Let's see obama run on his economic policy
Obama is asking whether we want to return to the policies that drove our economy off the cliff. That question can be debated, but it's reasonable, he's running with it, and it damn well may work for him. The GOP has nothing to be proud of, and the electorate damn well knows it.
.
It was not the Repubs who caused our economy to go off the cliff.
It's was the Dems and Fannie and Freddy that did this.
The Dems blamed the banks and the Repubs.
It's never their fault it is always something or some one else.
Learn the truth, instead of believing the the political spins and out right lies.
Your precious Dems are lying through their teeth about the this.
You Dems need to get it through your heads, that both parties are liars & spinners and so is our media.
2002 2005:
The Bush Administration and Republicans Push to Regulate GSEs
2002
The Enron Scandal Uncovered it All
Fannie Maes success reaching amazing housing goals began to come under scrutiny in 2002, in the wake of accounting scandals at Enron and Fannies GSE cousin, Freddie Mac. Enron had filed for bankruptcy late in 2001, after regulators proved management used illegal accounting to spice reported earnings. Freddie Mac and Enron had the same auditor. When it was found that Enrons auditor was complicit, there was significant concern about Freddie who had a close relationship with that auditor since 1970. Freddie had to change auditors in February 2002. The new one, PriceWaterhouseCoopers, took as its first task a major scrubbing of Freddies books.
PriceWaterhouse quickly found that Freddie used improper hedge accounting with regard to Treasuries. The rules governing this process are rather straight forward, so Freddies violations stuck out like a sore thumb.
Freddies management reported unaudited record earnings for the 2002 fiscal year, putting PriceWaterhouse in a make or break position of either certifying that report, or invalidating it and issuing its own. In 2002, it was highly suspect for any major mortgage house to post record earnings. Interest rates had moved sharply lower. By all rights and reason, the move should have negatively affected GSEs earnings, since the companies that buy mortgages lose money when they are forced to reinvest the proceeds of mortgage interest payments at lower rates. When Freddie and Fannie kept posting higher earnings that just met management compensation incentive targets, Wall Street investors became skeptical. Short positions which involve selling stock and then buying it back later, hopefully at a lower price in Fannie Mae began to rise sharply. When Republican Senator Chuck Hagel (R-NE) asked for details on how many losses Fannie accounted for in the negative interest rate environment, the company said the information was confidential and proprietary.
By then, auditors were deep into another Freddie accounting scandal. Management had improperly failed to recognize declines in value on a meaningful portion of the $260 billion in mortgages it owned. Through its accounting methods, management was squeezing optimal earnings out of the machine, but illegally glossing over Freddies true financial position
health
in other words, it was juicing the income statement by bastardizing the balance sheet.
2003
The Freddie Mac Scandal Caused Democrats to Circle the Wagons
By June 2003, the Freddie accounting investigation had forced management to admit to having misstated $5 billion of earnings. Of course, many analysts and investors began to look very closely at Fannies accounting.
Republicans moved swiftly to enact a stronger GSE regulatory framework
Democrats dug trenches and defended. Please recall if investors become more skeptical about Fannies health, they would not purchase as many of Fannies repackaged mortgage securities, at least not at market-low interest rates. That situation would reduce Fannies ability to buy mortgages, particularly in the risky subprime market. This was something Democrats wanted to avoid, at severe cost if necessary. One way to counter the increased risk perception was to directly state that, while the government does not guarantee Fannies individual securitized mortgage issues, the federal government would, in fact, step in to bail Fannie out if it got into serious financial trouble. During a Congressional hearing, Barney Frank (D-MA) stated, I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the federal government doesnt bail them out.
At risk for Democrats included the following:
Democrats had changed the law governing Fannie Maes mission (the CRA) to pressure management to take more risks, but did nothing to adapt the regulatory structure to the new mission. Allowing the discovery of aggressive accounting at both Freddie and Fannie, without a fight, would place Democrat party at political risk ahead of a Presidential election cycle.
Democrats had appointed Fannies senior executives and much of the board of directors, who would had to have been involved with the illegalities and may easily be publicly viewed as such if no fight had been put up to reframe the issue.
Publicly, Democrats fiercely defended the increased home ownership rates in poor neighborhoods, which were based upon investors having trust in purchasing Fannies repackaged mortgages. This easy access to funding would dry up if investors viewed investments in the securities Fannie issued as increasingly risky.
The CRA changes had significantly boosted community organizers, such as ACORN, which were rapidly becoming a Democrat party power base.
Local Democrat-linked political power brokers, such as Valerie Jarrett and friends, were making fortunes in the Chicago subprime housing market, where ACORN was a major player.
Clinton appointee Franklin Raines, and Congressional Democrats moved swiftly with the best defense is a good offense strategy. They painted anyone who presented evidence against Fannie Mae as being motivated by politics or greed. The same day auditors released the full Freddie Mac report, Franklin Raines held a press conference in which he accused Freddie of impeding Fannies lofty mission by causing collateral damage. Fannies management changed the Frequently Asked Questions section of the companys website to include the following statement: Fannie Maes reported financial results follow Generally Accepted Accounting Principles to the letter
. There should be no question about our accounting. They were wrong.
In October 2003 less than four months after Freddies admission Mr. Raines wrote a letter to Treasury Secretary John Snow that began,
Dear John,
From the beginning of our discussions, you and I have agreed to avoid disrupting the capital markets by indicating a wish to change Fannie Maes charter, status, or mission. After complaining about a comment that Raines said a high Treasury official had made about Fannies government-extended line of credit, he wrote, The result of his comment was that trading in our debt came to a halt for an extended period of time. I am disappointed and hope we can change course.
Very truly yours, Frank.
According to renown financial market and (at the time) Fortune Magazine reporter, Bethany McLean, In political terms, the letter was an astonishment what other CEO would dare dress down the Treasury Secretary, much less address him as Dear John?
