Sep 30 2008

The Democrat Record On Fannie Mae & Freddie Mac (2003-2007) – Updated!

Published by at 10:30 am under 2008 Elections,All General Discussions

Update: Let me pull some killer comments from SBD’s latest update all right after the dems took Congress in 2006:

First of all, Fannie Mae Freddie Mac, these are two companies, that have been closely tied to the Democratic Party. I think is the best way to put it. And they’ve been under a regulatory cloud. That may be lifted.

REMARKS BY REPRESENTATIVE BARNEY FRANK (D-MA), INCOMING CHAIRMAN OF THE HOUSE FINANCIAL SERVICES COMMITTEE, AT THE OFFICE OF THRIFT SUPERVISION HOUSING FORUM; LOCATION: THE NATIONAL PRESS CLUB, THE NATIONAL PRESS BUILDING, WASHINGTON, D.C. Federal News Service December 11, 2006 Monday

Now let me turn to housing — we have more to do yet in the deregulation. I’m just saying that one of the things that we did was to try and reduce the reporting requirement from the banks to the financial detectives. And far too much has to be reported now, in my judgment, of a routine nature. And the metaphor that I use is that we have told the law enforcement people to find a bunch of needles, and then we have set about building them a very big haystack. And we ought to thin that down so they can do a better job.

One of the things that I want to stress to my liberal friends is that excessive regulation or ineffective regulation is bad for regulation. Regulation is very important. The market does need some corrections, but if you overdo it, then you weaken your case.

Or you tank the financial engine of the world, also known as the American economy. The liberal media was cheering the Dems and their plans to free Freddie Mac and Fannie Mae from the oppressive oversight of the GOP. Amazing how soon they forgot their own words.

Update: SBD has much more in the comment section on how the 2006 win for the Dems saved Fannie Mae and Freddie Mac from serious investigation. Folks, get this post out to Hannity, Rush, Miller and anyone else who can spread the word.  The Do-Nothing Democrats did one thing since taking over Congress, they protected Fannie Mae and Freddie Mac from scrutiny and left us holding their bag of crap! Remember, 5 Dem Committee Chairman and numerous Democrat subcommittee chairman voted to kill the bailout.  Wonder what they know that we have forgotten down the liberal media news black hole? - end update.

Addendum:  Anyone note the $5 Billion PROFIT these two companies churned out in one year – enough to fund the war in Iraq and then some. It all went into the pockets of allies of power brokers in DC, and then into campaign coffers. - end addendum

Reader SBD has been out doing his usual top notch analysis of the historic record again, and he puts the lie to the idea the current financial meltdown was due to GOP policies. Check out the statements by the Rep Barney Frank over the years who is now pointing the finger at the GOP. And note how the GOP tried to reign this mess in before it got out of hand, but was stymied every step of the way by liberal democrats on a mission to sell houses to those who couldn’t afford them.

HOUSE COMMITTEE ON FINANCIAL SERVICES HOLDS A HEARING ON TREASURY DEPARTMENT’S VIEWS ON THE REGULATION OF GOVERNMENT SPONSORED ENTERPRISES
SEPTEMBER 10, 2003

And I now will recognize the ranking member, the gentleman from Massachusetts, Mr. Frank [D].

FRANK: Thank you, Mr. Chairman.

I appreciate hearing from the two Cabinet secretaries, but I just say at the outset that before we move on any legislation, I would hope we would have some additional hearings. And in particular, I think it’s important that the variety of groups in our country who care about housing be invited, because that’s my major focus here, as it’s been during my service on this committee.

I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government-sponsored enterprises that we’re talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We recently had an accounting problem with Freddie Mac that led to people being dismissed, as appears to be appropriate.

I do not think at this point there is a problem with a threat to the treasury. I’m going to say, we have an interesting example of self-fulfilling prophecy.

