John McCain Warned Of Mortgage Collapse In 2005

By Ken Taylor - Posted on September 17th, 2008
Tagged: Op-Ed
Barack Obama has been playing off the fears that are running rampant in the market because of the collapse of several of Wall Streets major investment companies like Lehman Brothers. Attacking John McCain and trying to create the idea that McCain does not know what he is talking about and that he is ignorant when it comes to the economy.

For Mr. Obama's information John McCain saw this collapse coming as far back as 2005 and not only warned of the coming collapse but co-sponsored legislation to try and prevent it and go after the corruption that was causing much of the problem. Following is McCain's speech on the Senate floor during debate of Federal Housing Regulatory Act Of 2005 urging the Senate to pass the Act which fell to defeat after being blocked by Senate Democrats.

Mr. President, (referring to the Presiding Officer of the Senate) this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets.

The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac. The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005.

These are entities that have demonstrated over and over again that they are deeply in need of reform. For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac—known as Government-sponsored entities or GSEs—and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns.

In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay. I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation."

Senate Democrats blocked the passage of the Bill and while it passed in the House it failed in the Senate because of the Democrats.

Additionally Obama has been claiming that the fault for this collapse lies in the policies of the Bush Administration and the Republicans using this as a way of finger pointing to John McCain when in fact the entire debacle was started under Bill Clinton. The Clinton administration dictated where mortgage lenders could lend and originally helped create the market for the high-risk sub prime loans now infecting the balance sheets of many of Wall Street's most revered institutions. If these institutions did not comply they were threatened with massive fines and penalties.

Clinton put the Community Redevelopment Act, a Carter era law designed to encourage minority home ownership, on steroids. And in so doing, he helped create the market for the risky sub prime loans that he and Democrats now decry as not only greedy but "predatory."

Two of Barack Obama's top staffers, James Johnson who headed the VP selection Committee and Penny Pritzer, Obama's campaign Finance Chair were both not only involved in this debacle but are attributed in creating the situations that began the sub prime lending schemes that caused the mortgage collapse.

Pritzer along with Earnst and Young working through Merrill Lynch created the sub prime financial engineering that created this meltdown. While Johnson was CEO at Fannie Mae when the Clinton Administration ordered the beginnings of the high risk market through the Community Redevelopment Act.

The very reform act that could have stemmed this collapse in 2005 co-sponsored by John McCain was voted against by Barack Obama who also was the third highest recipient of campaign donations from the Fannie Mae and Freddie Mac PACS behind only Christopher Dodd and John Kerry.

The hypocrisy of Obama in claiming that the GOP , President Bush and by inference John McCain caused this problem and did nothing to prevent it when in fact just the opposite is true as it began under the Clinton Administration with its birth created by Democrats who are now involved with the Obama campaign, shows that it is Obama who is ignorant about the economy while McCain knows what he is talking about.

McCain's statement that the fundamentals of the economy are still strong has been backed up by the 3.3 % growth in the economy last quarter as well as all other key economic indicators still holding strong. Democrat claims that we are in a recession heading to a depression are scare tactics as even the definition of a recession is two consecutive quarters of negative growth. This economy has not even experience on quarter of negative growth. The mortgage debacle was caused by greed and sub prime loans that created a bubble that was bound to burst. A bubble that was begun by Democrats and their supporters.

A problem that McCain foresaw and tried to stem and Obama voted with Democrats to keep going. Then Obama hired the major instigators of the schemes that created the sub prime lending chaos as top staffers of his Presidential campaign. So who is actually in touch about the economy ? Well it certainly is NOT Barack Obama. Rather the proven foresight of John McCain as well as his understanding of how an economy actually works instead of trying to scare voters as Obama does proves that McCain is the candidate who will stem the tied of greed and bring necessary reforms while allowing the market based economy to continue to grow.

Ken Taylor http://theliberalslies.blogspot.com

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Hey, Ken?
Submitted by DocJ on Wed, 2008-09-17 07:17.
This is absolutely front-page worthy - do you have a link to McCain's Senate floor statement and/or the bill he sponsored?

Also a link to the roll-call where St. Barack voted no would be, well, icing.

I'd do the research myself but I have this darn day-job, you see...

Thanks!

---------
Diplomacy is the art of saying 'Nice doggie' until you can find a rock.

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Senate Floor Statement
Submitted by dscoduc on Wed, 2008-09-24 15:34.
http://thomas.loc.gov/cgi-bin/query/D?r109:16:./temp/~r109nEqCIT::

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Nice!
Submitted by David Hinz on Wed, 2008-09-24 15:41.
thanks for that link

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This needs to be made into a campaign ad
Submitted by David Hinz on Wed, 2008-09-17 08:18.
And it needs to be shouted from the roof tops that the Obamessiah voted AGAINST that bill.

