Thursday, September 18, 2008

Bend Over

UPDATED: Please click this link for a "fun" look at Fannie Mae debacle


The mortgage mess fallout seems to producing no Ken Lays or Scott Sullivans, someone the public can finger as the culprit. Instead the culprit is the Bush Administration, the Republicans and that nebulous character "Wall Street". Clearly all three deserve some fraction of the blame, if for no other reason than it was happening on their watch. It is, frankly, less than clear that they should be alone in the blame game. In fact with just a little digging on my part we learn once again that the major media in this country is selective in its coverage of this and every other scandal. The culprits hail from every corner of Wall Street and Washington DC. The only hero, Henry Paulson, the current Treasury Secretary, is the man on the white horse in all of this. Did you know he was once the Chairman and Chief Executive Officer of Goldman Sachs, one of the world's largest and most successful investment banks... Quick, name me one of the two large investment houses still standing...

So if I am to castigate the President and the Republicans for not seeing - or at least not reacting to - the freight train barreling down the tracks then a little examination of the good folks on the other side of the isle is warranted. Holy shim stock Batman! You mean to say the Democrats have dirty hands too?

The year is 2005 and Daniel Mudd the new CEO of Fannie Mae is attending the swearing-in ceremony of the Congressional Black Caucus, including Barack Obama. He says:

"So many of you have been good friends to Fannie Mae and our mission. You've been friends through thick and thin. We have indeed come upon a difficult time for Fannie Mae. There is much to be done inside my company and I humbly ask you to help us and to help me. If there are areas where we are missing. If there are areas where we could do better, we'd like to hear it from our friends and I'd be so bold as to say our family first. " It is true that Fannie Mae has lent more money to more minorities and more underserved individuals than any single company in history." "In many ways I want to tell you today you are also the conscience of Fannie Mae."

Using Google I find that no news outlet has mentioned this speech despite the fact of Obama being present and later receiving $126,349 in contributions from Fannie Mae. The real question? If a similar "family" speech given to any Republican group who had received big donations from Fannie Mae wouldn't we expect this to be splashed all over CNN, ABC, CBS etc etc.

Well, the blindness at CNN, ABC, CBS etc etc doesn't stop there. The first of the mortgage giants to begin to float belly up was Countrywide and soon after that rumblings of trouble over at Freddie and Fannies place could be heard. Along the way we heard little tidbits of improper treatment for the connected crowd in Washington and Wall Street. In June, Condé Nast Portfolio.com disclosed the names of five V.I.P.-loan recipients: Senators Christopher Dodd and Kent Conrad, former Clinton cabinet members Alphonso Jackson and Donna Shalala, and former United Nations Ambassador Richard Holbrooke, also a Democrat. The Wall Street Journal reported that James Johnson and Franklin Raines, both former C.E.O.’s of government-sponsored mortgage buyer Fannie Mae, received favorable rates.

Other V.I.P. borrowers have also been named including former Countrywide director Henry Cisneros, who served as secretary of Housing and Urban Development in the Clinton administration; former Clinton White House staffer Paul Begala, now a commentator on CNN; and Postmaster General John Potter. Countrywide also offered special discounts to Congressional staffers involved in housing issues.

It seems incredible that so many former members of team Clinton who pushed for the loosening up of the home loan industry were later high ranking officials in Fannie Mae and or obtained extremely favorable treatment from Countrywide for their own home loans. Remember Jamie Gorelick? In the Clinton White House she erected the now infamous "wall of separation" that stopped the FBI and CIA from collaborating on intelligence in the battle against the terrorists. She went to Fannie and raked in some 20 million while the ship was sinking. Franklin Raines, also of team Clinton, was removed as CEO of Fannie Mae because of the imminent collapse. Oddly, he is one of Obama's economic advisors.

So have you been hearing much about this on the nightly news? (crickets chirping) I thought not. What about the top officers of these companies and GSE's, hearing their names dragged around? No? Could it be that if these guys start talking more Democrats are going to be exposed? What about the Bush justice department? Shouldn't they be "going after" the culprits in this fraud? Might Henry Paulson's former employer (where he is most likely to return to after Bushs' term is up) be sensitive to the fact that he ochestrated a takeover of one of Goldman Sachs chief rivals while heading up the U.S. Treasury department?

Is anything being done?

The revelation about the senators sweetheart deals brought to the forefront a longstanding loophole in the personal financial-disclosure requirements for members of Congress. Lawmakers are required to report their financial assets— in general —but they do not have to divulge anything about their primary residences. In an era of wildly inflating home values it was a ready made playground for these shenanigans.

To clean up the the disclosures rules, John Cornyn, the top Republican on the Senate Ethics Committee, last month offered an amendment to the sweeping housing bill crawling through Congress. The two-page amendment simply requires Senators to report the terms of their home mortgages. Unfortunately the barn door was left open for too long - the cows have all gone.

Mr. Paulson is threading the needle trying to keep the world finacial system from collapsing. So far it's hanging on by a (Goldman Sachs) thread. With so much damage having been done by these greedy, corrupt bastartds in Washington DC and on Wall Street it's hard to believe in a system and country I once loved. If I believed for one minute that socialism was even slightly better... Oooohh... shudder... That was close. Our system may not have a heart, this is true, but socialism has no heart and has no soul.

So much for the American dream. Play by the rules, work hard, do a little saving , do a little investing and retire healthy, wealthy and wise. Sure.

So, in the 90's the players got rich on the tech boom driving the stock markets through the roof with cooked books and phony valuations before the wheels came off and millions of "normal" investors got screwed. Well, I for one took some solace in the fact that the wealth I lost in my retirement accounts was more than made up for in the rising value of my other real asset, my house. Well, you know what happened there - yes, screwed again.

Aren't we all getting tired of this yet?



CW

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