Some of the critics of Fannie Mae and Freddie Mac say that the problem is is the federal government is obligated to bail-out people who might lose money in connection with them.

I do not believe that we have any such obligation. And as we said that it’s a self-fulfilling prophecy based on people. So let me make it clear: I’m a strong supporter of the role that Fannie Mae and Freddie Mac play in housing.

But nobody who invested in them should come looking to me for a nickel, nor anybody else in the federal government.

And if investors take some comfort and want to lend them a little money at less interest rates, because they like this center (ph) affiliation, good, because housing will benefit. But there is no guarantee, there’s no explicit guarantee,there’s no implicit guarantee, there’s no wink-and-nod guarantee. Invest and you’re on your own.

I believe that we, as the federal government, have probably done to little, rather than too much, to push them to meet the goals of affordable housing, and they set reasonable goals.

I worry, frankly, that there’s a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios.

I think that’s a (OFF-MIKE) problem, the federal government doesn’t bail them out. But the more pressure there is there, then the less I think we see, in terms of affordable housing. I want Fannie Mae and Freddie Mac to continue with its government-sponsored enterprises, with some beneficial arrangements with the federal government, in return for which we get both the general lowering of housing costs and some specific attention to low-income housing.

HOUSE COMMITTEE ON FINANCIAL SERVICES HOLDS A HEARING ON H.R. 2575, THE SECONDARY MORTGAGE MARKET ENTERPRISES REGULATORY IMPROVEMENT ACT AND THE ADMINISTRATION’S PROPOSALS ON GSE REGULATION

SEPTEMBER 25, 2003

FRANK: I think this is a very important hearing. And I appreciate the Chairman’s willingness to have it under the auspices of the full committee.

I joined this committee in 1981 because I am interested in housing. And I guess I wouldn’t want to boast about my accomplishments, because the situation regarding housing, particularly people who are of moderate and low income, has gotten worse during my tenure. I won’t accept the blame, but I clearly haven’t done a great deal of good.

And it makes it all the more important that we use every tool that we do have to try improve the housing stock.

And Fannie Mae and Freddie Mac are two of the very important tools that we have.
And there are people I know who are critical of the arrangements that we have. I, frankly, welcome the fact that we have in Fannie Mae and Freddie Mac a means of bringing down housing costs that doesn’t put a hit on the federal budget.

Essentially, there are people in the country who are prepared to lend money to Fannie Mae and Freddie Mac at less interest rates than they might get elsewhere. I thank those people for doing that. I must tell them that I hope they are not doing that on the assumption that if things go bad, I or my colleagues will bail them out. We will not.

FRANK: Let me ask Mr. Gould and Mr. Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?

Mr. Raines?
RAINES: No, sir.

FRANK: Mr. Gould?
GOULD: No, sir.

U.S. REPRESENTATIVE RICHARD H. BAKER (R-LA) HOLDS HEARING ON ACCOUNTING AND MANAGEMENT ISSUES AT FANNIE MAE

October 6, 2004 Wednesday

Ranking Member Frank?

FRANK: Thank you, Mr. Chairman.

First, I want to address a little history here. The committee here was well on the way to adopting legislation that would have enhanced the regulatory structure for Fannie Mae and Freddie Mac. In the Senate, in fact, the committee actually voted out a bill. There was some disagreement between the parties over I think a relatively minor section over receivership. I think that could have been worked out.

I believe we were well on the way, the chairman and I and the staffs, to putting together a bill that would have enhanced the regulator and could have passed. What stopped progress on a new bill was the Bush administration’s determination to go beyond safety and soundness and into provisions that would have restricted the housing function.

What is powerful here are not Fannie Mae and Freddie Mac, but the interests of a majority of the members of this committee in housing at two levels. First of all, in housing in the conventional market, is very important, and the continuance of Fannie Mae and Freddie Mac are important to that. We also have a subset of issues involving affordable housing, and those are very important to many of us.

