29, 2008, 10:56 pm
Filed under: Democrats, Economy, McCain, Obama, Republicans | Tags: ,

Despite the Democrats waving the finger blaming the Republicans, the Democrats, not the Republicans, are the ones who defended Fannie Mae and Freddie Mac. The Republicans warned us about what was going to happen andcalled for regulation. And yet the Democrats are the ones that decided against taking the necessary steps to prevent the mess we are in now:

Here’s a transcript of Rush Limbaugh’s commentary on the video:

RUSH:  What you are about to hear, ladies and gentlemen, is informative, educational, and stunning.  It is Democrat after Democrat defending all of these fraudulent mortgages from Freddie Mac; attacking those who were raising concerns.  You’re going to hear Democrats viciously attacking the effort to regulate Fannie Mae and Freddie Mac, which is at the root of the problem here requiring this so-called bailout. Every black member of the committee is defending Fannie Mae and Freddie Mac, and every Republican begging for more regulation.  You will not believe what you’re going to hear.  They defend Franklin Raines, every one of them.  It is Barney Frank saying “safety and soundness” is not an issue. Republicans are on the attack one after another; Democrats defending one after another.  I don’t get excited about YouTube stuff going around because there’s so much YouTube stuff, but this stuff is exciting. It’s huge. You have Franklin Raines actually saying these assets are “riskless.”  So we’re going to start with every speaker. This is a hearing from 2004: Republicans begging for regulations and Democrats defending Fannie and Freddie.  We start here with Rep. Richard Baker (R-LA).
BAKER:  It is indeed a very troubling report, but it is a report of extraordinary importance not only to those who wish to own a home, but as to the taxpayers of this country who would pay the cost of the clean up of an enterprise failure.  The analysis makes clear that more resources must be brought to bear to ensure the highest standards of conduct are not only required, but more importantly, they are actually met.

RUSH:  We’re talking here about Fannie Mae.  Rep. Maxine Waters (D-CA) starts the defense.
WATERS:  Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn’t broke, Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Mr. Frank Raines.

RUSH:  Here now is Rep. Gregory Meeks (D-NY).

MEEKS: As well as the fact that I’m just pissed off at OFHEO, because if it wasn’t for you, I don’t think that we’d be here in the first place, and now the problem that we have and that we’re faced with is: maybe some individuals who wanted to do away with GSEs in the first place, you’ve given them an excuse to try to have this forum so that we can talk about it and maybe change the, uh, the direction and the mission of what the GSEs had, which they’ve done a tremendous job. There’s been nothing that was indicated that’s wrong, you know, with Fannie Mae! Freddie Mac has come up on its own. And the question that then presents is the competence that — that — that — that your agency uh, uh, with reference to, uh, uh, deciding and regulating these GSEs. Uh, and so, uh, I wish I could sit here and say that I’m not upset with you, but I am very upset because, you know, what you do is give — you know, maybe giving any reason to, as Mr. Gonzales said, to give someone a heart surgery when they really don’t need it.

RUSH:  That’s Gregory Meeks, a Democrat from New York, attacking the regulator who was testifying about the problems at Fannie Mae and Freddie Mac in 2004.  Rep. Ed Royce (R-CA)…

ROYCE:  In addition to our important oversight role in this committee, I hope that we will move swiftly to create a new regulatory structure for Fannie Mae, for Freddie Mac, and the federal home loan banks.

RUSH:  Democrat response, Rep. Lacy Clay (D-MO)…

CLAY:  This hearing is about the political lynching of Franklin Raines.

RUSH:  Ed Royce again…

ROYCE:  There is a very simple solution.  Congress must create a new regulator with powers at least equal to those of other financial regulators, such as the OCC or Federal Reserve.

RUSH:  Do you see what’s shaping up here?  This is pure politics and it boils down to — you can’t avoid observing — racial politics.  We had a bomb, a time bomb waiting to go off at Fannie Mae and Freddie Mac which has gone off, it has gone off.  We had regulators testifying, brought in by Republicans and Democrats, saying, “What do we need to do to stop this time bomb?  What do we need to do to diffuse it?” “Well, we need new regulations. We need new oversight.”  No, you don’t! You’re not going to get away with kicking people out of houses and you’re not going to conduct a lynching of Franklin Raines.”  Now Franklin Raines… Just stick with this. Gregory Meeks here attacks the regulator yet again. 
MEEKS:  What would make you — why should I have confidence? Why should anyone have confidence, uh, in — in you as a regulator at this point?

FALCON:  Sir, Congressman, OFHEO did not improperly apply accounting rules.  Freddie Mac did.  OFHEO did not fail to manage earnings properly.  Freddie Mac did.  So this isn’t about the agency engaging in improper conduct.  It’s about Freddie Mac.

