In Sept. 2003 President Bush proposed a new agency to oversee regulatory reforms of Fannie Mae and Freddie Mac. Here is an excerpt form the above linked article from Sept. 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.
Then in 2005 John McCain co-sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005.
The Bill was never passed. John McCain addressed the floor on May 26th, 2006. Here is an excerpt:
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.
This bill was shot down by the Democrats and some Republicans in Congress.
John McCain fought two years ago to shield the American people from the crisis some of us are facing.
What was Barack’s vote??
Update: 09/17/08 5:48am EST (yeah, I dont’ sleep much)
We asked the question: “What was Barack’s vote?” We had the answer on Monday, but didn’t link it here until now. I like dramatic pauses.
As reported here, since 1989, Barack Obama is second only to Sen. Chris Dodd in most amount of Lobbyist money accepted from Fannie Mae and Freddie Mac.
Are you hearing this? He has been in the Senate less than four years and only Dodd has taken more money than he has. Since 1989. No wonder he wanted to keep Fannie and Freddie under Senate oversight.
And no wonder there isn’t an “Enron type” investigation going on. Nobody wants to investigate themselves.
Hopeandchange certainly sounds like sameoldcrap.
Barack Obama: he loves hates the lobbyists!
41 Comments
September 16, 2008 at 7:07 pm
I don’t understand what John McCain wants where does he stand today. In his acceptance speech, and other speeches, John McCain said he wants less regulation and also said he wants Governement “To stay out of your way”. What does John McCain want? What does John McCain believe. They keep changing it so much that I don’t know which John McCain to believe is any.
September 16, 2008 at 10:16 pm
There is a difference between private owned business and government sponsored programs. President Bush in 2003 and Senator McCain in 2005 both recognized that both Freddie and Fannie (both government sponsored programs) were operating without accountable oversight, and had some very questionable practices. Senator McCain and President Bush both tried to implement reorganization plans for Fannie and Freddie but had stiff opposition, especially from House Financial Services Committee Chairman Barney Frank who rejected their concern. Hence the glut of bad sub prime loans and the problem now. In short, Senator McCain’s stance is, private industry – government keep away (accountability occurs through the stockholders), government programs – must be regulated for accountability so we don’t run into this.
September 17, 2008 at 3:10 am
http://www.opensecrets.org/news/2008/07/top-senate-recipients-of-fanni.html
jamie gorlick direct connection to both fanne mae and the obama election comm.
September 17, 2008 at 10:45 am
[...] on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark): Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly [...]
September 17, 2008 at 11:05 am
“Hence the glut of bad sub prime loans and the problem now.”
___So are you saying that it wasn’t actually the fault of the people promoting, making, packaging, selling and buying the loans? Are you saying that those who committed those acts are not the perpetrators, but the victims?
September 17, 2008 at 12:03 pm
[...] e, por acaso, a propósito do Fannie Mae e Freddy Mac, encontrei a seguinte notícia (via blog Beltway Snark, de onde se retiram também as outras informações): New Agency Proposed to Oversee Freddie Mac [...]
September 17, 2008 at 1:34 pm
[...] Lot’s of blogs did some great research on this issue. Hotair.com Beltwaysnark.com [...]
September 17, 2008 at 3:32 pm
[...] say, John McCain. The Senator from Arizona actually did lead on this issue. Back in 2006 McCain said, in a speech on [...]
September 17, 2008 at 6:27 pm
Thanks for the information and your post. Yes McCain tried to tell the government along with Congress of the problems they were headed for and no one listen! The democrats and even some of the republicans was in on the money from both Fannie mae and Fannie Mac. Obama was no 2 on the the list of names that got the most money. But I also see that the House Speaker is on the top part of that list also along with many more democrats.
September 17, 2008 at 6:36 pm
The McCain camp needs to do a better job of playing this up, as well as Obama’s ties to Fannie and Freddie. Their latest ad on the economy was a bit lackluster.
