Suit Against Fannie and Freddie Execs Ignores Pols Also to Blame

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  1. hvactec
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    hvactec VIP Member

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    Dec 17, 2011 1:07 PM EST

    As the SEC levels fraud charges against former Fannie Mae and Freddie Mac executives, we revisit our look at some of the politicians who blocked reform while taking contributions from them.
    Now, as the finger-pointing ramps up, one of the major culprits is clear: the reckless priming of the mortgage market by Freddie Mac and Fannie Mae, both government-sponsored enterprises.

    In a lawsuit filed Friday by the Securities and Exchange Commission, six former executives of the mortgage giants Fannie Mae and Freddie Mac, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron, were charged with civil fraud. But they are not alone to blame for the reckless lending that triggered the financial meltdown in 2008. Nor is Newt Gingrich the only politician who took Freddie and Fannie dollars. Many notable political figures, including then-Senator Barack Obama, took money from Freddie and Fannie--and opposed legislation to curb their excesses. The Daily Beast surveyed the money-and-law connections in October 2008, but in the noise of the crisis nobody followed up.

    Since at least 2003, there have been numerous efforts to put Fannie and Freddie on a tighter leash. Each was defeated, in large part by Democrats—many of them major recipients of campaign contributions from Fannie and Freddie. In the accompanying media gallery, The Daily Beast documents in detail the main enablers in Congress—and the money their campaigns were paid through Freddie and Fannie’s political action committees and various affiliates. The top takers of Fannie and Freddie’s campaign money were three Democratic senators:

    1. Chris Dodd, the chairman of the Senate Banking Committee ($165,400)

    2. Presidential front-runner Barack Obama ($126,349)

    3. John Kerry ($111,000)

    4. John McCain, a campaigner for tighter regulation, received no money from the political action committees, but executives contributed $21,550.

    5. Democratic vice-presidential candidate Joe Biden received one of the smallest contributions, $3,300.

    The Beast’s gallery of enablers identifies the main opponents of strong reform and what key figures among them said about the agencies at the time.

    The Democrats’ goal of widening home ownership to low-income groups and minorities was socially desirable—and economically disastrous. At the first downturn in the housing market, in large part due to high-risk mortgages provided through Fannie Mae and Freddie Mac, the companies did not have enough liquidity to continue without a government bailout.

    Perhaps the biggest blunder the agencies made was to borrow $1.4 trillion at privileged low rates (because of their quasi-government status) and use the money to earn higher interest on high-risk bundles of securitized mortgages repurchased from bank

    read more Suit Against Fannie and Freddie Execs Ignores Pols Also to Blame - The Daily Beast
     
  2. CrusaderFrank
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    CrusaderFrank Diamond Member

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    Dodd and Frank were Domestic Financial Terrorists and should be treated as such. They did more damage then their pals in Al Qaeda ever could
     

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