What derailed the legislation was an insistence by the Bush administration on going beyond safety and soundness and giving the regulators, for example, particular power to say, “Well, they’re going beyond their charter in housing; they should not do these new products.” There were specific issues here that transcended safety and soundness or went under it, but the administration was seeking powers that were not related to safety and soundness.

If they were to have dropped that, we would have a law already signed and in place, because on the question of safety and soundness regulation, there has not been a significant dispute.

Mr. Bachus?

BACHUS [R]: I thank the chairman.

First of all, chairman, there have been several remarks made that we would have addressed these issues had it not been for the Bush administration. It is my recollection that the Bush administration actually urged this committee and this Congress to take strong action and that at that time that was in the sort of post-Freddie Mac. At that time, many of the Democratic members accused the Bush administration of going on a witch hunt against Fannie Mae of saying that things were right at Fannie Mae, and that OFHEO was doing a wonderful job, and that there was sufficient regulation, that this was simply to accuse the Bush administration of wrong motives.

It was actually a combination of those in the Senate that did not want to take action, and members of this committee that disagreed with the Bush administration. One thing the Bush administration was concerned about is the new products that Fannie was offering, and they wanted Treasury to approve those new products. It is my recollection that the minority members almost to a person resisted those reforms.

I do think, and I commend Mr. Frank. Mr. Frank actually had it right and more accurately when he said the Bush administration wanted to go further than this committee. I think that is absolutely true. And now all of a sudden, some of the things that the Bush administration wanted to do it seemed like they would have been very prudent things to have done.

So to try to, a month before an election, to try to somehow create a smokescreen that the Bush administration had done something wrong would be inaccurate and would not be factual. Of course, it probably is not surprising either.

HOUSE COMMITTEE ON FINANCIAL SERVICES HOLDS A HEARING ON GOVERNMENT-SPONSORED ENTERPRISES REFORM
APRIL 13, 2005

Now I recognize the gentleman from Massachusetts, the ranking member, Mr. Frank?

FRANK: There are three sets of concerns that have been brought out with regard to the government-sponsored enterprises, and I will talk particularly Fannie Mae and Freddie Mac.

But there are two other agendas at stake here. One is the notion that it is inappropriate for the federal government to interfere with the allocate of functions of the capital market. I believe this partly motivates Mr. Greenspan.

There is obviously a very respectable, intellectual tradition that says: The market knows all, the market is smart and government is dumb — to quote a former majority leader from Texas, a former majority leader from Texas, a current former majority leader from Texas — and he said the markets are smart and the government is dumb.

And the view is that Fannie Mae and Freddie Mac, with a particular set of legislative and executive arrangements, biases capital allocation towards housing. And there are people who want to stop that. I very much disagree with that.

There are also competitors. There are organizations of people who compete or resent the fact that Fannie Mae and Freddie Mac can borrow money more cheaply than others, because of a perception in the market that we’re going to bail them out. I am not going to bail them out, and if they want to lend money to Fannie and Freddie cheaper, that’s their judgment. Don’t come to me if it doesn’t work out.

MARKETPLACE MORNING REPORT
SHOW: Marketplace Morning Report 6:50 AM EST SYND

May 26, 2005 Thursday

HEADLINE: House committee gives green light to legislation that would tighten regulation of Fannie Mae Click for Enhanced Coverage Linking Searches and Freddie Mac Click for Enhanced Coverage Linking Searches

ANCHORS: KAI RYSSDAL

KAI RYSSDAL, anchor:

A new framework for Fannie and Fred.

Announcer: The MARKETPLACE MORNING REPORT is produced in association with the University of Southern California.

RYSSDAL: From American Public Media in Los Angeles, I’m Kai Ryssdal.

A House committee has given the green light to legislation that would tighten regulation of mortgage giants Fannie Mae and Freddie Mac.