September 17, 2008 at 6:37 pm
I´ll translate this info since no spanish speaking journo will inform it.
September 17, 2008 at 6:45 pm
I too am wondering why the McCain camp hasn’t jumped on this & made it a headline against Obama. We keep hearing about hopeandchange. I hope that the change coming isn’t a man who’s in the pockets of people like Fannie Mae & Freddie Mac. We have enough economic problems without a person like that heading our country.
September 17, 2008 at 7:02 pm
[...] GoodTimePolitics has come through again with a great link showing McCain warning Congress about Freddie Mac troubles back in 2005 check it here:http://beltwaysnark.com/2008/09/16/john-mccain-supported-a-proposal-for-an-ag [...]
September 17, 2008 at 8:30 pm
How sneaky of you to ask the question, “what was Obama’s vote?” and then never give the answer. Or did I just miss it? The truth is that neither Obama nor McCain voted because the bill never made it that far.
What about the Bill S. 900? It was “An Act to enhance competition in the financial services industry by providing a prudential framework for the affiliation of banks, securities firms, and other financial service providers, and for other purposes.” It was passed by Republicans in 1999. Did it help us avoid this crisis? Apparently not.
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00105
September 17, 2008 at 8:32 pm
@LREKing
Fannie Mae and Freddie Mac were the main repackagers of these loans. It is quite reasonable to believe that without the perceived government backing of these packages they would have been far less appealing to investors. Shrinking Fannie Mae and Freddie Mac probably would have shrunk the crisis.
As far as *victims*, I’ll leave that to therapists to decide. When it comes to financials I’m far more interested in effects rather than victims.
September 18, 2008 at 1:18 am
[...] el año 2003 la Casa Blanca propuso formar una agencia federal que dependiera del Secretario del Tesoro que monitoreara las prácticas contables de Fannie Mae y [...]
September 18, 2008 at 10:08 am
McCain should stand by his principles. Regulation should not stand in the way of entrepreneurship unless absolutely necessary. In the instance of Fannie Mae, regulation and oversight were clearly necessary. McCain fought for regulation and reform since 2003.
McCain should point out that it was Sens. Biden and Obama who refused to step up and fight for passage of the Federal Housing Reform Act of 2005 . Why didn’t Obama or Biden issue a statement in support of the Reform Act. They were leaders in Congress, they knew about the fines that Fannie Mae had been found liable for. Why didn’t they stand with Hagel and McCain. Instead they waited until it was too late in 2007 to take any action.
Likewise, McCain should use his experience in the difficulty of reform here to point out that reform of Fannie Mae with bumperstickers about how we can part the waters and have all the answers is another fairytale. Even no nothing Harry Reid had sense to acknowledge “No one knows what to do. We are in new territory here. This is a different game. We’re not here playing soccer, basketball or football, this is a new game and we’re going to have to figure out how to do it…”
This was an economic 9/11 and anyone who thinks it does not require 9/11 Commission to bring the public to bear on approriate regulation is dangerously naive about our economic security.
September 18, 2008 at 11:07 am
[...] on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark):” “Meanwhile, Barack Obama took hundreds of thousands of dollars from the lobbyists [...]
September 18, 2008 at 1:22 pm
[...] en 2005 votó en contra de una propuesta para mejorar su transparencia y control financiero: beltwaysnark.com/2008/09/16/john-mccain-supported-a-proposal-for-an-ag/ sin comentarios en: actualidad, internacional karma: 11 etiquetas: obama, mccain, elecciones, [...]
September 18, 2008 at 4:51 pm
Lesa Perry,
It sounds like there was some kind of vote b/c it was “shot down” by Democrats and some Republicans. How did they stop it without voicing their opinions? That’s a vote!
September 18, 2008 at 7:08 pm
[...] on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark): [...]
