The Obama-Fannie-Freddie Connection

Obama’s two economic advisors are former Fannie Mae and Freddie Mac CEO’s who may have pulled strings to give Obama a “heads up” on the recent government bail-out plan.  Washington Prowler has the story:   
When President George W. Bush nominated Henry Paulson to serve as Treasury Secretary, Republicans raised a red flag that Paulson, who, along with his wife, has strong ties to the Democrat party, would not be an honest broker with Republicans.

That seems to have been borne out, with sources inside of Treasury reporting that Paulson briefed Sen. Barack Obama and his campaign advisers on the Fannie Mae and Freddie Mac bailout plan before offering such a briefing to the McCain campaign.

In fact, the McCain campaign had sought a similar briefing several days ago as word spread that a bailout plan was to be unveiled and had been turned down by Paulson’s senior staff.

The next question is: Why was the Obama campaign so keen on getting advanced word about the bailout?

“They have a huge problem with the mortgage and housing market story, and everyone is missing it,” says a Republican political media consultant with ties to the Obama campaign due to the bipartisan nature of the firm he does work with.

“You look at Obama’s economic advisers, the guys he has counted on from day one and who have raised him a ton — and I mean a ton — of money: Franklin Raines and Jim Johnson, both of them are waist to neck deep in the mortgage debacle.”

Both Raines and Johnson have served as CEO of Fannie Mae, with Raines taking over from Johnson. Both are key political and economic advisers to Obama.

“How can Obama go out with a straight face and saw it was Republicans who made this mess, when it is his key advisers who ran the agencies that made the big mess what it is?” says a Democrat House member who supported Sen. Hillary Rodham Clinton. “It’s his people who are responsible for what may well be the single largest government bailout in history. And every single one of them made millions off the collapse that are lining Obama’s campaign coffers. If the McCain campaign lets this one go, they deserve to lose.”

It isn’t just Fannie Mae where Obama has a problem. Another close political adviser, in fact the one man responsible for rallying support for Obama early on among Congressional Democrats, is Rep. Rahm Emanuel, who served on the Board of Directors for Freddie Mac after leaving the Clinton White House. According to Freddie Mac insiders, Emanuel during his time on the board opposed every reform proposed by the Bush Administration that would have impacted Freddie and Fannie Mae.

Emanuel claimed to be neutral in the primary race between the wife of his old boss and his longtime Chicago acquaintance, Obama. But the chairman of the House Democratic Caucus, who would be first in line for the vacated Senate seat of Obama should he win the presidency, quickly dumped Clinton when it was clear Obama had a head of steam for the nomination.

“We ought to be able to — rightly — hang the Fannie and Freddie scandal around the neck of Obama, if they can get out in front,” says a House Republican. “Middle-class folks’ mortgages are probably safe, but the American taxpayer will also be paying for this scandal for years to come.”

Possibly this connection may (or may not) inspire the Clinton’s to join the rush to the November 4 finish line.  After all — Fannie Mae and Freddie Mac were created under Clinton’s administration. 
It’s possible President Bush could have avoided some of this by his HUD secretary, Mel Martinez, undoing Andrew Cuomo’s rules.  But can you imagine the grief he would have gotten for making houses harder to buy, especially for those on the lower rungs of the economic ladder, with the likes of Barney Frank and Paul Krugman on the opposing side?

This was the perfect liberal operation:  The righteous cause of home ownership for those on the lower rungs of the economic ladder.  Pockets padded for fellow cronies.  And the blame for the inevitable crisis going to Republicans.  Perfect.  Bill Clinton is a genius.
 
Deliver us from any more displays of Clinton’s genius.   Include in that display the election of Barack Obama — expecially if Obama’s economic programs are being master-minded by Clinton cronies.
 
 
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28 Responses to “The Obama-Fannie-Freddie Connection”

  1. BRP Says:

    Fanny May was created under FDR 1938 Freddie Mac under Nixon 1970. I don’t care for Clinton but Facts is Facts.