RUSH:  This is the Democrats going after Ken Starr investigating Bill Clinton.  This is attacking the regulator, attacking somebody. Look, we all know now. Looking back in 2004, we all know the regulator is right. We all know the Republicans are right. We all know that the time bomb was ticking. We know that the time bomb has gone off. The Democrats are now using the time bomb to blame the private sector for this!  Barney Frank, Nancy Pelosi, and Harry Reid to this day are claiming that what went wrong is the private sector, “greed on Wall Street.”  What is obvious is that what went on is Democrats in Congress propping up a failed institution for whatever reasons:  minority interests, interests of the poor, votes from those interests, defending Franklin Raines — who was a thief!

Franklin Raines stole the money out of Fannie Mae and had the employees there back-date and falsify letters and so forth, assets — postdate them, predate them, to show that they were worth something, when they were worthless.  That’s how he scored his big payday.  You can see the wagons being circled here, and it boils down to that the Democrats on this committee had no desire to have this fixed. They had no desire for any of the problems to actually be properly enumerated.  Now, the Drive-By Media covered none of this.  This is all from C-SPAN.  None of this is from cable television or evening news programs or anything of the sort.  Christopher Shays (R-CT) asks, “How many in this room are on the payroll of Fannie Mae.”

SHAYS:  And we passed Sarbanes-Oxley, which was a very tough response to that, and then I realized that Fannie Mae and Freddie Mac wouldn’t even come under it.  They weren’t under the ’34 act, they weren’t under the ’33 act, they play by their own rules, and I am tempted to ask how many people in this room are on the payroll of Fannie Mae. Because what they do is they basically hire every lobbyist they can possibly hire. They hire so many people to lobby and they hire some people not to lobby, so that the opposition can’t hire them.

RUSH:  Now, this is again another indictment of Fannie Mae, but let’s go back and listen to Rep. Lacy Clay (D-MO), describe what he thinks is really going on here.

CLAY:  This hearing is about the political lynching of Franklin Raines.

RUSH:  It was not about the “political lynching” of anybody, and there’s the racial politics. It’s not even covert.  There’s the overt racial aspect of this that nobody is discussing and nobody is talking about, but it all happened on a committee in the House chambers, House office buildings, in 2004.  Ladies and gentlemen, it is clear that there were people who tried to stop this.  The Republicans. Again, just to illustrate, if there were a single Republican the Democrats could pin this on, there would have been congressional hearings, you’d have heard his name mentioned all weekend long.  There is no such Republican in existence who can be made to take the heat for that.  Here is Rep. Artur Davis (D-AL) defending executives at Fannie Mae.

DAVIS:  The concern that I have is you’re making very specific, what you have correctly acknowledged, broad and categorical judgments about the management of this institution, about the willfulness of practices that may or may not be in controversy.  You’ve imputed various motives to the people running the organization.  You went to the board and put a 48-hour ultimatum on them without having any specific regulatory authority to put that kind of ultimatum on ’em.  Uh, that sounds like some kind of an invisible line has been crossed.

RUSH:  How about that? “You went to the board. You put a 48-hour ultimatum on them without having any specific regulatory authority to put that kind of ultimatum on them.”  What kind of authority are these same people asking for now?  To let the Treasury Secretary ensure the public welfare!  The Treasury Secretary, of all people!  So as this goes on, you can clearly see and you can clearly hear, there was no desire on the part of the Democrats to even acknowledge that there was a ticking time bomb.  Christopher Shays again, Republican from Connecticut.

SHAYS:  Fannie Mae has manipulated, in my judgment, OFHEO for years — and for OFHEO to finally come out with a report as strong as it is, tells me that’s got to be the minimum, not the maximum.

RUSH:  OFHEO is the regulatory agency that is under attack here.  What Shays is saying is that Fannie Mae has manipulated the regulator for years and the regulator can take it no more.  The regulator said: Look, I can’t sweep this under the rug anymore. To come out with a report as strong as it is, detailing the problems and the ticking time bomb status of Fannie Mae and Freddie Mac, what Shays is saying is, “It’s gotta be worse than they’re saying, given how they’ve been manipulated in the past.”  Barney Frank…

FRANK:  …etcetera. Uh, I — This — You — you — you seem to me saying, “Well, these are areas which could raise safety and soundness problems.”  I don’t see anything in your report that raises safety and soundness problems.