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Franklin Raines- get to know him, cause the Dems had his back!
Submitted by streetwise on Wed, 2008-09-17 11:24.
Raines, a well-connected Democrat, headed Fannie Mae during its go-go years, earning megabucks from its frenzied growth. The Dems constantly resisted efforts to reign him in.

Classic quote:

On Sept. 22, 2004, OFHEO released results of its continuing investigation. The "Special Examination of Fannie Mae" was a dense 211 pages packed with technical accounting details. But the message was clear: OFHEO accused Fannie Mae of both willfully breaking accounting rules and fostering an environment of "weak or nonexistent" internal controls.

And the Dem leadership responds:

"This hearing is about the political lynching of Franklin Raines," said Congressman William Lacy Clay of Missouri. Massachusetts Congressman Barney Frank said, "I see nothing in here that suggests that safety and soundness are an issue." Other Democrats complained that the mere fact of releasing the report could increase the cost of home-ownership.

See full story on Fannie Mae done by Fortune back in 2005. (!)

http://money.cnn.com/magazines/fortune/fortune_archive/2005/01/24/8234040/index.htm

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I don't give a rats ass if he warned it might happen.

I guess he didn't either because he didn't do anything to change things did he?

John McCain saw this collapse coming as far back as 2005 and not only warned of the coming collapse but co-sponsored legislation to try and prevent it and go after the corruption that was causing much of the problem. Following is McCain's speech on the Senate floor during debate of Federal Housing Regulatory Act Of 2005 urging the Senate to pass the Act which fell to defeat after being blocked by Senate Democrats.

McCain Proven Right: Federal Housing Regulatory Reform Act of 2005

Barack "World" Obama and Christopher Dodd (he of involvement with Countrywide mortgage, eventually absorbed by Bank of America before it could go under) were the two politicians who received the MOST money from Fannie Maeand Freddie Mac as those "government sponsored entities, as those entities lobbied Congress to BLOCK reform efforts.

Meanwhile, John McCain co-sponsored the Federal Housing Enterprise REgulatory Reform Act of 2005. That act was BLOCKED by Democrats, along with some of the "goold old boy" Republicans that Palin fought in Alaska.

What's more, McCain PREDICTED the present mortgage problem He made a speech in the Congressional record talking aobuut the accounting fraud at Fannie Mae and Freddie Mac (fraud committed mainly by Democrats). Not only that, McCain said he was "concerned" about the magnitude of teh role played by these government sponsored entities in our mortgage market, when they were obviously not being vigourously regulated.

As on Iraq, it is McCain who proved RIGHT on Fannie Mae and Freddie Mac and Obama who is on the side of the people who BLOCKED reform.

There is no doubt that McCain (it pains me a little to say that on McCain, because his insticncts can be so bad on conservatives, but facts are facts) and Palin are the only REAL reformers in the Presidential ranks. They are the only ones who have shown themselves willing to stand up to the "establishment", including the establishment of their own party.

Republicians all suck! They get ritcher while the poor get poorer. I'm still wondering when people in nursing homes are going to be throwen out because of their social security thy paid for all their lives gets reduced by half crippled and bed ridden people end up living in cardboard boxes on the streets. They all would die in cold weather.

right out of the Dem handbook

McCain owns at least 8 homes
(although he doesn't have a clue to how many he truly owns)
I'm sure he doesn't give a darn about the housing crunch

do you know something young lady...you could own more then one house too...thats what so beautiful about the good old USA...anyone can make it...cross my heart

Right out of REPUBLICAN hand book. You've got to have money to make money. Any way I'm also wondering when people in VA hospitals will get thrown out because Repulicans will want to cut their Government funds to pay off George Bushes spend money that wasen't there silver spoon ideals. The people in Va hospitals deserve being suported by the government they fought for this country!

what page did you read that one on...wow !!

NONE I don't have the democrat hand book. LOL. I just worked at the VA HOSPITAL and nursing homes. I'm a Certified Nursing Assistant. Retired

Ah well...you tried...some partisans will never believe the truth no matter how obvious they are.

...but thanks for setting the record straight anyway...

I have worked at a VA Hospital too.

Hmmm....A Federal Housing Regulatory Reform Act of 2005 and it says "Barack "World" Obama".

Actually he did... But was stonewalled on the floor of our 'government'... by both parties it would appear.

No one likes to have their hand slapped when its in the cookie jar.

Anybody able to find and post the voting record for that particular piece of political manuevering?

income redistribution is never a good idea..regardless of it disguise

Sorry to bust your bubble. You don't need money to make money.

All you really need to do is scare a few congressmen and senators into voting for a massive shell game. Then you can just print the money and pave your path to the bank on the backs of hard working americans.