Drudge Retort: Red Meat for Yellow Dogs
Tuesday, September 16, 2008

In an extraordinary turn, the Federal Reserve agreed to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan.

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I wonder if the Fed will try to get back the 70 million golden parachute Martin Sullivan got when he was canned from AIG. Un-Fing-believable. All CEO's enhance shareholder value, but get packages like this should be sent to a Gulag.

Where the fuck are we getting $85 Billion dollars? Are we ending the Iraq war or something?

Oh, that's right, we're going to borrow it from China, or just print it. Because the investment class that doesn't want to pay taxes want's their bailout for being incompetent.

The deal, paper shuffling, is the road to a quick buck. How long will it last?

* that DON'T enchance

F-this, let the system fail. Private companies should face private losses. Live up to the ideology they claim to embrace.

If not, they should expect a complete government take over, kick the executives out on their asses without a dime.

Why bail out one company and not another?

Lehman no; Bear Stearns, Freddie&Fanny yes?

LOL Federal Reserve!?!? The largest PRIVATE BANK in America people.. Ever looked at their "golden Parachutes"??? The FEDERAL RESERVE IS AS FEDERAL AS FED EX!!!!! WAKE THE FUCK UP PEOPLE.

That's it.

The party's over.

GOTTRUTH, that's not true. It's about as private as Amtrak and the US Postal Service. here and here (kids page, but hey it's a good quick summary).

Sheriff John McSame's threats of cleaning up this town don't seem to be impressing anyone. Looks like business as usual to me. I do wonder if AIG was insuring some of the hurricane victims in Texas?
Sure seems inconsistent though to refuse to bail out one and then bail out the other.
I think the fear is setting in in Washington that the mess that they have created is bigger than they first thought and that it might be a real cause for panic if they don't, at least, try to prop things up until they can quietly (I hope) sneak out of the buildings of our government and slink quietly away on the night of Jan. 20.

Private companies should face private losses.

Yeah tell that to all the people with AIG life insurance plans. Or AIG mortage insurance.

Yeah we are sorry the folks who ran this company paid themselves billions so now your policies that you have paid on for 20 years are void. I'm sure that would sit well with folks. They got taken, the gov. bailing out AIG is about the ones that got ripped off. AIG has to pay 11% interest on that money. This is one of the best bailout packages I have seen for taxpayers.

The line of credit to AIG, which is available for two years, is designed to help the company meet its obligations, the Fed said. Interest will accrue at a steep rate of 3-month Libor plus 8.5%, which totals 11.31% at today's rates.

AIG will sell certain of its businesses with "the least possible disruption to the overall economy." The government will have veto power over the asset sales and the payment of dividends to shareholders.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 16, 2008: 10:27 PM EDT

Not such a bad move for the government looks like to me. Heck the assest of AIG = 1.1 trillion even at firesale prices thats 250 billion 79.9% of 250 billion is a good hunk over the 85 billion it will cost. And we get interest on it. Maybe it will even boost the value of the dollar.

Welcome to the USSoA

okay to socialize 85 billion in debt on a weeks notice- but socialized medicine? hell no.

only 7 comments on this? holy shit. we should be banging on the white house door with pitchforks and torches in hand. hope you have some water and beans stashed away.

when they kick out your front door, how ya gonna come...

danni, are you referring to the democraps that created this mess,by your remarks you obviously don't know what the fuck you are talking about, so why don't you quietly slink under your computer and get a clue. This is a clinton mess, and it will become public. Your assclown piece of shit obama managed to take monmies from fannie may, freddie mac along with that slobbering , drooling piece of crap joe biden,and chris fraud.
This shit is going to bite you fucking commies in the ass.

Off the gold standard and on the BS standard. What happened?

AIG are scum.

I hope they all die.


....was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory."

Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.

And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.

As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

While government arguably has a role in helping low-income folks buy a home, Clinton went overboard by strong-arming lenders with tougher and tougher regulations, which only led to lenders taking on hundreds of billions in subprime bilge.

Market failure? Hardly. Once again, this crisis has government's fingerprints all over it.

Forgot the link:

ibdeditorial.com

"This is a clinton mess, and it will become public."

Right, I just imagined that Republican Congress and President.

"This shit is going to bite you fucking commies in the ass."

NOw that there is funny, I don't care who you are.

Robert Reich on MSNBC: In the latter years of the Clinton administration -- when I was not there any longer, I should add -- there was an attempt by Alan Greenspan and Bob Rubin and a few others to deregulate financial markets, and they did. They split commercial banking off from investment banking. And many people say, "Well, that was the beginning of the problem," and then, of course, in 2003-2004, Alan Greenspan reduced short-term interest rates to the point where every single bank wanted to lend money. I mean, if you could stand up straight you could get a bank loan because there was so much pressure to get that money out the door. Money was so cheap. So, yes, there is some responsibility on Democrats, some responsibility on Alan Greenspan and the Fed.

