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Beer Bryant
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New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By STEPHEN LABATON
Published: September 11, 2003

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.
''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''

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.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.


New Agency Proposed to Oversee Freddie Mac and Fannie Mae


gatorrocks
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Member since Oct 2007
9850 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae


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jamboybarry
LSU Fan
I Putt Out
Member since Feb 2011
12464 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:

Representative Melvin L. Watt


Can't wait to see some of the directives this yahoo has coming out of FHFA in the next few months


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rintintin
New Orleans Saints Fan
Life is Life
Member since Nov 2008
9187 posts
Online

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:


''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts


Wow. Watch the documentary "Inside Job", Frank acts as if he saw it coming all along.


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Springfield XD
Member since Feb 2013
1782 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
Bush was a coward when it came to economic policy. This and SS he raised the question then dropped the issue immediately.


Beer Bryant
Alabama Fan
In a Hidden Bunker
Member since Jan 2012
8792 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005

The United States Senate

May 25, 2006

Sen. John McCain [R-AZ]: 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.


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dr smartass phd
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re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae


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ugasickem
Georgia Fan
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Member since Nov 2010
5988 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
:crickets


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Zephyrius
LSU Fan
Covington, La.
Member since Dec 2004
3244 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:

Bush was a coward when it came to economic policy. This and SS he raised the question then dropped the issue immediately.

Image: http://i01.i.aliimg.com/wsphoto/v0/611301159_1/Fleeciness-fashion-lifelike-costly-Dark-brown-shallow-brown-black-personality-wigs-free-shipping.jpg


Springfield XD
Member since Feb 2013
1782 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
Hey, I like the man. I voted for him twice. But on so many things, he lacked the courage of his convictions.


Beer Bryant
Alabama Fan
In a Hidden Bunker
Member since Jan 2012
8792 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
Seventeen. That's how many times that the Bush administration has called for tighter regulation of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Congress has cooperated only once. "Fannie and Freddie spewed out $1 trillion worth (face value) of subprime mortgages between 2005 and 2007"

Democrats Were Wrong on Fannie Mae and Freddie Mac


Peeta2
Member since Apr 2013
363 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:

Beer Bryant
Which party was in the majority? Couldnt they have just rammed this through? Not flaming.


I B Freeman
Member since Oct 2009
7986 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
There is absolutely no question that the financial meltdown in 07-08 was directly caused by Freddie and Fannie.

Most of those derivatives that left investment banks illiquid were speculation on "government back securities" originated from Fannie and Freddie.

They owned Barney Frank and all his democrat friends.

Bush should have forced both entities to liquidate then. The logic that all those assets could not be dumped on the market was just wrong. We would have been much better off if all those highly leveraged banks and Fannie and Freddie had been forced to liquidate. It's not like we would have been without banking or housing or cash. Do we miss Bear Sterns today? The assets would not have disappeared.

How stupid was it for those big investment banks to treat those derivatives as such secure assets? They were writing derivatives on derivates and default insurance on default insurance. Nobody was even looking to see if the writers of the derivatives could financially back what they were promising. That kind of stupidity should not have been rescued by Bush and Obama.


Beer Bryant
Alabama Fan
In a Hidden Bunker
Member since Jan 2012
8792 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
Democrats took over the House and Senate in Jan. 2007. I'm not defending Rinos. Just sick of people blaming everything on Bush. I was no huge fan of his, but this "the same policies that got us in this mess" used by the Democrats, and not challenged by the media, is sickening. Hell, just tell the truth and let the chips fall where they may.


Springfield XD
Member since Feb 2013
1782 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:

Seventeen. That's how many times that the Bush administration has called for tighter regulation of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.


I didn't know that...and now I feel bad.

Banking Queen


Peeta2
Member since Apr 2013
363 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:

Democrats took over the House and Senate in Jan. 2007
I know this for a fact. They were also a super majority in 09-10 and rammed through Obamacare. If Freddie & Fannie were a serious issue (which they were), then why didn't congress ram this through?


Beer Bryant
Alabama Fan
In a Hidden Bunker
Member since Jan 2012
8792 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
Rush has some funny stuff on his shows!


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aaronb023
LSU Fan
TeamBunt CEO
Member since Feb 2005
11774 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
quote:

Banking Queen


I almost wrecked my truck when I first heard this on Rush


cajunangelle
LSU Fan
R.I.P. los angeles tiger
Member since Oct 2012
18016 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae


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Springfield XD
Member since Feb 2013
1782 posts

re: New Agency Proposed to Oversee Freddie Mac and Fannie Mae
If GWB was rebuffed 17 times, and McCain was part of the reform push, WHY IN GOD'S CREATION didn't he use it as a focal point of his 2008 campaign!?
This post was edited on 5/3 at 9:28 am


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