FANNIE MAE IS BADLY IN NEED OF REFORM & NEW LEADERSHIP MINUS CONGRESS' INTERVENTION (NO BAIL OUT)

FANNIE MAE IS BADLY IN NEED OF REFORM & NEW LEADERSHIP MINUS CONGRESS' INTERVENTION (NO BAIL OUT):

WITHOUT CONGRESSIONAL INTERFERENCE, FANNIE MAE STAFF CAN NO LONGER USE POLITICS TO HURT HOMEOWNERS WHO VOTE OPPOSITE OF THEIR CHOSEN CANDIDATES.

WITHOUT CONGRESS' HELP, FANNIE MAE STAFF CAN NO LONGER STEAL HOMES WITH EQUITY FROM U.S. MILITARY VETERANS WHO VOTE OPPOSITE OF THEIR CHOSEN CANDIDATES.


Post Sources: American Banker, Forbes, Fox News, Youtube


********How next FHFA chief can reform Fannie, Freddie without Congress' help


The legislative stalemate over housing finance reform is likely to prolong the uncertain future for the government-sponsored enterprises. But it also illuminates the power of the next head of the Federal Housing Finance Agency.

With FHFA Director Mel Watt's term due to end in January, his successor — either a Senate-confirmed appointee or an interim chief — has substantial authority to set part of the path forward on GSE reform, including how far Fannie Mae and Freddie Mac expand their mission and the status of a common securitization platform shared by the two mortgage giants.

“Reforms can move forward without legislation,” said Anne Canfield, executive director of the Consumer Mortgage Coalition. “There are things that can be done administratively that would reduce the government’s exposure and risk to the GSEs and bring private capital into the marketplace, but in a little bit of a different way.”

That highlights the importance of whomever the Trump administration selects for the job. It could be someone who differs from Watt — an Obama appointee — in style and policy, who could opt to go as far as placing the mortgage giants into receivership.

“I don’t think we’re going to have legislative GSE reform anytime, but the day-to-day decisions they make, whether to approve a pilot or fund the Housing Trust Fund, these are significant decisions that will impact the trajectory of mortgage finance,” said Isaac Boltansky, the director of policy research at Compass Point.

During his tenure, Watt has appeared cautious about changing Fannie and Freddie's role in the absence of congressional reforms.

"I am well aware, and regularly express my belief, that conservatorship should never be viewed as permanent or as a desirable end state and that housing finance reform is necessary," Watt said in a 2014 policy speech early in his FHFA tenure. "However, Congress and the administration have the important job of deciding on housing finance reform legislation, not FHFA. Instead, our task is to continue to fulfill our statutory mandates, to execute our strategic plan and to manage the present status of Fannie Mae and Freddie Mac."

But observers said his successor could take advantage of the agency's powers to move in the direction of reducing the GSEs' role.

Before Watt arrived, the agency was run on an acting basis by Ed DeMarco, who had joined the agency in the Bush administration and was seen as more opposed to expanding Fannie and Freddie's reach.

“It depends on the person," said Canfield. "It really depends on who they select.”

Some candidates who have been mentioned as possible successors to Watt — including DeMarco himself along with retiring House Financial Services Chairman Jeb Hensarling — have been vocal about reducing the government’s role in the mortgage market.

In February, when Fannie requested a $3.7 billion draw from the Treasury, Hensarling harshly criticized giving the company any more bailout funds.

“Today’s announcement that Fannie Mae has once again run out of money to pay its own bills is the latest example of why we need to repeal the GSEs’ government charters once and for all," he said then in a statement, adding criticism later of Watt's handling of the companies' fiscal situation.

"The even more troubling aspect of the GSEs financial crisis is FHFA Director Mel Watt’s continued insistence to siphon taxpayer dollars to prop up payments to the Housing Trust Fund that the GSEs cannot afford to make," Hensarling said. "If the GSEs don’t have the money to pay their own bills, they should not be making optional payments to outside entities."

While Watt's term will end in early 2019, a pair of recent scandals facing the agency has led some to speculate he could leave sooner. Watt has been accused of sexually harassing an FHFA staffer and is reportedly under a separate investigation for attempting to weaken the oversight of the FHFA Office of Inspector General.

Before a new nominee is Senate-confirmed, the White House could appoint one of Watt’s three lieutenants to serve as acting director or appoint a temporary director under the Federal Vacancies Reform Act when Watt leaves.