85 billion to AIG. Bought out freddie mac and fannie mae. 70 billion (50 +20) into nations economy from fed reserve in NY.

See, bailouts and handouts are Ok at the corporate level. But healthcare for every american is "socialism".

No wonder we haven't seen W lately. He's hiding from his economic legacy. What a mess.

The righties got their talking points at 10:30 and are busily posting them. The new one...Clinton caused Bush's mess. The Clinton deflection, never too old, never too tired, works for everything, eliminates responsibility for anything.

The shorter anamerican:

It's clinton's fault!(in 2008 after 8 years of republican control, and Bush KEPT GREENSPAN ON!)

Bullshit.

"What a mess."

Posted by Alexandrite

Too bad keelhauling isn't an option.

Too bad keelhauling isn't an option.

#22 | Posted by CapnBligh at 2008-09-16 11:00 PM | Reply | Flag:

Sez who?

OK. I do. It isn't nasty enough.

The New York Times reported this five years ago:

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.

This should have been a no-brainer, right? With hindsight, we can see that the Bush administration had accurately diagnosed the problem in the lending market and had a plan to address it. Fannie Mae and Freddie Mac reluctantly supported the plan.

However, Democrats objected (emphases mine):

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 dont 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.

Link:query.nytimes.com

"F-this, let the system fail."

Let me guess, you voted for Bush.

didnt Bush have a republican majority and decent approval rating 5 years ago? was that "recommended", or fought for with the backing of a majority in congress and a responsible banking industry.

the only thing that story tells me is that somebody payed some lip service.

republicans are crooks

so are democrats

those in power only care about staying there and the rest can fuck off, right?

I'm just reporting - check the links. Let the chips fall.

AA, the posters will never read what is fact.
Washington players are neck deep in this mess.

AnAmerican-
Thanks for the link:

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

(You really should read the entire article, and not only the snips from whatever website you poach from)

wonder if the Fed will try to get back the 70 million golden parachute Martin Sullivan got when he was canned from AIG. Un-Fing-believable. All CEO's enhance shareholder value, but get packages like this should be sent to a Gulag.

If my tax money has to go to bail out AIG to prevent a further economic catasrophe these politians better make damn sure they don't give one red cent in bonus or severance pay to the CEOs at the top who caused this mess. Those AIG CEOs who speculated and played with everyone's money should be held responsible and see the inside of a jail cell for a couple of years.

If we keep bailing these private companies out but not punishing those at the top whose greed caused this problem in the first place, they'll just keep on swindling everyone.

AnAmerican-
The chips have fallen.

directorblue.blogspot.com

Though she had no training or experience in finance, Gorelick was appointed the Vice Chairman of Fannie Mae and served in the role from 1997 to 2003. During that six-year period, she earned over $26 million.

During Gorelick's tenure, FNMA suffered a $10 billion accounting scandal, an ominous harbinger of the firm's looming troubles. One of the falsified transactions helped FNMA hit earnings targets for 1998, which triggered bonuses for top executives including nearly $800,000 to Gorelick.

Put simply "Jamie Gorelick was one of the Fannie executives who benefited from inflated bonuses based on Enron-style accounting."

In 2002 Business Week interviewed Gorelick concerning the health of FNMA. She responded, "We believe we are managed safely. We are very pleased that Moody's gave us an A-minus in the area of bank financial strength -- without a reference to the government in any way. Fannie Mae is among the handful of top-quality institutions."

Less than a year later regulators "accused Fannie Mae of improper accounting to the tune of $9 billion in unrecorded losses."

Today, of course, FNMA is on taxpayer-funded life support, currently trading at 61 cents a share. And because it was thought to have been "managed safely" (Gorelick's words), many top-flight financial services companies held its stock.

Ah...In the words of Harry Truman: "the buck stops way down there, somewhere, but certainly not here"

Or something like that.

From your NYT link, AnAmerican:

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

You Bushlovers all wanted deregulation and no government oversight. All you yelled about was to "get government out of our way" and now look what happened.

Bush literally decimated the number of financial and banking regulators who were needed in order to keep watch over these banks and finance houses. And the few regulators who were left on the job were handpicked to make sure they turned a blind eye to all the corporate fraud and crooked deals. Wall Street is a mess and the taxpayers are having to spend billions of our money to fix it.

Bush has made all the federal rules and regulations voluntary (in every government agency he hasn't already managed to privatize) just as his corporate donors demanded he do and now look at the mess we're in. You so-called "conservative" Republicans who whine you want "a government the size where you can fit it into a bathtub" so as not to interfere with your business dealings have made an absolute mess.

Bush Economics - privatize all the profits and socialize all the debt.

Americans are fed up with you crooked Republicans and your greed run amok.

Califchris, what you fail to note is that the Bush plan would have given oversight and the Dems were against it.