RUSH:  “I don’t see anything in your report…”  This is a guy in charge of fixing this now. “I don’t see anything in your report that raises safety and soundness.” I don’t see a ticking bomb here. There’s nothing going wrong here.  Maxine Waters heaps praise on Franklin Raines…

WATERS:  Under the outstanding leadership of Mr. Frank Raines, everything in 1992 has worked just fine.  In fact, the GSEs have exceeded their housing goals.  What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans. 

RUSH:  To people who can’t pay ’em back! That’s brought this system to a screeching halt and a perceived crisis.  We need to focus on the regulator.  Barney Frank says it was the private sector that caused this.  Here are Democrats in Congress trying to destroy the credibility of the regulator — while you have been led to believe that there wasn’t enough regulation, that the private sector was running around like a bunch of drunken cowboys.  I hope you’re getting the picture.  There is more to this.

RUSH: Now, back to these sound bites here from the 2004 House hearing.  The regulator who is being attacked, I need you to know who this guy is.  His name is Armando Falcon, Jr.  He was the director of the Office of Federal Housing Enterprise Oversight, OFHEO, and was being attacked by all the Democrats on the committee in the sound bites which we will resume shortly.  There is a story here from the Washington Post back pages, December 28, 2004:  “There are no awards for moxie in regulating, but if such a program is ever established, supporters of Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, would probably nominate him. The tiny agency was created in 1992 to oversee Fannie Mae and Freddie Mac, two government-backed housing financiers with assets and mortgage guarantees adding up to more than $3 trillion. … It has David and Goliath features: a tiny agency taking on a gigantic company; Falcon, an unknown regulator paid $158,100 annually, going up against Fannie Mae chief executive Franklin D. Raines, who received $16.8 million in cash compensation in 2003. … Three months ago, Falcon and his agency dropped a bombshell: a report that concluded Fannie Mae committed numerous accounting and earnings mistakes. The investigation began after members of Congress blamed OFHEO for missing similar problems at Freddie Mac.”

This is what Chris Shays was talking about.  So the guys at OFHEO said, “Okay, we looked the other way, but we’re going to get tough here.”  That brought the Democrats out to attack Falcon, and that’s what you’re listening to in the sound bites that we will resume here in just a moment.  Now, a follow-up story, and I reference this moments ago, the AP, April 19th this year:  “Franklin Raines, former chief executive, Fannie Mae, and two other top executives are paying a total of nearly $31.4 million over their roles in a 2004 accounting scandal in a settlement that the government announced Friday.”  What was happening here, ladies and gentlemen, is that false signatures were used to aid Fannie Mae bonuses, and the same regulator that these people are attacking in the ’04 hearing that you’re going to hear us resume in a moment are now attacking Falcon for bringing all of this to light. 

This is from the Washington Post of April 7th of 2005: “Fannie Mae employees falsified signatures on accounting transactions that helped the company meet earnings targets for 1998, a ‘manipulation’ that triggered multimillion-dollar bonuses for top executives, a federal regulator said yesterday. Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, said the entries were related to the movement of $200 million in expenses from 1998 to later periods.”  Now, I just say all this to refresh your memory.  The regulator found the abuses, and these are more than abuses.  These are crimes.  There were crimes.  In 2004, we are playing for you sound bites of a House committee hearing in which the regulator, Mr. Armando Falcon, is explaining what he found.  The Democrats on the committee have decided to attack him, to discredit him because Fannie Mae, Freddie Mac has become for them at that time a way to get their constituents into houses they can’t afford. 

It was a ticking time bomb.  Everybody knew it then.  The OFHEO guy, Falcon, Bush, McCain, a number of Republicans were trying to sound the warning bells about the ticking time bomb.  The Democrats didn’t want to hear it, started attacking the regulator and everybody else saying there was a problem under the basis that this would challenge and harm this new affordable housing.  Affordable housing thus now defined as people who can’t afford houses being allowed to live in them at taxpayer expense, pure and simple.  That’s what affordable housing is.  Let’s resume now.  Maxine Waters, just to replay this, heaping praise on Franklin Raines.

WATERS:  Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 act has worked just fine.  In fact, the GSEs have exceeded their housing goals.  What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans.

RUSH:  Now, you’re probably saying, “Why hasn’t all this been mentioned by the Republicans in the past week?  Why hasn’t somebody stood up and said, ‘Hey, folks, the problem that we supposedly have a crisis with was attempted to be solved numerous times,’ and cite all this?”  The Republicans that you’re hearing here, many of them are still in the Congress, coulda stood up and said this. I can’t answer the question, I don’t know.  I don’t know why they’re not standing up and saying this.  I think everybody’s become affected by the crisis, the psychological crisis here that has successfully been manufactured by the Obama campaign and the Democrats and the media just five weeks prior to the election.  Here is Democrat Lacy Clay of Missouri.

