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.

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.