Conspicuously absent from the bill, though, was something both the White House and Federal Reserve Chairman Alan Greenspan have been calling for: sharply limiting how large those companies’ holdings can be. Fannie Mae, you might have heard, is an underwriter of this program.

FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005 — (Senate – May 25, 2006)

Mr. McCAIN. 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.

U.S. SENATE COMMITTEE ON BANKING, HOUSING AND URBAN
AFFAIRS HOLDS A HEARING ON GOVERNMENT-SPONSORED
ENTERPRISES REFORM (PART II)

APRIL 7, 2005

SHELBY: Senator Schumer?

SCHUMER [D]: Thank you, Mr. Chairman. And I join our ranking member, Senator Sarbanes, in thanking you for holding these extensive and timely hearings.

First, I’d like to say that what I smell in the air is a campaign to virtually eliminate Fannie and Freddie. It’s been chosen at an opportune time because they both have regulatory and accounting problems. But many of those who are on this campaign have been out to disable Fannie and Freddie long before the regulatory problems appeared. They are in a sense behaving like opportunistic predators.

And I think there are a whole lot of questions out there that the normally convincing Alan Greenspan really didn’t answer yesterday — or didn’t answer at least I think to the satisfaction of many of us — and there are a lot.

SNOW [R]: OK. Well, let me take the one that — number four on your list that seemed to be the heart of your concerns.

It isn’t anybody’s preference that GSEs, quote, “make less money.” The preference is that they reflect less systemic risk to the housing market and to the larger financial system.

From my point of view, Senator, that’s the heart of the reason why we’re meeting here today, it’s the heart of this legislation that’s being proposed. And this is…

SCHUMER: Sir, are you talking about interest-rate risk?

SNOW: No, I’m talking about the — well, take a minute and talk about this. The GSEs have, as reflected in the marketplace, paper that sells for the best spreads except U.S. treasuries, the best spreads, which reflects the market’s premium for that paper, saying it’s the very best paper except the best paper in the world, which is the U.S. treasuries.

Now, that creates…

SARBANES: I thought the president went somewhere yesterday and looked at these IOUs…

SNOW: West Virginia.

SARBANES: … and U.S. treasuries and cast doubt about their validity.

SNOW: He cast not one iota of doubt. What he said was, they will be paid, but the question is, how will they be paid, from what financing source and at what burden to the fisc (ph) of the United States?

But the GSEs have this lower borrowing ability. And they have used that over the course of the last decade and a half to accumulate a very, very large portfolio of assets unrelated to making the secondary market. Those are assets that have interest-rate risks to them. And in order to protect against those interest-rate risks, they have wisely engaged in massive hedging activities, derivative trading and hedging activities.

SCHUMER: Is that any different than private sector banks and their hedging activities.

SNOW: Senator, it’s different in this regard: They are playing off a sizable advantage which allows them to borrow at rates that are lower than those other institutions.

JACKSON: I think, Mr. Chairman, if I can add…

SHELBY: Go ahead.

JACKSON: … to what Secretary Snow says — if we use just common sense terms, major banks can leverage 11 to 1 probably at the most. Fannie and Freddie, in some cases, are leveraging 50 to 1, 60 to 1. That’s clearly out of whack.

SCHUMER: Would risk-based capital solve that?

JACKSON: Absolutely. I think it surely would.

SBD

Citizens doing the job journalists used to do before they became members of liberal campaigns. The record is clear, the Dems defended Freddie Mac and Fannie Mae and accused those who raised alarm bells of being too tough. And now we get to experience their mistakes – full force.


6 responses so far

6 Responses to “The Democrat Record On Fannie Mae & Freddie Mac (2003-2007) – Updated!”

  1. MerlinOS2 says:

    Yesterday the Dems and Republicans defeated a 700 billion bailout proposal.

    US stock markets reacted with a net loss in one day of 1.2 Trillion dollars of equity and that is with a no shorting of financial sector stocks in place.

