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Subject:
And It Just Keeps On Coming - Congressional Democrats and the Subprime Mortgage Crisi
CJH
10/4/2008 12:04:29 PM
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"http://digg.com/2008_us_elections/Democrat_Liberals_Fight_Regulations_on_Fannie_Freddie_2004?OTC-widget"
GSEs are government-sponsored enterprises
Excerpts From the Wikipedia article on Franklin Raines
"http://en.wikipedia.org/wiki/Frank_Raines" -
"On December 21, 2004 Raines accepted what he called 'early retirement' [4] from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities. He is accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses [5]."
Under the heading of "Role in the subprime mortgage crisis" -
"In accordance with the mission of Fannie Mae to enable home ownership by a greater proportion of the population, Franklin Raines, while Chairman and CEO, began a pilot program in 1999 to issue bank loans to individuals with low to moderate income, and to ease credit requirements on loans that Fannie Mae purchased from banks. Raines promoted the program saying that it would allow consumers who were 'A notch below what our current underwriting has required' to get home loans. The move was intended in part to increase the number of minority and low income home owners.[15] Some observers have noted that the expansion of easy credit to home buyers with a lesser ability to pay them back was one of the major contributing factors to the subprime mortgage crisis.[16] Although under Raines, Fannie Mae invested in some securities backed by subprime loans, it didn't start buying subprime and Alt-A loans directly (and bundling them into securities) until late 2004 after the accounting scandal. Purchasing of subprime and alt-A mortgages expanded exponentially under the guidance of Raines's successor Daniel H. Mudd.[17][18] (See also Subprime lending.)"
About Raines and Obama -
"On July 16, 2008, The Washington Post reported that Franklin Raines
had 'taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters.' [19]. Also, in an editorial in August 27, 2008 titled 'Tough Decision Coming', the Washington Post editorial staff wrote that 'Two members of Mr. Obama's political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.'[20]"
"On September 18, 2008, John McCain's Campaign, published a campaign ad that quoted the Washington Post's claim that Franklin Raines advises Barack Obama on economic matters. The ad also notes that 'Raines made millions and then left Fannie Mae while it was under investigation for accounting irregularities'.[21] Both Raines and the Obama Campaign claim that Raines is not an Obama advisor and has never advised Senator Obama. [22]"
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