Wednesday, September 17, 2008

The Economic Panic We Are In: Give credit to McCain. He said it would happen.


The Democrats are running with the economy as a political plus for themselves. I do not blame them for that because it has been a good strategy but they need to be careful. The reason markets are collapsing and businesses are failing is because of the mortgage crisis. One man warned us, on the record, this would happen. It was John McCain:

FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005

The United States Senate

May 25, 2006
Section 16

"Mr. President, 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." -John McCain, May 2006

He was right! In addition to him being right, Barack Obama was the second largest beneficiary of Fannie Mae and Freddie Mac contributions. Fannie and Freddie play a huge role in the economic panic we are in right now.

A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama. - Fox News, John Gibson

Information I collected from Center for Responsive Politics or OpenSecrets.org:

John McCain's top contributors 2003-2008:

ContributorTotal
Merrill Lynch$293,010
Citigroup Inc$251,851
Goldman Sachs$223,995
Morgan Stanley$212,821
AT&T Inc$187,673
Blank Rome LLP$175,326
JPMorgan Chase & Co$169,625
Greenberg Traurig LLP$154,687
Credit Suisse Group$144,525
Bank of America$120,625
Pinnacle West Capital$119,250
Lehman Brothers$115,800
UBS AG$114,315
US Government$112,101
Wachovia Corp$110,462
PricewaterhouseCoopers$109,270
FedEx Corp$108,253
Hess Corp$95,050
US Army$92,007
Blackstone Group$91,500

There are several struggling companies at the top of McCain's list but they are also on Obama's.

Barack Obama's top contributors 2003-2008:

ContributorTotal
Goldman Sachs$689,280
University of California$531,070
JPMorgan Chase & Co$449,671
Citigroup Inc$411,504
Harvard University$407,452
University of Chicago$396,339
UBS AG$390,000
Google Inc$379,212
Lehman Brothers$365,922
Skadden, Arps et al$358,121
Sidley Austin LLP$356,345
Kirkland & Ellis$351,714
Moveon.org$347,463
Morgan Stanley$314,638
Exelon Corp$310,911
National Amusements Inc$298,500
Microsoft Corp$280,425
Time Warner$279,859
Jones Day$266,705
Latham & Watkins$255,095

In 2008 Freddie Mac has given the most money to:

Top Recipients

SenateDodd, Christopher J$28,800
SenateObama, Barack$18,150
SenateClinton, Hillary$17,600
HouseBean, Melissa$11,249
SenateMcCain, John$9,500

Obama got twice as much as McCain but McCain is still fifth. That is pretty high considering his statements against GSEs.

I am not going to try to sway anyone's opinion on this issue. I just want to put forward the facts. What do you think about the facts I have provided? Does this effect your vote any? Does this change your mind any on which candidate can best fix the economy?

2 comments:

Unknown said...

McCain would get more credit if he actually had not also said 10 months ago that there was not a crisis, or had tried to pass a single law from 2000-6 when they had both houses and the pres. http://www.dailykos.com/storyonly/2008/9/17/132224/433/382/601700

The Wookie said...

I understand that someone may think those two quotes are opposites but they aren't. He did say Fannie Mae and Freddie Mac were dangerous. He was pointing out their untruthful accounting. The second quote is on sub-prime loans specifically. So, he did warn that Freddie Mac and Fannie Mae were corrupt and out of control and dangerous to our economy. But, no, he did not predict that sub-prime loans, specifically, would crash the economy.