  2. sbd says:

    NIGHTLY BUSINESS REPORT 6:30 PM EST
    November 8, 2006 Wednesday

    KANGAS: Give us some examples of companies whose stocks should benefit from the change in congressional leadership and the reasons why.

    DEPEW: Well, right off the bat, we can talk about Fannie Mae and Freddie Mac and why are these companies going to benefit. First of all, they`ve had horrible accounting issues. Fannie Mae hasn`t even filed an earnings statement since 2004, so why are they going to benefit. Well, there is the perception that the Democrats are in favor of a little more lenient rules over the oversight and regulation of those two companies and today they`re up 2 percent just about, so that goes to show you.

    Global Broadcast Database – English
    SHOW: 7 News At 4:30 AM 4:30 AM ABC
    November 8, 2006 Wednesday
    STATION: 7 KMGH Denver, CO

    SOME COMPANIES. ABC’S BETSY STARK OUTLINES SOME LIKELY WINNERS AND LOSERS. >> WHILE VOTERS GOT THEIR FIRST CHANCE TO VOTE IN ELECTION 2006 ON TUESDAY, WALL STREET’S BEEN VOTING ON THE OUTCOME OF THE ELECTION FOR WEEKS.

    MORTGAGE GIANTS FANNIE MAE AND FREDDIE MAC HAVE BEEN FACING REGULATORY CHALLENGES UNDER REPUBLICAN RULE. SHARES OF BOTH FANNIE AND FREDDIE HAVE BEEN ON AN UPSWING IN THE PAST MONTH IN ANTICIPATION OF A DEMOCRATIC TAKEOVER. I’M BETSY STARK, ABC NEWS, NEW YORK.

    Democrats Take Control of Congress with a Projected 26-Seat Margin CNN November 8, 2006 Wednesday

    SHOW: AMERICAN MORNING 7:00 AM EST

    SERWER: And that is what it looks like we’re going to have here. As far as the futures being down, that’s not a big deal. And this will probably get resolved soon, so not a huge impact on the stock market. The stock market was also up two days in a row, so we may just be cooling off a little bit.

    Let’s look at some industries that could be helped or hurt by a Democratic majority. Starting off by those that could fare well, with a Democratic Congress.

    First of all, Fannie Mae Freddie Mac, these are two companies, that have been closely tied to the Democratic Party. I think is the best way to put it. And they’ve been under a regulatory cloud. That may be lifted.

    REMARKS BY REPRESENTATIVE BARNEY FRANK (D-MA), INCOMING CHAIRMAN OF THE HOUSE FINANCIAL SERVICES COMMITTEE, AT THE OFFICE OF THRIFT SUPERVISION HOUSING FORUM; LOCATION: THE NATIONAL PRESS CLUB, THE NATIONAL PRESS BUILDING, WASHINGTON, D.C. Federal News Service December 11, 2006 Monday

    Now let me turn to housing — we have more to do yet in the deregulation. I’m just saying that one of the things that we did was to try and reduce the reporting requirement from the banks to the financial detectives. And far too much has to be reported now, in my judgment, of a routine nature. And the metaphor that I use is that we have told the law enforcement people to find a bunch of needles, and then we have set about building them a very big haystack. And we ought to thin that down so they can do a better job.

    One of the things that I want to stress to my liberal friends is that excessive regulation or ineffective regulation is bad for regulation. Regulation is very important. The market does need some corrections, but if you overdo it, then you weaken your case.

    But now as to housing — and that is the biggest difference between us. There were areas where we worked together and the GSE bill is a good example of that. And I would say, you know, it’s football season. I think we’re about on the 10-yard line; and I think we are about to put this thing together. We have enjoyed working with Secretary Paulson and I will now, having said that, apologize to him for The Wall Street editorial that will come denouncing him for that fact. (Laughter.) Poor Oxley — (laughter) — Oxley used to get one of those a month — (laughter) — but we have come together on a, I think, a reasonable framework, and I believe we will be able to get a bill through. But there are some philosophical issues here and I want to say that’s what — I’ll just say, first of all, I welcome –(inaudible). Part of the problem is the cynicism with which this gets written about.