“If there’s a prolonged period where we have an acting director … I think that it would be a slower decision-making process and more of a caretaker,” said Boltansky.

But Canfield disagreed, saying that the administrative decisions made by an acting director could depend on the person.

“I think the acting director can do quite a bit,” she said. “I would hope that they would get a permanent director in there but if they’re not able to do that, I think they can all move forward with an acting director.”

If the White House were to move quickly to nominate a successor to Watt, it would signal that the administration wants to move quickly to end conservatorship and implement reforms of the mortgage finance system, Keefe, Bruyette & Woods wrote in recent a research note.

“However, it is difficult to say what policy path the administration will pursue until we see what personnel it intends to insert at FHFA,” the company said.

Of all the actions a director could take, the most significant would be to put Fannie and Freddie into a receivership, which supporters claim would restructure the GSEs without burdening taxpayers.

Among the other decisions the next FHFA director could make would be to determine the courts of efforts to implement a common securitization platform, which would allow Fannie and Freddie to issue uniform mortgage-backed securities. The FHFA has pushed the second phase of the process to June 2019 — after Watt’s departure.

The director will also be at liberty to decide whether or not to continue Fannie's pilot Enterprise-Paid Mortgage Insurance program and Freddie's similar Integrated Mortgage Insurance pilot, which both debuted this year. Some have criticized the mortgage insurance programs as being too far outside the bounds of the GSEs’ mission.

An FHFA director with the view that the GSEs' footprint should be reduced could oppose the mortgage insurance pilots.

However, the pilot programs are too new to automatically write off, and the FHFA director could just as easily wait to see if the programs are effective before making a decision to implement them further, said Laurence Platt, an attorney at Mayer Brown.

“I don’t think this is an issue that will be dependent on who the new FHFA director is,” Platt said. “I don’t think there’s a partisan side to this, per se.”

To be sure, there are clear limits on what the next FHFA director can do administratively. Creating some new housing finance structure to replace the GSEs is the territory of Congress. Instituting an explicit government guarantee or changing the ownership charter or structure of the GSEs would need congressional approval, which is unlikely to happen in the short term.

Besides congressional reforms, there are other policy areas where the FHFA cannot move unilaterally. The FHFA would have to work with the Treasury Department to change the preferred stock purchase agreements, which require Fannie and Freddie to direct nearly all of their profit to Treasury. Investors have long claimed this is unfair, and have unsuccessfully challenged the legality of this agreement in court for several years.

MEL WATT, 72, FANNIE MAE CHIEF, INVESTIGATED FOR SEXUAL HARASSMENT CLAIM BY FEMALE EMPLOYEE (#MeToo)

MEL WATT, 72, FANNIE MAE CHIEF, INVESTIGATED FOR SEXUAL HARASSMENT CLAIM BY FEMALE EMPLOYEE (#MeToo):

FANNIE MAE OWNS THE LOANS FOR MANY U.S. MILITARY VETERAN HOMEOWNERS.

U.S. MILITARY VETERAN HOMEOWNERS ARE LOSING THEIR HOMES UNDER FANNIE MAE'S LEADERSHIP......WHY??

IF U.S. MILITARY VET HOMEOWNERS EXPERIENCE HARDSHIPS, WHY NOT TRANSFER THOSE LOANS TO VETERANS AFFAIRS ADMIN?

THE SEXUAL HARASSMENT CLAIM IS BEING THOROUGHLY INVESTIGATED BY A FEDERAL AGENCY.

THE VICTIM HAS HIRED A VERY REPUTABLE ATTORNEY.

MEL WATT IS A CHARLOTTE, NORTH CAROLINA NATIVE & FORMER U.S. CONGRESS MEMBER.

MEL WATT IS AN OBAMA ADMIN HOLDOVER. HIS FIVE-YR TERM ENDS IN 2019.

DRAIN THE SWAMP.


Post Sources: Politico, Charlotte Observer, Daily Caller, Youtube


****** **** Federal housing leader Mel Watt under investigation for sexual harassment claim


Mel Watt, a former Democratic congressman from Charlotte who now heads a federal housing agency, is under investigation for harassment of a female employee.

Politico first reported the allegations Friday, citing documents and partial transcripts of conversations between Watt and the employee, which the story did not name. The story describes three 2016 incidents of Watt making sexual advances on the woman.

A statement from Watt through the Federal Housing Finance Agency to McClatchy confirmed an ongoing investigation, as did an attorney for the woman.