"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."


AnAmerican-
Again, from the article you linked to:

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.


Beteleg, your highlighted portion of the article would have provided these protections with the oversight of the new agency instead of Congress.

Wasn't Gorelick a Clinton appointee? You conspiracy nuts should enjoy her. WTC Bombing, 9/11, Duke Lacrosse, Fannie Mae... She's a one person wrecking machine.

Since I'm batting 1000 on predictions this year. I'm predicting that this will not be ignored any longer by the American people. There will be some big name resignations and convictions with this and a lot of turmoil in both of the glass houses. You dems were just punch drunk before; however, this is going to be a blood bath for the Dems. Pelosi and co. should probably start practicing their dignified resignation speeches now - Gorelick will probably be appointed as the special counsel.

anamerican-
this seems pretty freakin' clear, dude:

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

Where did you get your disinformation from?

Seriously. What site?

Why didn't Congress want someone else providing this oversight?

Of the 354 lawmakers who received money from Freddie and Fannie between 1989 and 2008, Sen. Chris Dodd received the most. But next was . . . drumroll . . . Barack Obama. Yup. And he was only there for three years. Not too much went to John McCain, about a sixth of what Obama received (h/t Glenn Reynolds.)

But, you say, maybe all the Fannie and Freddie employees who gave money just liked-- Obama. That might make sense with ordinary institutions. But these two had a game plan to influence and sway lawmakers for the purpose of keeping them on the government gravy train and out of the regulatory line of fire. Its no coincidence that they liked-- Senate Banking Chairman Chris Dodd best of all.

So it would appear that this is precisely what Obama has been railing against: Washington insiders lining the pockets of other Washington insiders while the taxpayers ultimately have to foot the bill. The Agent of Change, it seems, didnt exactly walk the walk on this one.

David Frum reports for the National Post:

The two institutions have long been run not by bankers but by retired political figures, predominantly Democrats. From 1991 to 1998, Fannie Mae was headed by James Johnson, a longtime aide to former Democratic vice president Walter Mondale. Johnsons successor, Franklin Raines, had served as budget director to Bill Clinton. Jamie Gorelick, vice chair of Fannie Mae from 1998 to 2003, served as deputy attorney general in the Clinton administration.

These figures have paid themselves impressive private-sector salaries. Johnson earned US$21-million in just his last year at Fannie Mae. Raines earned US$90-million for five years work at Fannie Mae. Gorelick got US$26-million.


In the mean Time Democrat Speaker Nancy Pelosi says that the Democrats bear no responsibility for the current crisis--. Real nice nancy - too bad the public record overwhelmingly proves otherwise.

"The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac...

Yeppers. The Bush administration was gonna crack some heads, LOL.

Beteleg, I got my information from the same NY Times article. Check it again - its within the first few paragraphs.

Anamerican-
David Frum, Bush's speechwriter?

And I must admit I've never heard of the "National Post". Is that the site that cut and pasted the NYT article to say what you wanted to hear?

anamerican-
The reputable site you got your talking points from seemed to leave this paragraph out, dude:

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

You are really confused, Betelg.

Since you have a problem understanding the premise of the Bush plan, allow me to assist you.

Fannie Mae and Freddic Mac were ALREADY SET UP with significant government subsidies AND the guarantee that Washington would bail them out if they ran into financial difficulty enabling them to issue debt at significatly lower rates than their competitors. They were experiencing financial difficulties under Congressional oversight, so Bush put forth a plan that would keep their protections in place, but would set up an agency whose primary function would be oversight of FM and FM. Democrats in Congress did not want or feel the need for this agency and killed the Plan.

Get it now?

Barney Frank loves Fannie Mae and Freddie Mac and supported Manufactured Housing - how much did Fannie and Freddie hide from Manufactured home losses? Did they finance the Katrina mobile home parks?


"I want Fannie Mae and Freddie Mac to continue as government
sponsored enterprises with some beneficial arrangement 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. In particular, I am concerned right now that
there has been--and it has been raised by Fannie Mae, it has
been raised by one of the rating agencies that have been
critical of the Federal Home Loan Bank--manufactured housing.
Manufactured housing is a very important housing resource
for low- and moderate-income people. You talk about increasing
homeownership among low- and moderate-income people, and
disproportionately, if you look at the increases in
homeownership, it has come with their ability to get
manufactured housing; and I do not want to see Fannie and
Freddie pushed in the direction of being tougher on
manufactured housing. And many of us will be in touch with
Secretary Martinez to see how we can improve this.
I have talked to my colleagues in the Congressional Black
Caucus, and the Blue Dogs. This is a very important and, I
think, somewhat underrated form of housing. I think we now see
pressure on it that is generated in part by exaggerated fears
of a financial crisis.
"

blog.heritage.org

Fannie Mae and Freddie Mac were created by Presidents Franklin D. Roosevelt and Lyndon B. Johnson to make homes more affordable for Americans. They accomplish this by buying, repackaging and then selling home loans that other institutions make, thus freeing institutions to offer more loans. Contrary to what some defenders of big government assert, Fannie and Freddie were also key players in the subprime mortgage market. In 2004 alone, they bought 44% of all subprime securities. Every dollar that Fannie and Freddie gave to companies like Countrywide Financial for bundled subprime mortgages was another dollar Countrywide gave out in new subprime mortgages.