  2. OT Hill Says:

    It’s not an issue for me, but FreddieM seems to have been created under LBJ …

    What matters is what happened to loan standards under the Clinton Administration:

    – Both of these are “government sponsored enterprises” (GSE) – regulated by another Govt entity (HUD) and without any real free enterprise controls. “Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. ”

    – As any other GSE without true shareholder accountability, they are more prone to go astray particularly with incompetent leaders like Andrew Cuomo (see next paragraph)

    For more detail: http://hnn.us/articles/1849.html

    In recent history, HUD Director, Cuomo (during the Clinton years) pushed both funds into the risky sub-prime markets – the begining of the end:

    “[Andrew Cuomo] turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. ”

    http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/

    Thanks for dropping by!!!!!

  3. The Right To Bear Arms » Deafening Silence on F-Mac/F-Mae By Obama Says:

    […] II: In the comments, Swansong posts a link to this blog entry. Excerpt: “You look at Obama’s economic advisers, the guys he has counted on from day one and […]

  4. candy Says:

    Lets get this straight. This is the responsibility of the agencies themselves to remain viable. Not LBJ, not Clinton, Not Bush. Blame the agencies themselves not the government. If I go to Vegas with my Dad’s money and bet it all Red 7 and loose….I don’t get a bail out no one offers to float me…..That is if I make it out alive (which is doubtful).

    Responsibility- that is a word that America is slowly loosing. Blame, Blame, Blame!

  5. Tooie Says:

    Unfortunately, none responsible will be made to pay.
    We the common folk will bear the burden. To the Obama and McCain supporters, neither candidate has a clue and neither can do much about it so you might as well ignore the commercials and lip service.

    Washington and Wallstreet are so corrupt and in bed together just so a handful of people can walk away with monster payouts.

    We’re al screwed-screwed-screwed.

  6. OT Hill Says:

    I don’t totally disagree with previous posts, but I’m more optimistic.

    Obama’s theme of “crisis” and “doom and gloom” does little to tell me that he has insight into the economic problem(s).

    As for John McCain — he’s more positive and supportive of Americans than the One …

    See info on O’s plans at http://perishthethought.blogdrive.com

    I’ll be posting it here as well later.

  7. christian Says:

    Why can’t the GOP take responsibility for their failed economic policies? The free market does not “correct itself” – it fails and we end up paying. McCain/Palin have no economic plan for America and I wonder why nobody ever talks about who is paying for this trillion dollar war? The GOP wants endless tax cuts in a time of war? I don’t get it.

  8. OT Hill Says:

    I’m not sure you are justified in playing the GOP/Bush blame game, Christian …… Bush tried to move Congress to action on F-F 5 yrs ago and it has been the Dems who have had oversight responsibility for two years.

    It’s an “us” problem. Skip the blame game. And if you feel that Obama holds the key to economic salvation — check my next post and support your assumption!

  9. Paul McCord Says:

    Christian,

    You need to learn some basic facts of how we got into this situation.

    It starts with congress insisting–mandating–that lenders find ways to lend money to low income families who want a home but couldn’t afford one The nice, cozy liberal idea was that anyone who wanted a home should be able to have a home. Feel good economics.

    The only way to do that was to lower underwriting standards to the point where in reality there were no underwriting standards. Lenders and mortgage underwriters developed loan programs that gave virtually anyone who breathed the opportunity to get a 100% mortgage. They even developed programs where people could get into homes with only $500 out of pocket–some even got money back.

    Easy mortgages meant millions of people who should never have gotten mortgages did. Those new buyers forced up home prices to absurd levels.

    Since a great, great many of the people buying the homes couldn’t afford the payments or were just plain greedy and stupid, they opted for variable interest loans because the initial payment was low–and the mortgage industry accommodated them with congress’ full approval. After their two or three year low rate period, the interest rates on the loans began to increase–along with the normal increases in insurance and property taxes, of course. They couldn’t make the payments.

    Lenders sold these crappy loans to investors in packages–with the promise of high returns.