“The selective leaks related to this matter are obviously intended to embarrass or to lead to an unfounded or political conclusion.

However, I am confident that the investigation currently in progress will confirm that I have not done anything contrary to law. I will have no further comment while the investigation is in progress,” said Watt, who is the agency’s director.

The investigation began a month or two ago, said Diane Seltzer Torre, an attorney for the woman who alleges the harassment.

Torre said the investigation is being conducted by an official with the U.S. Postal Service. It is typical for an outside agency to investigate claims such as these.

My client did not submit information to the media. She is not looking for attention and doesn’t want to talk to the media,” Torre said.

Torre declined to identify her client nor would she discuss her client’s employment status with the Federal Housing Finance Agency.

She said she is not aware of any other complaints against Watt.

Watt, 72, represented Charlotte in the U.S. House of Representatives from 1993 to 2014, when he was tapped by President Barack Obama to head the Federal Housing Finance Agency.

The agency oversees Fannie Mae, Freddie Mac and FHLBanks, which provide nearly $6 trillion for mortgage markets and financial institutions, according to FHFA.

The Federal Housing Finance Agency was created after the housing crash in 2008 and it serves as the conservator of Fannie Mae and Freddie Mac.

Watt was confirmed by the Senate 57-41 months after he was nominated. Sen. Richard Burr of North Carolina was one of two Republicans to back Watt’s nomination.

Watt’s five-year term is set to expire in January. Watt is still on the job, a spokeswoman for the agency said.

Watt, an attorney, is married and has two grown children and three grandchildren, according to his FHFA bio.

A Mecklenburg County native, Watt graduated from UNC-Chapel Hill before earning a law degree at Yale. He served one term in the North Carolina state senate.

While in the U.S. House in 2011, Watt tried to slash funding for the Office of Congressional Ethics by 40 percent, a move that was soundly defeated.

Watt and seven colleagues were investigated and cleared by the office for fundraising that took place before a key House vote.

In 2008, Watt had voted to create the Office of Congressional Ethics.

“I wouldn’t call it a ‘personal vendetta,’” Watt told McClatchy at the time. “But I also wouldn’t deny that my experiences had something to do with my view of this agency.”

CITIGROUP Agrees To Pay Freddie Mac $395 Million For Toxic Mortgages & Poor Loan Servicing

#Citi

"Citigroup To Pay Freddie Mac $395 Million To End Mortgage Claims"

Citigroup Inc. (C), the third-biggest U.S. bank, agreed to pay Freddie Mac $395 million to resolve repurchase claims on soured mortgages sold to the government-backed firm over more than a decade.

The accord covers about 3.7 million loans sold to Freddie Mac between 2000 and 2012, the New York-based company said yesterday in a statement. The payment was covered by repurchase reserves as of June 30, Citigroup said.

The biggest U.S. home lenders, including Bank of America Corp.and Citigroup, faced mounting pressure after the housing crisis to resolve claims on faulty mortgages sold to Fannie Mae and Freddie Mac, the U.S.-owned firms that took a $187.5 billion bailout. Citigroup announced a deal in July to pay Fannie Mae $968 million for loans over a similar period.

The deal with Freddie Mac is “another important milestone in successfully resolving Citi’s remaining legacy mortgage issues,” Jane Fraser, chief executive officer of the firm’s CitiMortgage unit, said in the statement.

The accord doesn’t release the bank from liability tied to servicing the loans.

It excludes less than 1,000 loans from the period with “certain characteristics,” including those already in the process of being repurchased. Citigroup said it believes it’s also adequately reserved for those.

The biggest U.S. home lenders, including Bank of America Corp. and Citigroup Inc. faced...

The company had $719 million in reserves for buying back faulty mortgages at the end of the June, according to a July 15presentation.

The bank added $3.9 billion to its reserves since 2009 through June, according to data compiled by Bloomberg.

U.S. Seizure

Freddie Mac and Fannie Mae, its larger rival, bought about $2.2 trillion of mortgages from the 15 biggest banks and Ally Financial Inc.

(ALLY) between 2006 and 2009, according to Inside Mortgage Finance, a trade journal.

Regulators seized the two firms in 2008 after their purchases of risky loans pushed them to the brink of collapse.

Citigroup sold $62.4 billion of mortgages to Freddie Mac between 2005 and 2009, according to data from Washington-based Compass Point Research & Trading LLC.