September 19, 2008 at 8:30 am
This financial crisis is not stemming from the existence of Freddie and Fannie. They simply purchased the loans from many mortgage originators and ensure that there is enough capital out in the market to create those loans. The law that JM refers to was not even scheduled for a debate. To state that someone voted against it is disingenuous. To claim that McCain had some sort of foresight into this situation is equally disingenuous. Look at statements and legislation from one of his TOP advisors (who was asked to leave, but is still working with the campaign….like calling Ron Paul for an endorsement). Phil Graham introduced legislation to remove the teeth from regulation and wiped out regulation in other areas. McCain even spoke about doing away with regulations within his acceptance speech. He brags about being a foot soldier in the Regan Revolution; which pushed forward lower regulations in every industry. This has lead to a crumbling infrastructure and financial system. If you want to talk about lobbyist, why don’t you look at McCains staff?
OBAMA 08
September 19, 2008 at 8:56 am
Dear Dutch,
Fannie and Freddie agreed to purchase high risk, bad debt loans. It is their terrible behaviour, not their existance, that caused this crisis. They enabled and encouraged banks to offer these crazy loans. McCain cosponsored oversight reform to prevent this situation, and it was blocked. His words about the threat to the economy and banking system are here for everyone to see. You say that McCain didn’t have foresight into this situation. I say read his words again: “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.” It’s pretty self-explanatory.
September 19, 2008 at 2:36 pm
Go John with the biggest broadside you can fire at Odumba and the rest of the con artists. The American public is woefully ignorant of most any topic that takes thinking ability but they sure excel with American Idol, lattes, cell phones, and me too ism.
September 19, 2008 at 7:04 pm
[...] John McCain Supported A Proposal For An Agency To Oversee Fannie And Freddie……In 2005! In Sept. 2003 President Bush proposed a new agency to oversee regulatory reforms of Fannie Mae and Freddie Mac. Here is [...] [...]
September 20, 2008 at 1:15 am
Dutch said “To claim that McCain had some sort of foresight into this situation is equally disingenuous.”
Dutch I guess you can’t read….John McCain tried to warn them of what was going to happen and it happen just as he said!
September 20, 2008 at 10:03 am
The bill cosponsored by McCain would have further deregulated Freddie and Fannie and hollowed out or eliminated the regulatory agencies that existed. Here is an analysis of the House bill which is identical to the Senate bill.
“HR 1461–a bill that was supposed to create a “world class regulator”–is in fact a world class failure. Not only does it fail to improve significantly upon the regulatory authority of the Office of Federal Housing Enterprise Oversight (OFHEO), but it actually increases the opportunities for Fannie and Freddie to exploit their subsidies in order to expand into other areas of residential finance. While the bill makes some modest improvements to the weak regulatory structure of OFHEO today, these improvements do not bring the authority of the new regulator of Fannie Mae and Freddie Mac to the level currently exercised by federal bank regulators. Moreover, the deficiencies of the bill so far outweigh its modest regulatory improvements that the taxpayers and the economy generally would be better off with current law. Under these circumstances, unless there is a reasonable chance that the bill can be strengthened on the House floor, in the Senate, or in conference, it does not deserve to proceed further in the legislative process.”
http://www.aei.org/publications/pubID.22...
Here are the two bill summaries side by side but if you read the full bills you will find these companion bills are identical.
http://www.govtrack.us/congress/bill.xpd...
http://www.govtrack.us/congress/bill.xpd…
September 20, 2008 at 6:50 pm
Amy,
I would like to respond tow hat you said. While as a rule Republicans favor less government, there are constitutionally correct roles for government. One of those roles is to prevent crime and fraud and corruption.
The banking reform that passed in 1999 wasn’t a deregulation as Obama campaign says. It let commercial banks and investment banks work together again like itr is in several other countries, but the checks and balances and oversight were circumvented.
The Cinton Administration encouraged Fannie and Freddie and the banks to give high risk loans to low income people and then encouraged Fannie and Freddie to “help” buy buying those bad loans. In the process congress & partisan orgs was getting huge donations from Freddie and Fannie ($200 million worth) while Congress leaned on the regulators to back off.