    The scam couldn’t maintain itself forever. It began to collapse in on itself.

    There is plenty of blame to go around:

    1. Congress for being stupid and forcing lenders to make idiotic loans just so they could feel good about their big liberal hearts and all the great stuff they were doing to help the little guy

    2. The home buyers who had no business getting a mortgage in the first place because they couldn’t afford it, had proven they couldn’t manage money, and opted to get the smallest payment possible figuring they’d worry about the bigger payments in the future.

    3. The lenders for agreeing to this scheme to begin with and then, once they discovered they could make a ton of money, ran with it, getting looser and looser with their underwriting and figuring somehow, someway, it’d all work out in the end

    4. The regulators who were for the most part former lenders and who were anything but regulators–more like cheerleaders.

    5. The relators and builders who couldn’t have cared less whether the homebuyer could acutally afford the home, they just wanted their commission–and they’d shop the loan until they found someone who’d give it.

    5. We, the rest of the people, for falling for this voodoo, feel good economics to begin with.

    Everyone is to blame, but it all started with the Democrats and their idea that everyone deserved to have a house–whether they could afford it or not.

    Worse, some like the highly enlightened Barney Frank have learned nothing, and want to continue this same scam.

  10. Obama Sleaze Factor (No Tit for Tat~Obama Surrounded With Corruption) « Zipline Conservative Says:

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  11. Granny conservative Says:

    Truth is government (both parties) has been printing more and more paper money for years (one reason why gold stocks are high) and now they can’t back it up (shrinks dollar)…when rest of world demands payment in gold…USA will really be in trouble.

  12. rpm1122 Says:

    Lots of lucidity here.

    For an astrological look at Obama/Palin/Biden/McCain, go to http://www.robertphoenix.com

  13. Financial set backs will give Obama a boost? - Page 3 - The Dragon's List Kung Fu Community Says:

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  14. Economic Crisis: Why The Democrats Aren’t More Helpful « Count Us Out Says:

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  15. Home For Failed Bankers - Campaign Obama « Porcupine Rim Says:

    […] Over-the-Hill Oracles The Obama-Fannie-Freddie Connection “How can Obama go out with a straight face and saw it was Republicans who made this mess, […]

  16. Lizabeth Hardman Says:

    It is absolutely NOT TRUE that Franklin Raines and Jim Johnson are “key political and economic advisers” to Barack Obama. Raines got a couple of phone calls from someone in the Obama campaign very early on to talk about general economic issues, but even Raines himself states that he is not nor has he ever been in any way an adviser to Barack Obama. Johnson was briefly on the team to vet possible running mates, but stepped down as soon as his role in financial misconduct surfaced. He also is not in any way an advisor to Obama.

  17. OT Hill Says:

    Early newspaper interviews suggest otherwise …. ummm … Johnson’s stepping down “as soon as his financial misconduct surfaced” indicates that he was indeed an advisor — otherwise … well — never mind.

    Saying it aint’s so, don’t make it not so!

  18. Elizabeth Stolfi Says:

    Raines is not one of his advisors. Whatever Mac says in an ad automatically becomes true these days.

    http://voices.washingtonpost.com/fact-checker/2008/09/obamas_fannie_mae_connection.html

  19. Rob Says:

    Elizabeth are you that blind of a Obama supporter that you won’t see the truth, do you need video of Raines and Johnson having financial discussions with Obama. They were both advisors to him in some capacity. These are the type of unethical,irresponsible,crooked thieves he has chosen to advise him, this is his “judgement” of men with character to advise him.

  20. OT Hill Says:

    Thanks, Rob —- it looks as if we have our “work” cut out for us.

    How can so many people be so blind to the reality of BH Obama?