When President Bill Clinton took office, Fannie and Freddie were viewed as key-- to Clintons plans to expand home ownership. The Washington Post reports: The result was a period of unrestrained growth for the companies. The companies increasingly were seen as the engine of the housing boom.-- As the companies grew, conservatives repeatedly warned that their size posed a systemic risk to the financial system. As Sarah Palin put it, thanks to the implicit federal guarantee of their debt, Fannie and Freddie had become too big and too expensive to the taxpayers.

But Fannie and Freddie pushed back hard, turning to friends on the left for protection. Former Walter Mondale and Barack Obama campaign adviser James Johnson led a fierce lobbying campaign to fight reform of Freddie and Fannie. Clinton administration OMB director Franklin Raines told investors when he was Fannie Mae CEO in 1999: We manage our political risk with the same intensity that we manage our credit and interest rate risks.-- Fannie and Freddies lobbying power over the left continues to be strong to this day. According to the Center for Responsive Politics, the top three recipients of campaign donations from Freddie and Fannies PACs and employees are all Democrats. From 1989 through today, Sen. Chris Dodd received $165,400, Barack Obama $126,349, and John Kerry $111,000. The Washington Post concludes: Blessed with the advantages of a government agency and a private company at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them.--

Katrina Strikes again!

anamerican-
I'm kicking someone else's ass right now. I'll get to your links from the non-partisan Heritage Foundation later.

No matter how you look at it, Congress - mostly Democrats - acted like the fox looking after the hen house.

Betelg, I hope you are doing better over there than you are here. Cause I'm giving you more than you can handle.

LOL

AA--True!

No matter how you look at it, Congress - mostly Democrats - acted like the fox looking after the hen house.

#51 | Posted by anamerican at 2008-09-17 12:08 AM | Reply | Flag:

Right. The Democrats waved shiny objects around for the six years that Republicans controlled all branches of gov't, confusing them into doing the evil bidding.....

I'm sorry, it's just beyond risible.

"And here is my concern: If you move the regulator to
Treasury and you leave HUD with the mission, I am not sure that
it isn't ``mission impossible,'' or at least implausible. What
is HUD going to do, yell at them? I mean, if all the regulatory
authority and all the clout is over in Treasury, what is left
in HUD? And I noticed that the homebuilders raised that.
So my threshold question is, if you move this regulator to
Treasury, if you bifurcate in terms of the Cabinet departments
the responsibility for the low-income housing mission,
including manufactured housing--very important to me, as I
said--and other forms of housing, if you bifurcate that, what
real strength is there left behind the mission if most of the
regulation and most of the teeth--I guess if you put all the
teeth from Treasury, having HUD gum them into doing more low-
income housing doesn't strike me as the ideal situation.
And that is why I say, Mr. Chairman, in closing, that as we
proceed on this, I would hope we would have a day when groups,
a range of groups that are concerned with housing, could
specifically address that. Thank you.
"

Barney Frank - 9/10/2003

Anamerican-
This is still a hoot. Try reading it sometime:

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

Oh, so it's not clintons fault anymore, its the 50 dems in congress?

What about the 49 reps? the independent?

Congress is stuck in a filibuster constantly. It's all their damn faults.

But it's Greenspans fault and somehow you don't lay any blame on the current prez? W let greenspan stay on for how long? You're a partisan nut, anamerican.

So the monthly payment for paying back 85 billion in 24 months is what??

That's like 3.54 billion every month?


That's a big check.

Why didn't the Bush Plan of reform pass under a Republican majority Congress? Money.

How did Fannie and Freddie counter such efforts? They flooded Washington with lobbying dollars, doled out tens of thousands in political contributions and put offices in key congressional districts. Not surprisingly, these efforts worked. Leaders in Congress did not just balk at proposals to rein in Fannie and Freddie. They mocked the proposals as unserious and unnecessary.

Rep. Barney Frank (D-Mass.) said the following on Sept. 11, 2003: "We see entities that are fundamentally sound financially. . . . And even if there were a problem, the federal government doesn't bail them out."

Sen. Thomas Carper (D-Del.), later that year: "If it ain't broke, don't fix it."

As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to "immediately reconsider his ill-advised" reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president's suggestion for a strong, independent regulator of Fannie and Freddie was "inane."

