Birds Of A Feather Flock Together

-By Dan Scott

Give credit where credit is due, blame the Democrats for their equality of outcome incompetence. A blind person could see more than the Democrat cronies who were running Fannie Mae and Freddie Mac (FMs) up to now. There is none so blind as those who refuse to see. The Democrat’s ideological blinder was the Equality of Outcome policy they implemented to push home ownership to people who simply weren’t capable of being homeowners. In 2003, the Bush Administration tried to head off the problem with the FMs but Democrats would have none of it, the NYT recorded their excuses for posterity. Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

‘‘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.”

Let’s be very clear about this, the reason why financial companies like Bears Sterns and Lehman Bros went down were the Collateralized Debt Obligation (CDO) valuations based on the supposed soundness of FM and Bank mortgages. Had the mortgages been sound, the CDO problem wouldn’t exist. This is not the simple “greed” of CEOs on Wall Street (while it did involve some on many Dem supporters part as you will see), this was mostly the incompetence of liberal Democrats and their idiotic Equality of Outcome policy inappropriately extending home ownership to people who simply weren’t able to handle that responsibility. We shouldn’t entirely blame the banks for the incompetence of the Democrat’s Equality of Outcome policy. Who do you think set the rules for granting mortgages to be bought? The FMs. The banks and other financial institutions based their CDOs on mortgages of these two institutions. Who ran these institutions until recently? CLINTON cronies! Together these two companies amount to about 70% or so of the total secondary market for home mortgages in which mortgages are bought from the originating lenders and then packaged into tranches which are sold to investors in what is known as a Collateralized Debt Obligation…

… Well, Fannie Mae has long been the sinecure where Democratic Party functionaries have gone to get rich. The most well-known figures are former chairman Jim Johnson (once the head of Barack Obama’s vice presidential search committee before being replaced by Caroline Kennedy), 9/11 Commission member and former deputy attorney general Jamie Gorelick who served as Fannie Mae’s vice chairman from 1997 to 2003. But the most notorious former Democratic apparatchik in this respect is former Clinton OMB director Frank Raines. Under his leadership Fannie Mae was accused of cooking its books to boost the multi-million dollar bonuses paid to its top executives and Raines settled with regulators for the astonishing sum of $24.7 million. But the story doesn’t end there as we found out this last spring with the sweetheart loan deals offered to Democratic Senators Kent Conrad and Christopher Dodd by former Countrywide Home Loan chief Angelo Mozila in what was aptly title the “friends of Angelo” program.

It was the prosecutors under the Bush Administration that went after the Clinton cronies running the FMs The politically appointed cronies got away with the scandal as long as they did because the FMs are not subject to the Sarbanes-Oxley Act as they are quasi-government institutions. Any bank that attempted to behave the way the FMs behaved would have been taken over long ago and the CEOs prosecuted for fraud.

What the FMs did under the Equality of Outcome (affordable housing) policy was to essentially eliminate the requirement to be a credit worthy home owner. It shouldn’t have come as a surprise when a renter buys a home on overly generous credit terms, when find themselves in trouble they are going to walk and default on the mortgage. The fact is some people are only able to be renters due to their economic background and lifestyle. Why is that? In their experience, when a renter found they couldn’t continue to pay the rent, they moved out and doubled up with someone else until they found a cheaper place, it’s the landlord’s problem to find another tenant. Other than sometimes losing the security deposit, there were no immediate negative financial repercussions. I call this “renter’s mentality”. A renter with no history of home ownership and NO vested interest (no down payment), i.e. nothing to lose (risk free), purchases a house, they don’t see it’s their responsibility to be able to afford the place and they’re off the hook if they can’t. If you have to put your own money on the line and face possibly loosing it, you are far more careful as to your decisions. As far as the renter’s mentality is concerned, they are moving out of an apartment and see the Bank (FMs) as the landlord. In the renter’s mentality, the bank has the property and it’s the bank’s problem to find another buyer.

In 2005 the Bush Administration tried again to reform the system this time with Barack Obama’s opposition added.

The administration did not accept half-measures. In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie’s lobbyists set out to weaken it. The bill was rendered so toothless that Card called Oxley the night before markup and promised to oppose it. Oxley pulled the bill instead.

During this period, Sen. Richard Shelby led a small group of legislators favoring reform, including fellow Republican Sens. John Sununu, Chuck Hagel and Elizabeth Dole. Meanwhile, Dodd — who along with Democratic Sens. John Kerry, Barack Obama and Hillary Clinton were the top four recipients of Fannie and Freddie campaign contributions from 1988 to 2008 — actively opposed such measures and further weakened existing regulation.

Which brings us to Barack Obama’s connection to the FM mess and the demise of Lehman Brothers and Bears Sterns. Obama received a grand total (per Open Secrets) of $1,223,737.00 from Fannie Mae, Freddie Mac, Lehman Brothers, AIG, and Bear Stearns while John McCain received only $258,075.00.

John McCain $6,550 (Fannie Mae) $9,100 (Freddie Mac) $117,500 (Lehman Bros.) $36,875 (AIG) and $88,050 (Bear Stearns)

Barack Obama $137,950 (Fannie Mae) $68,750 (Freddie Mac) $370,524 (Lehman Bros.) $75,899 (AIG) and $570,614 (Bear Stearns)

Now at first blush why would the FMs and other financial service giants give to Barack Obama when he doesn’t have any committee assignments that were even remotely connected to their industry? Let’s think about that and consider some facts. Now clearly Barack Obama under the campaign finance rules could not receive a single source contribution of $137,950 from Fannie Mae or any of those other amounts previously listed. These amounts were the sum total of employees working for Fannie Mae, i.e. Democrat contributors. Fannie Mae’s large aggregate contributions were not isolated, most of Barack Obama’s top contributors are from the financial services industry.The financial record of contributions shows that liberal Democrats are heavily involved in the financial services sector and thus have a vested interest in free wheeling markets. Contributions to John McCain from Republican employees are puny in comparison and therefore contrary to the liberal myth Republicans aren’t the greedy minions of Wall Street. Obama was friends with Franklin Raines, the former CEO of Fannie Mae whom by the way was also an economic advisor to his campaign. And Raines wasn’t the only one.

From Rev. Wright to Franklin Raines it seems Barack Obama’s continual poor choice in associates and heavy support reflects the old adage of “birds of a feather, flock together. ” Why should anyone vote for a guy who takes advice from someone who helped damage the US financial system and stuck it to the taxpayer (you and me) to clean up the mess? Why should anyone believe Barack Obama has the answers to the current economic issues when he and his buddies caused the mess? Why should anyone believe the Democrat Party has any answers at all when they and their high flying contributors are part and parcel of the problem?

Other reference web links of interest

Federal Election Commission Contributor Database

Contribution limits
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Dan Scott calls himself a “Member of the Global Capitalist Cabal preaching Capitalism and personal responsibility as the economic solution to world poverty.” He is also a member of the 14th Amendment Society — victimhood is a liberal code word for denying the civil rights of others. He is also a proud member of the Global Warming Denier Cabal, insisting that facts not agendas determine the truth.

Dan can be seen on the web at http://www.geocities.com/fightbigotry2002/ as well as http://www.geocities.com/dscott8186/saidwebpage.htm, And can be reached for comments at dscott8186@yahoo.com.