    But we’re there to do what we think is the right thing. Of course we take these other things into account. And that, frankly, disturbed me on the GSE thing. This note — and I think one of these we managed to show people was no — including some of us — we weren’t doing anything for Fannie Mae and Freddie Mac — at least most of us.

    For me the motivation was housing. We were doing something for housing. And I agreed with those who argued that because of the market’s perceptions, Fannie Mae and Freddie Mac got this great benefit in being able to borrow money cheaply, but that the benefit was not being adequately returned to the public.

    Now there were two things you could have done about that. You could have reduced the benefit. You could have cut back on their ability, in effect, to borrow as cheaply, or you could leave that benefit in place and distribute it more fairly. That’s what we chose to do with the Affordable Housing Fund. And again, that is not in either — in both cases, from the standpoint of Fannie and Freddie and their stockholders, they were going to lose something.

    But let me make this distinction and why I think it’s not a bubble — and I’m just thinking about this as Mike was talking — it was — maybe housing suffered from irrational exuberance, but bubbles in history have not been cases of irrational exuberance. They have been cases of exuberant irrationality — and there really is a distinction. Irrational exuberance means you get a little carried away with something that basically is a good thing, but the exuberant irrationality is when you start thinking that tulips, or some of those dumb ideas on the Internet where they were selling things that nobody in his right mind ever wanted to buy, those were excessive.

    It’s also not the same as the savings and loan crisis. As I remember in the savings and loan crisis, you had a lot of empty land out there that had been greatly overvalued. And I also believe that one of the major causes of that was some irrationality on the congressional part, that is in the 1981 Tax Act endowing land with buildings with enormous value, artificially inflated, and then taking it away in ’86. I don’t think there’s ever been a case of going from one extreme to another in public policy like what we did with some of those buildings.

    REP. BARNEY FRANK DELIVERS REMARKS AT THE NATIONAL PRESS CLUB ON WAGES
    January 3, 2007 Wednesday

    MODERATOR: What’s going to happen in the new Congress regarding the regulation and oversight of Fannie Mae and Freddie Mac?

    FRANK: We will pass a bill, I hope — which we could’ve passed last year — which will substantially increase the ability of the regulator to oversee Fannie Mae and Freddie Mac. That has never been in question. The bill that passed the House overwhelmingly included a very significant upgrade in the powers of the regulator — equal to, if not surpassing, what the bank regulators have.

    FRANK: What blocked it last year was the insistence on some economic conservative fundamentalists in the Bush administration who, to be honest, don’t think there should be a Fannie Mae or a Freddie Mac. You know, (inaudible) the head of the Federal Reserve, is saying, well, at least he was intellectually honest about this, and said, you know, we shouldn’t even have a Fannie Mae and a Freddie Mac, so, if we have one, let’s have one as small as possible.

    They wanted — in addition to giving the regulator all the power, they wanted to, arbitrarily in my judgment or at least summarily, say and we’re going to reduce their size.

    Once you get an agreement that we are not going to have an arbitrary limit or a preset limit on the size of their portfolio, then you can go to regulation.

    By the way, you know, arguments for the portfolio, one of the things that many of us are going to be arguing for is some forbearance by lenders so you don’t get excessive foreclosures.

    If you sell all of this mortgage stuff into the secondary market, forget about forbearance. The secondary market can’t do forbearance. Forbearance — allowing people who are in trouble a little extra time, et cetera — can only come from an entity that holds those mortgages.

    I can ask Fannie Mae and Freddie Mac to show forbearance. I can go ask the secondary market to do it, and they won’t pay any more attention to me than Dick Cheney does.