Sen. Dodd wonders what the Bush administration did to address the risks of Fannie and Freddie. Now, he knows. The real question is: Where was he?

Alex--there is plenty of blame to go around--to the congress and the feds and the pres and the companies themselves.

They got prefernetial treatment, bought politicians, ran the company to the ground and the gov't is bailing them out--meaning you and me..

Let me guess, you voted for Bush.

Nope, I just want the people who are responsible for the mess to own it and not get a bailout as their ideology would suggest.

Fredie mac, fannie mae, lehman bros, AIG, merril lynch all falling apart. Goldman Sachs takes a 71% loss.

Wall street is crumbling and getting huge bail outs. Where the fuck is president bush? WHERE IS HE? Where is the national announcement, press conference, ANYTHING? Is the republican party so concerned about winning the election that they're hiding the POTUS so he won't shit on McCain's chances, or is W just golfing somewhere while the last bits of his "legacy" fall away?

Where's the fucking leadership?!

For your consideration, the Democrats could block anything the whole time the Republicans had a simple majority. The Republicans never had 60 seats in the Senate.

Take note of the cosponsors of this bill:

thomas.loc.gov@@@L&summ2=m&#summary

S.190

Title: A bill to address the regulation of secondary mortgage market enterprises, and for other purposes. Sponsor: Sen Hagel, Chuck [NE] (introduced 1/26/2005)
Cosponsors: Sen Dole, Elizabeth [NC], Sen McCain, John [AZ], Sen Sununu, John E. [NH]

SUMMARY

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.

You must have missed his press conferences Alex.

AIG came late tonight--probably come out tomorrow morning to talk about it.

For your consideration, the Democrats could block anything the whole time the Republicans had a simple majority. The Republicans never had 60 seats in the Senate.

And the Media just accused them of not using an up or down vote, and said the reps should use the nuclear option.

Now that the shoes on the other foot, all that talk of one party being obstructionists went away.

Some liberal media.

Murphy- I must have, because I watch a lot of news, and didn't see him at all.

IF you only a simple majority and don't have every vote on your side, you cannot pass a bill. Not every Republican was voting in support of the bill for aforementioned reasons - lobbying and money. There has never been any time in US history that any administration was able to pass every bill no matter how much control they had. There are a lot of ways to block bills.

AIG overleveraged eveything in recent years.

In insurance world--AIG OWNS everything.

They are the only Kahuna--not just the big one.

They bought companies right and left and expanded everything to the nth degree. They own Zurich, they own Farmers Insurance.

They should have started selling off stuff years ago--but nooooo. They kept on doing the wrong thing.

And there will be liars amoungst the top dogs about the company and it's viability.

But if they had failed the trickle down effect would have been enormous.

Since this is a loan and they have 2 years to pay it off--that seems fair.

I have got to get to bed - will check with this conversation tomorrow.

Good night all.

Nighty nite

Where's the fucking leadership?!

It hit an iceberg about eight years ago.

If things went well for this administration, the opposition would lose, can't have that! Conversely, if things are not going well the opposition would win!

Works BOTH ways, and holds all of us HOSTAGE!

The post above about Hagel and McCain trying, with the administrations help, to correct a major problem with Fannie and Freddie is totally true, and VERY sad!

Money rules, need term limits, OR campaign limits, this sucker went on for 2 years! Cut it to three months to select a candidate, two months for them to convince you to vote for them! Saves money, no one listens until two or three weeks before election day anyway!

Hold all elections over the first weekend in November (not tuesday) to give time for thought (Ha! Ha!), and allow news coverage ONLY on Sunday afternoon, say after three o'clock until the final decision is made!

Works for me!

Between Fannie, Freddie, Behr-Stearns, IndyMac and other failed banks, and AIG America just assumed another $300,000,000,000 of total risk because oversight and regulation over risky practices were the 'enemy' of the right.

My dad always said, "The working man gets peanuts and business gets the chocolates when Republicans control everything". Herbert Hoover took a similar course leading to the crash in 1929. Similar policies the GOP Congress and the Bush White House encouraged - with the help of 'less regulation' John McCain and his economic adviser, former Senator Phil Gramm

PIC: Gramm and McCain hangin' by their private jet

Remember the deregulated Savings & Loan failures and bailout? Helped along by John McCain. It almost got him in a heap of trouble. Deregulation of banking has led to all this mess. Exotic trading vehicles of debt called 'derivatives'. The "Ownership Society" was all done on credit with little or no thought given to traditional prudent credit practices when they started America on a credit binge.

Our current situation is, as Yogi Berra would say, "Deja Vu ... all over again".

Nice fiction. how about some fact!

Senate banking committee with Paulson, FNM/FRE
regulator & FHA director should be on CSPAN Wed.
to start pre election blame game. Dodd has already
made a few jabs like he knows nothing/involvement.