  21. nmorton Says:

    It’s become so clear that as democrats try to blame republicans for this mess they are just ignoring the facts. Anyone who truly believes that democrats have no fault in this are just too biased to see reality

    Obama – fannie mae’s second favorite senator:
    http://nmorton.wordpress.com/2008/09/16/barack-obama-fannie-mae-lobbyists-second-favorite-senator/
    Democrats blocking republican efforts to reform fannie and freddie: http://nmorton.wordpress.com/2008/09/30/breitbarttv-%c2%bb-2004-dems-fight-regulations-on-fannie-freddie-during-illegal-bookkeeping-hearing/

  22. Cindy Johnston Says:

    This is what I have been saying all along. I just found this website because I googled “how could people be so blind to Obama” and your website came up. I am appalled at all the information out there showing how unethical Obama is and the people still fawn all over him like he is some kind of god. I thought Clinton was bad but Obama is scary. I hate to think we will have 4 years of this man and his militant wife.

  23. OTHill Says:

    A primary reason is that MSM supports him and chooses NOT to investigate or ask him!!!

    Plus …. look at the blog headlines today and what is happening in the democrat/Obama campaign — beyond hyping VP debate — such as

    1. the FEC investigation of over $22 million in “mysterious” domestic and foreign donations to the Obama campaign,

    2. the discovery of secret democrat documents which target “the idiots” vote of “minorities, drop-outs and GED’s” —-

    Now tell me again how anyone ANYONE can face taxpayers and tell us that he wants to redistribute tax monies (but not his own) to help those living in poverty (you know, “the idiots”)…..

    Don’t give up!!!!!

  24. Top Posts « WordPress.com Says:

    […] The Obama-Fannie-Freddie Connection Obama’s two economic advisors are former Fannie Mae and Freddie Mac CEO’s who may have pulled strings to […] […]

  25. BCH says Says:

    As I read over these comments, I have come away with the realization that the Obama camp has intrenched it’s self into deception and lies. Obama, lies about his back ground, he lies about his campaign finances. How can a man from a poor neighborhood come as far as he has with out some backing. Let’s really find out who his backers really are. He does have ties to the radiacal muslum left and is not a patriot who should be elceted to lead our country.

    His finacual advisors lined their pockets fro Fanney and Freddie and now want every one to let them be finacial advisors in the White House.

    Not on my watch, vote no to the corruption and lies in the Obama camp.

  26. steve Says:

    Heres the connection that matters to me. Obama helped Acorn sue/litigate against a bank in Chicago that wouldnt loan to people that didnt meet their financial standards of which a larger percentage were a minority. They sued and won on that ground that because the people that cant afford these houses are mostly black that its discrimination and the bank was forced to lower its standards and loan to these people.

    So if a minority comes into a car dealership and he makes a certain amount of cash and cant afford the car and the dealership tells him that, then thats discrimination? THIS is what caused this problem. People like Jess Jackson and Barney Frank who campaigned on this, faught hard to get lower income people to be able to get these loans. The only reason i can think of why they did this was they figured that houses would keep going up and it was unfair that the richer white guys were being able to afford these houses because once they bought the houses they made huge profits on it going up in value. So they figured if we could just get the low income people in the door, then the house would go up in value and that would secure them in the house.

    Yeah… that only works for so long. But thats the rationale behind the argument and that is what Barack fought for… no matter how good his intentions he did not see the harm he was doing.

  27. NH Says:

    **””How can a man from a poor neighborhood come as far as he has with out some backing.**
    then came : Let’s really find out who his backers really are. He does have ties to the radiacal muslum left and is not a patriot who should be elceted to lead our country.””

    to the first… is that not the “American dream”?
    to the second… how is fulfilling the “American dream” unpatriotic?
    with your statement do you infer that, if you grew up a poor negro there is no getting ahead without either the aid of a lovable rich white man or the other route which seems to be “palling around with terrorists”?..

  28. OT Hill Says:

    No, NH. Not at all.

    But for a person to aspire to the most powerful office in the world without telling us WHO HE IS — why should we believe in him “because he says he is someone special?”

    Obama has not been forthright about his background or associations. For example, here’s another revelation about his support of his cousin in Kenya — a radical socialist who was defeated as President.

    Why should associations NOT be considered as indicators of a person’s values and philosophy?

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