    (LAUGHTER)

    DEMOCRATIC MEMBERS OF THE HOUSE OF REPRESENTATIVES HOLD A MEDIA AVAILABILITY FOLLOWING A CLOSED CAUCUS MEETING CQ March 27, 2007 Tuesday

    There are other things here that we’re proud of that we think will make a difference. For example, the GSEs, the government- sponsored enterprises, Freddie Mac and Fannie Mae, are about to enter into an agreement to pay the government something in return for the GSE status they enjoy.

    We’re working with Chairman Frank on the Finance Committee. We’ve arranged to create a reserve fund to which those contributions would be credited. And that money would then be used for an affordable housing program.

    I can go on and on and on, but what we’re doing here is husbanding rather scarce resources to do some important things that the country clearly needs to have done.

    PRESS CONFERENCE WITH SENATE MAJORITY LEADER HARRY REID (D-NV); HOUSE SPEAKER NANCY PELOSI (D-CA); SENATOR CHRISTOPHER DODD (D-CT); REPRESENTATIVE BARNEY FRANK (D-MA); SENATOR CHARLES SCHUMER (D-NY); REPRESENTATIVE CAROLYN MALONEY (D-NY); REPRESENTATIVE STEPHANIE TUBBS JONES (D-OH);
    SUBJECT: AN OFFER OF A PLAN TO STEM THE TIDE OF HOME FORECLOSURES;
    LOCATION: THE CAPITOL, ROOM S-211, WASHINGTON, D.C.

    October 3, 2007 Wednesday

    PELOSI: Today we’re here to ask the administration to step up to the plate for once and do the right thing, to act decisively and quickly to help families protect their main source of wealth and prosperity and prevent the subprime mortgage crisis from dragging our entire economy down with it.

    First, the administration should remove its ideological blinders and temporarily lift the portfolio caps imposed on Fannie Mae and Freddie Mac. Click for Enhanced Coverage Linking Searches The GSEs are the best hope for providing liquidity. When you have a homeowner who is a prime borrower, who could refinance, you have two things missing. You have money for the mortgage and you have somebody to help them work it out. Because as Barney mentioned, a bank is no longer on the scene. There’s no one to help them, and none of us could do this ourselves.

    So the first step to get the money is the GSEs. That’s the logical and natural place. The administration provided a minuscule cap of relief two weeks ago, and the GSE regulator has suggested he may remove the caps altogether in February. We’re standing here today together and saying, “Mr. President, February is hundreds of foreclosures” — I’m sorry, “Mr. President, February is hundreds of thousands of foreclosures away.”

    The time to act with sensible, targeted policies is today, not months from now. And my view, if the administration does not act, Congress should act on the legislation — now — that I introduced to temporarily lift the limits on Fannie and Freddie’s mortgage portfolios by 10 percent. That’ll free up $145 billion for the purpose of new prime mortgages.

    The legislation requires that 80 to 100 percent of the financing be dedicated to refinancing borrowers who are stuck in risky adjustable rate mortgages. And that would do a world of good.

    The administration should do it on their own; if not, we have to act and should act. Targeting the borrowers that are likely to default in the months ahead will not only save homes, but will help strengthen the broader credit markets and economy as a whole.

  3. [...] of speeches in Congress, mostly by Representative Frank. For several years Barney Frank has been resisting calls for Treasury to regulate Fannie Mae and Freddie Mac. But today, you find him on every tv station in [...]

  4. Gaelan says:

    Barack Obama made the claim that he spoke out about Freddie and Fannie two years ago—–Did he? Where? When? What did he say?
    Thank you,
    Gaelan

  5. [...] only to be rebuffed by Democrats like House Financial Services Committee Chairman Barney Frank, who continued to favor the issuance of the subprime loans that have now caused the mortgage market to [...]

  6. [...] only to be rebuffed by Democrats like House Financial Services Committee Chairman Barney Frank, who continued to favor the issuance of the subprime loans that have now caused the mortgage market to [...]