Wow what a horrible month. Fannie freddie lehman aig the reserve money market fund (SHATTERING the dollar). BAC buying Merrill. Finally some reason for the market to rallly from here.....

Everybody was waiting for a shoe to drop, never did I hear about Ilmeda Marco's collection of shoes would be dropping.

Don't expect the dr left nor barack obama to talk intelligently about this situation. It's all somebody else's fault and only they can fix it.

"Don't expect the dr left nor barack obama to talk intelligently about this situation."

Do you even know that you said absolutely nothing in your own post other other than "wow this bad, lefties are stupid"? Was that piece of shit supposed to pass for intelligent talk about the situation?

In the blink of an eye Republicans erase an eight year presidency and six years of REpublican control of Congress and, as always, revert to the Clinton deflections. I find it hard to believe that the average America will be dumb enough to allow them to get away with such dishonesty. We'll see in the weeks ahead, McCain will make shit up about how he is the new "regulator" who used to be the "deregulator" and we'll listen to tax proposals that favor the wealthy from McCain and the middle class from Obama. It just seems to me that there has to be a point past which Americans will not go in voting against their own best interests regardless of the economic bull shit I hear over and over from REpublican surrogates for McCain.
"You can't raise taxes on the wealthy during a recession...."....tell that to FDR.

Jesus Christ!!!

Eight years of the rethuglicans voting as a bloc and block in congress and they still want to blame and talk about Clinton.

They sound like bitches; ITS NOT MY FAULT.

Take away reason and accountability = GOP

blog.heritage.org


Fannie Mae and Freddie Mac were created by Presidents Franklin D. Roosevelt and Lyndon B. Johnson to make homes more affordable for Americans. They accomplish this by buying, repackaging and then selling home loans that other institutions make, thus freeing institutions to offer more loans. Contrary to what some defenders of big government assert, Fannie and Freddie were also key players in the subprime mortgage market. In 2004 alone, they bought 44% of all subprime securities. Every dollar that Fannie and Freddie gave to companies like Countrywide Financial for bundled subprime mortgages was another dollar Countrywide gave out in new subprime mortgages.


When President Bill Clinton took office, Fannie and Freddie were viewed as key-- to Clintons plans to expand home ownership. The Washington Post reports: The result was a period of unrestrained growth for the companies. The companies increasingly were seen as the engine of the housing boom.-- As the companies grew, conservatives repeatedly warned that their size posed a systemic risk to the financial system. As Sarah Palin put it, thanks to the implicit federal guarantee of their debt, Fannie and Freddie had become too big and too expensive to the taxpayers.


But Fannie and Freddie pushed back hard, turning to friends on the left for protection. Former Walter Mondale and Barack Obama campaign adviser James Johnson led a fierce lobbying campaign to fight reform of Freddie and Fannie. Clinton administration OMB director Franklin Raines told investors when he was Fannie Mae CEO in 1999: We manage our political risk with the same intensity that we manage our credit and interest rate risks.-- Fannie and Freddies lobbying power over the left continues to be strong to this day. According to the Center for Responsive Politics, the top three recipients of campaign donations from Freddie and Fannies PACs and employees are all Democrats. From 1989 through today, Sen. Chris Dodd received $165,400, Barack Obama $126,349, and John Kerry $111,000. The Washington Post concludes: Blessed with the advantages of a government agency and a private company at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them.--

They sound like bitches; ITS NOT MY FAULT.
Take away reason and accountability = GOP

#78 | Posted by fresno500

It's not just the GOP frizz...

One come a day, the water will run,
No man will stand for things that he had done...
Hurrah!
And the water will run...
One come a day, the water will run,
No man will stand for things that he had done...
Hurrah!
And the water will run...
Will Run!
Will Run!

-Perry Farrel

New York Times article from 2003

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By STEPHEN LABATON

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.

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

''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.

So this is what Nullifidian means when he talks about free markets!


Congress (mostly Democrats and some Republicans) voted down the Bush's Plan(subject of the NY Times article). Why would they have a problem with an agency providing this oversight?

And how did Fannie and Freddie counter such efforts? They flooded Washington with lobbying dollars, doled out tens of thousands in political contributions and put offices in key congressional districts. Not surprisingly, these efforts worked. Leaders in Congress did not just balk at proposals to rein in Fannie and Freddie. They mocked the proposals as unserious and unnecessary.


Rep. Barney Frank (D-Mass.) said the following on Sept. 11, 2003: "We see entities that are fundamentally sound financially. . . . And even if there were a problem, the federal government doesn't bail them out."


Sen. Thomas Carper (D-Del.), later that year: "If it ain't broke, don't fix it."


As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to "immediately reconsider his ill-advised" reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president's suggestion for a strong, independent regulator of Fannie and Freddie was "inane."


Sen. Dodd wonders what the Bush administration did to address the risks of Fannie and Freddie. Now, he knows. The real question is: Where was he?