CLAY:  I find this to be inconsistent and a rush to judgment.  I get the feeling that the markets are not worried about the safety and soundness of Fannie Mae as OFHEO says that it is, but of course the markets are not political.
RUSH:  Oh, the markets are not political, but the regulator is political all of a sudden.  The regulator who has found accounting disasters, fraud, and theft throughout Fannie Mae and Freddie Mac can’t be trusted because he’s political.  These guys want to believe the market back in 2004.  The market, by the way, Congressman Clay, was being intimidated by a number of Democrats.  “If you don’t continue to make and service these loans, then you’re going to be investigated.”  Here’s Barney Frank again, same hearing.

FRANK:  But I have seen nothing in here that suggests that the safety and soundness are at issue, and I think it serves us badly to raise safety and soundness as kind of a general shibboleth when it does not seem to me to be an issue.

RUSH:  Barney Frank four years ago:  “There’s no problem here.  I’ve seen nothing in here, the regulator’s testimony, that suggests that safety and soundness are an issue.  I think it serves us badly to raise safety and soundness as kind of general shibboleth.”  These guys knew it, they saw it, it was staring them right in the face and they wanted to attack the regulator.  Let me ask you a question.  You go into the hospital for a heart bypass, the doctor performing the surgery screws it up.  Do you ask him to do it again on the basis he knows best what went wrong or do you go find a new doctor?  I’m being serious, ask yourself, you go in for some sort of surgery and you find out that a finger was amputated by mistake, somebody got a report wrong, chart wrong, do you go back to the guy who amputated your finger and read the chart wrong and say, “Fix this?”  It’s what we’re doing here.  The very people who designed this, they designed this to fail, it did fail, the very people who knew that it was in the process of failing have now been put in charge of fixing it, but they don’t want to do it by themselves.  They’re demanding that Republicans vote with them to give them cover.  Now, another Republican, this is Don Manzullo, (R-IL) calling out the Democrats by name who raked in money.

MANZULLO:  Mr. Raines, 1.1 million bonus and a $526,000 salary.  Jamie Gorelick, $779,000 bonus on a salary of 567,000.  This — what you state on page 11 is nothing less than — than staggering.  The 1998 earnings per share number turned out to be $3.23 and 9.mills, a result that Fannie Mae met the EPS maximum payout goal right down to the penny.  Fannie Mae understood the rules and simply chose not to follow them.  If Fannie Mae had followed the practices, there wouldn’t have been a bonus that year.

RUSH:  Okay, now, what’s up next is unreal.  Franklin Raines is being questioned by Christopher Shays.  The second voice you hear on this bite is Franklin Raines, who was discovered to have committed major fraud and sent packing.

SHAYS:  And you have about 3% of your portfolio set aside.  If a bank gets below 4%, they are in deep trouble.  So I just want you to explain to me why I shouldn’t be satisfied with 3%?

RAINES:  Because banks don’t — there aren’t any banks who only have multifamily and single-family loans.  These assets are so riskless that their capital for holding them should be under 2%.

SHAYS:  Fine.

RUSH:  These assets are so riskless.  Franklin Raines, who will be in Obama’s cabinet.  Franklin Raines, who gives Obama advice on housing. Franklin Raines, who had to give back gazillions of dollars that he stole from Fannie Mae.  A former director of the Office of Management and Budget for the Clinton administration, Franklin Delano Raines.  You just heard him say the assets, subprime mortgages, all of these things that they bundled, riskless.  Franklin Raines is a Democrat, by the way, 2004 congressional hearing.  And let’s close this out, ladies and gentlemen, with Bill Clinton finally on ABC’s Good Morning America last week, Chris Cuomo says, “Is it a little surprising to you to hear the Democrats saying that this came out of nowhere, this was all the Republicans?  Pelosi saying it’s all the Republicans, she knew what was going on with the SEC.  They’re all sophisticated people.  Is that playing politics in this situation?”

CLINTON:  The responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president to put some standards and tighten up a little on Fannie Mae and Freddie Mac.

RUSH:  Okay, forget him inserting himself in there.  He just admits here, the responsibility the Democrats have may rest more in resisting any efforts by Republicans in the Congress to tighten up a little bit on Fannie Mae and Freddie Mac.  And you’ve just heard evidence.  There ought be no doubt who caused this, and given that, why in the world anybody wants to put the same party in charge of all of this, under the guise that they’re the ones that have the compassion, that they’re the ones that care about affordable housing, they are taking over the country.  They are stealing the country with this legislation, and our nominee is out talking about earmarks.

(Linked Transcript)


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