They did this till it all blew up. While this is a bi-partisan scandal, about 2/3 of the key players are Democrats. This is the biggest financial swindle in the history of the world. Over a trillion dollars. The previous record was the UN Oil for Food Program where $26 Billion was stolen from UN Corruption.
Yet we here of no commissions or investigations and no special prosecutors. John McCain said this is an influence peddling scandal and he is quite correct. This is the kind of crap McCain has been fighting forever and getting outvoted on. This is the kind of thing the energy industry was doing in Alaska before Palin tore it all down and while the people love her there, both party machines hate her. She took away their billion dollar corruption ring.
September 20, 2008 at 7:01 pm
Deward Bowles – you have the wrong bill with the wrong links – HERE is the Bill summary of S-190 which is what McCain sponsored. It saught to get the regulators out of reporting to Congress because influence peddling made the current regulation scheme worthless:
http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab=summary
/26/2005–Introduced.
Federal Housing Enterprise Regulatory Reform Act of 2005 – Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting.
Amends the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation. Transfers the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation.
Excludes the Federal Home Loan Banks from certain securities reporting requirements.
Abolishes the Federal Housing Finance Board.
September 20, 2008 at 7:45 pm
Deward Bowles – While you are right that HR 1461 had some serious flaws, the worst of which, as AEI pointed out, was a one year gap in OFHEO (Office of Federal Housing Enterprise Oversight) oversight before the new regulator would take charge.
I’d like to believe that this was an error and would have been corrected before the bill was voted on, had it ever made it to the floor. (Without a parallel universe, we’ll never know.)
The one area that I believe would have provided the proper oversight to keep the economy from the pickle we’re in today, is contained in AEI’s evaluation which reads: (from 06/2005)
“The Senate appropriations committee recently attempted to deny OFHEO the funds needed to complete the Special Examination Report of Fannie Mae. That report revealed internal control failures so substantial that they caused the ouster of Fannie Mae’s CEO, CFO, and other senior officers. ”
“Thus, it would be a welcome improvement to remove OFHEO from pressure Congress can exert on the regulator through the appropriations process.”
This passage reveals that Congress, which has oversight of the OFHEO, used (or tried to use) funding pressure on OFHEO in order to obscure the problems at Fmae and Fmac, both of which were contributing heavily to various Congressional members, Dodd and Obama being #1 and # 2.
Is the fox guarding the henhouse?
September 21, 2008 at 7:08 am
[...] in 2003 and McCain in 2005. John McCain Supported A Proposal For An Agency To Oversee Fannie And Freddie……In 2005! … __________________ John Ontario 32 – Aria Free, is the heart, that lives not, in fear. Full, is [...]
September 21, 2008 at 10:22 am
Why the hell doesn’t the McCain campaign use that quote on the senate floor in May 2006 in an ad?! Why do they let Obama define and run away with this issue?! It will cost him the election – and us our country.
September 22, 2008 at 11:44 am
[...] With the financial sector in turmoil today, the media and the politicians have started throwing around blame with the same recklessness as lenders threw around credit to create the problem. Politically, the pertinent question is this: Which candidate foresaw the credit crisis and tried to do something about it? As it turns out, John McCain did — and partnered with three other Senate Republicans to reform the government’s involvement in lending three years ago, after an attempt by the Bush administration died in Congress two years earlier. McCain spoke forcefully on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark): [...]
September 23, 2008 at 6:14 am
From what I been reading of how the media is playing up to Obama, it does not matter how or what McCain does or how much experience he has they want Obama in the White House! http://xrl.us/orwuf
September 25, 2008 at 8:34 pm
A $100,000 state grant for a botanic garden in Englewood that then-state Sen. Barack Obama awarded in 2001 to a group headed by a onetime campaign volunteer is now under investigation by the Illinois attorney general amid new questions,
This is the sort of robbery that has the Markets going under! I have posted more information over on my blog! Lets get the word out!