But, you say, maybe all the Fannie and Freddie employees who gave money just liked-- Obama. That might make sense with ordinary institutions. But these two had a game plan to influence and sway lawmakers for the purpose of keeping them on the government gravy train and out of the regulatory line of fire. Its no coincidence that they liked-- Senate Banking Chairman Chris Dodd best of all.


So it would appear that this is precisely what Obama has been railing against: Washington insiders lining the pockets of other Washington insiders while the taxpayers ultimately have to foot the bill. The Agent of Change, it seems, didnt exactly walk the walk on this one.

So Anamerican what happened to that legislation, Republican Congress did what with it????

Inquiring minds want to know???

Highlighting Bush's ineffectiveness in dealing with Congress helps alleviate Republican responsiblity how???

Wouldn't it be cheaper for the government to broker a sale of all AIG policies to other insurance companies? I'm sure the other companies would like the new business, and it would cost the taxpayers a lot less if we didn't have to pretend that the government is an insurance company. Is there something I'm missing here?

Excerpted from AIG's fucking website:

AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.

American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world.

The insurance policies written by AIG companies are direct obligations of its regulated subsidiary insurance companies around the world. AIG noted its long tradition of service in Asian markets, which are key to AIG's future growth. Founded in Shanghai in 1919, Asia is home to some of AIG's oldest and most valued clients.

The AIG companies are fully committed to maintaining required capital levels in all of its subsidiaries and to meeting the needs of their customers around the world (PROVIDED THE US GOVERNMENT BAIL THEM OUT TO THE TUNE OF $85 BILLION).

This insurance company diversified out into financial and banking services, with the advent of GRAMM DEREGULATION. Apparently they didn't know those business models very well.

WHY DIDN'T THE JAPANESE OR CHINESE BAIL THESE FUCKERS OUT??????????????????

Good lord... Its Bush's fault, Greenspan's fault, Clinton's fault, etc.. When are you people going to wake up and vote for Lincoln? This is your fault. As long as you continue to vote for candidates who care nothing about our constitution, this is the result you will get.

The constitution is a document that gives our government PERMISSION to do certain things. Nowhere does it permit our government to provide corporate subsidies and bailouts. That is corporatism. Its to the point of becoming communism. If you continue to vote for dems and reps, you will get more of the same. And when you party shills point fingers at the other party, I hope you eventually notice the 3 fingers pointing back at you.

This is as cut and dry a situation as there is. Both side of the aisle fucked us. Republican congress pushed to repeal Glass-Steagall. Clinton signed it. McCain takes money from wall street, so does Obama. These people are not on your side. Don't do them the favor of being on theirs.

WHY DIDN'T THE JAPANESE OR CHINESE BAIL THESE FUCKERS OUT??????????????????

#86 | Posted by nutcase

They did... where do you think we're getting the money from?

"Wouldn't it be cheaper for the government to broker a sale of all AIG policies to other insurance companies?"

Yes

"Is there something I'm missing here?"

The taxpayer and government spending isn't a concern when rich people's money is at stake.

All this buyout business couldn't have come at a worse time. Why? Now both candidates are coming out in favor of another buyout - this time for the auto industry. Both candidates are in favor because they want the votes in auto making states. Maybe I should request a buyout of my few credit cards so I could pay them back at my leisure. I'm sure the taxpayers wouldn't mind, right? ~

ap.google.com
Among the few bills likely to actually become law before Congress closes shop for the elections is a plan to give struggling U.S. automakers $25 billion in federal loans.

Opponents criticize it as a taxpayer-funded industry bailout, but the legislation is steaming ahead anyway, buoyed by the support of both John McCain and Barack Obama.

Its no coincidence that the legislation would help manufacturing states like Michigan and Ohio, whose voters could very well determine the outcome of the presidential election.

The loans would be used to help General Motors Corp., Ford Motor Co., and Chrysler LLC retool their factories to produce cleaner, more fuel-efficient vehicles as required under an energy bill passed last year.

The automaker loan program was established but not funded under the same bill. That sets it apart from the federal governments intervention to prevent the collapse of Bear Stearns and a subsequent takeover of mortgage giants Fannie Mae and Freddie Mac.

Funding is needed before any loans can be made. The money would subsidize the loans, provide a cushion for possible defaults and absorb the cost of permitting automakers to defer loan payments for up to five years. The Congressional Budget Office says the $25 billion in loans would cost the government $7.5 billion

For his part, McCain initially opposed the program, but reversed course after coming under assault.

Our auto companies are rising to the challenge of building the next generation of American cars,-- McCain said last month, adding that the government should assist Detroit and its suppliers in making it through this difficult time of transition.--

""Wouldn't it be cheaper for the government to broker a sale of all AIG policies to other insurance companies?"

Yeah all the homeowners policies in Texas would be real easy to sell off.

"For his part, McCain initially opposed the program, but reversed course after coming under assault."

Flip flopped but no surprise. Should mention here that the government actually earned a profit when they bailed out Chrysler back years ago.
It has been government that has allowed foreign, government subsidized, manufacturers to flood our markets with all kinds of goods while we expect our manufacturers to compete independently. So it will have to be government that helps them retool and create new products that Americans will want to buy but that is not all, we need to erect protections for those manufacturers to make it a level playing field. It is in our national interest to insure that our manufacturing base is modernized and brought into the 21st century. The myth that we could remain a rich nation while outsourcing our manufacturing is rapidly being revealed as nonsense.
If we do "bail out" the auto makers and make some changes to our trade policies we could enable the Big 3 to once again employ millions and put our national economy back on track. If we decide not to do these things and many others then it will just be a slow but sure descent into 2nd world status for the majority of Americans.

Good post American.
Again, both these guys are going to spend OUR money wherever it does THEM the most good. Whether that's Wall Street, Detroit, or welfare, these guys are looking out for number one. And most of country seems to be fine with that, so I guess we'd better get used to it.

"Yeah all the homeowners policies in Texas would be real easy to sell off."

Danni-

I never said my idea was perfect. The one our government went with isn't perfect either. I doubt that the majority of AIG policies are homeowners insurance on the Texas coast. If you want to pretend that that's the case, have fun with that.

I might add that the auto industry is the ONLY industry I might be inclined to help. Our government has made their job next to impossible. Americans want big cars and SUVs and we LOVE our cars but the greenies want cars to run on air or something.

Most people have no idea how difficult it is to raise the MPG avg for an entire fleet from an automaker, every vehicle sold goes into the mix.

Probably a fair point Joe, actually I've been sort of busy at work and at home and have not had time to read up on the AIG bailout. My comments were sort of just a wild guess as to the reason behind it.

Fuckers.

All of them.

Fuckers.

"The constitution is a document that gives our government PERMISSION to do certain things. Nowhere does it permit our government to provide corporate subsidies and bailouts.

#87 | Posted by jsprague"

It's called "General Welfare"

James Madison Jr., House of Representatives, February 1792:

I, sir, have always conceived--I believe those who proposed the Constitution conceived, and it is still more fully known, and more material to observe that those who ratified the Constitution conceived--that this is not an indefinite Government, deriving its power from the general terms prefixed to the specified powers, but a limited Government tied down to the specified powers which explain and define the general terms. The gentlemen who contend for a contrary doctrine are surely not aware of the consequences which flow from it, and which they must either admit or give up their doctrine.

It will follow, in the first place, that if the terms be taken in the broad sense they maintain the particular powers afterwards so carefully and distinctly enumerated would be without any meaning, and must go for nothing. It would be absurd to say, first, that Congress may do what they please, and then that they may do this or that particular thing; after giving Congress power to raise money, and apply it to all purposes which they may pronounce necessary to the general welfare, it would be absurd, to say the least, to super add a power to raise armies, to provide fleets, &c. In fact, the meaning of the general terms in question must either be sought in the subsequent enumeration which limits and details them, or they convert the Government from one limited, as hitherto supposed, to the enumerated powers, into a Government without any limits at all.

I shall be reminded, perhaps, that according to the terms of the Constitution, the Judicial Power is to extend to certain cases only not to all cases. But this circumstance can have no effect in the argument, it being presupposed by the gentlemen that the specification of certain objects does not limit the import of general terms. Taking these terms as an abstract and indefinite grant of power, they comprise all the objects of Legislative regulation as well such as fall under the Judiciary article in the Constitution, as these falling immediately under the Legislative article; and if the partial enumeration of objects in the Legislative article does not, as these gentlemen contend limit the general power, neither will it be limited by the partial enumeration of objects in the Judiciary article.

There are consequences, sir, still more extensive, which, as they follow clearly from the doctrine combated, must either be admitted, or the doctrine must be given up. If Congress can apply money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may establish teachers in every State, county, and parish, and pay them out of the public Treasury; they may take into their own hands the education of children establishing in like manner schools throughout the Union; they may undertake the regulation of all roads, other than post roads. In short, everything, from the highest object of State legislation, down to the most minute object of police, would be thrown under the power of Congress; for every object I have mentioned would admit the application of money, and might be called if Congress pleased provisions for the general welfare.

General Welfare - the abuse continues

Great post, Petrous. I'm guessing there is a sizable hole where J.J. Madison's grave used to be. All that spinning would have certainly collapsed it by now.

Nice article in today's NYT by Floyd Norris. Basically calling the Fed's actions very Socialist. Also puts all the blame on Republicans opposing any measure to regulate these risky derivitives that have put the global financial world upside down.

What do you get when you combine socialist fiscal policy with authoritarian police practices and expansionist military campaigns? I'm just saying...

Bob- Sounds like Nazism to me.