September 27, 2008 at 10:02 am
As usual, right-wingers pluck points out of context to soothe their simple minds. Here are the facts:
1) McCain co-sponsored S. 190 2005 almost 1 1/2 years after the bill was introduced and had effectively died in a Republican-controlled committee that could have brought it to the Senate floor with no support from the Democrats. Bloggers try to pull the wool over the eyes of everyone by saying it was the threat of a filibuster that prevented the bill from coming to the floor but, in fact, Republicans were tepid on the bill because it didn’t really have a lot of teeth to it and some other factors (more on this point later).
2) After he signed on to the bill, Mc Cain was never heard from on it again. He signed on after he began his bid for the White House (read, political motives only).
3) The bill was a typical smoke and mirrors operation that would have changed some of the regulatory players but didn’t substantively change the way Fannie and Freddie did business. Another bill that passed the House with broad bipartisan support and was very similar to S. 190, H.R. 1461, was characterized by the American Enterprise Institute for Public Policy as “worse than current law.”
4) When H.R. 1461 came over to the Senate, it also died in a Republican-controlled committee and never saw the light of day in the full Senate even though it could have been brought to the floor with no Democratic support. The reason: it was so similar to S. 190, which the Republicans in committee were so lukewarm about, McCain’s support of S. 190 notwithstanding.
5) The real maverick in the Senate was Chuck Hagel, who was the original sponsor of S. 190. Of course, Hagel was as unpopular as he could be in 2005 among Republicans because of his criticism of the Iraq War. Don’t think Hagel’s sponsorship of S. 190 might have affected Republican support? Oh, of course not!
6) Finally, in 2005 the Iraq War had become such a huge distraction to everyone that it’s not hard to see how this problem slipped through the cracks. What I want to know is why are we so incensed at the “bailout,” which is an effort to address American problems (whether it works or not time will tell), but we continue to discount the fact that we’ve already spent almost 600 billion on a useless war and will probably spend 2-3 trillion there by the time the last disabled soldier receives his or her last benefit check many years from now. The real economic debacle of this generation is not Fannie and Freddie but Iraq, which has been totally financed by the Republicans by debt. And I thought conservatives were supposed to be fiscally responsible.
One undeniable fact is that Republicans have been the dominant impulse of the deregulation regime since the Regan era, and now this impulse has been weighed in the scales and found wanting. Even Adam Smith said markets weren’t perfect.
September 30, 2008 at 9:05 am
[...] the facts people!!!!!! John McCain Supported A Proposal For An Agency To Oversee Fannie And Freddie……In 2005! … Beltway Snark Home About Beltway Snark Another Prime-Time Palin InterviewThe Big-Ticket PUMAs [...]
October 1, 2008 at 7:33 am
John McCain’s efforts to move the bill forward were limited to a Senate floor speech on May 26, 2006. (16months after the bill was introduced. It expired with no further action taken)
The bill was reintroduced in the Senate by primary sponsor, Chuck Hagel, in 2007 (S.1110). Three of the original cosponsors signed on again. John McCain, did not.
S. 1100: Federal Housing Enterprise Regulatory Reform Act of 2007
http://www.govtrack.us/congress/bill.xpd?bill=s110-1100
October 5, 2008 at 7:35 pm
you list his speech, given May 26th, 2006… this bill died on Jul 28, 2005… kind of a timeline problem there since the 109th was done and the bill wasn’t even viable
You think he just wanted to go on record as a co-sponsor to cover his azz before the presidential campaign
Probably not, politians don’t resort to such tactics…
October 7, 2008 at 11:08 am
[...] 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark) John McCain predicted the collapse of Fannie Mae and Freddie Mac, along with Bear Stearns [...]
October 29, 2008 at 8:15 am
[...] and Freddie. John McCain sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005. Read about it here [...]