The bank’s CEO, Michael Corbat, 53, named Fraser in May to run the mortgage operation.

She has sought to reduce staff and move beyond legacy issues.

Citigroup said earlier this week it’s cutting about 1,000 jobs in its home-lending business as refinancings slow.

The bank said earlier this month that it closed a Danville, Illinois, facility, leading to 120 job cuts, and fired some telephone sales agents.

Separately, the firm is hiring employees to originate new mortgages for home purchases as opposed to refinancings, a person familiar with the moves said this week.

Citigroup created $65 billion of mortgages last year, or about 3.4 percent of the total market, according to Inside Mortgage Finance, a trade publication.

#CITI

CITI MORTGAGE IGNORED OBAMA'S NATIONAL MORTGAGE SETTLEMENT BY PUSHING FAKE LOAN MODIFICATIONS TO STEAL HOMES!!

THAT'S HOW CITI'S PROFITS SOARED!!

In February 2012 Pres Obama signed a National Settlement Agreement w/ the CEOs of America's four largest Banks: BOFA, Chase, Citi & Wells Fargo.

Another MORTGAGE SETTLEMENT was signed in January of 2013.

Since then both BOFA & Citi have basically ignored the Terms of this Settlement.

Especially Citi Mortgage!

Yet Congress allowed Citi Mortgage to rake in huge PROFITS at the expense of Struggling Homeowners, many whom are now Homeless because Citi Mortgage Stole their Homes via FAKE Loan Modifications.

So How was this being done?

Five Different Ways: (FORT MILL, S.C. & O'FALLON, MO. LOCATIONS)

**1) Send Struggling Borrowers on a Wild Goose Paper Chase by asking them to send in the SAME Financial Docs over & over again.

**2) Hire Loss Mitigation Specialists, Poorly train them & Use their names to Foreclose on Millions of Properties.

**3) String Borrowers along on a Doc Chase until the Foreclosure Statue of Limitations in each State Expires.

**4) Grant only allow a Handful of Borrowers HAMP Certifications.

**5) Reward Managers & Loss Mitigation Specialists Huge Bonuses for helping to Steal Homes from Struggling Borrowers via FAKE Loan Modifications.



Sources: AP; Bloomberg; NJ.com; NY Times

Bank Of America Agrees To Slash Mortgages For 200,000 Borrowers! Principal Reduction!

BofA to slash mortgage balances by $100,000 or more


Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers.

As part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District of Columbia last month, Bank of America (BAC, Fortune 500) customers who qualify could see their mortgages reduced by an average of $100,000 or more, according to bank spokesman Rick Simon.

Those principal reductions are much deeper than the ones originally announced as part of the robo-signing settlement deal.

When the settlement was first announced, the average principal reduction was expected to reduce mortgage balances by an average of about $20,000. Among the five biggest lenders, the reductions are expected to help roughly 1 million homeowners who owe more on their homes than they are worth.

Multi-million dollar foreclosures

The other four banks, JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial, are expected to reduce qualified borrowers' principal to between 115% and 125% of the value of their homes. Bank of America, meanwhile, is aiming to reduce the amount owed on a home to 100% match the current market value.

Bank of America's deal only applies to the mortgages it owns and some that it services for private investors. Loans backed by government-controlled agencies like Fannie and Freddie or insured by the Federal Housing Administration are not eligible for the program.

Many of the mortgages Bank of America plans to refinance came to the bank through its 2008 acquisition of Countrywide Financial, which issued many high value loans called jumbo mortgages that exceeded the loan limits of Fannie Mae (FNMA, Fortune 500), Freddie Mac (FMCC, Fortune 500).

A large percentage of those loans were issued in some of the country's hardest hit housing markets, including California, leaving many of Bank of America's mortgage borrower's deeply underwater on their mortgages, said Simon.

The bank has already identified the 200,000 or so borrowers that it will offer modifications to and will start to reach out to them as soon as a D.C. federal court approves the settlement.

"We expect to get off to a fast start with this program," said Simon.

There are incentives to do that. If the bank is able to demonstrate that it faithfully carried out the provisions of the attorneys general's foreclosure settlement -- as well as a separate settlement in which it agreed to reimburse HUD $1 billion to cover problems originating FHA loans -- over the next three years, it can be forgiven $850 million in penalty payments, said Simon.

The bank has also agreed not to pursue foreclosures against any delinquent borrowers who might be eligible for a mortgage modification as part of the settlement.

It will also reform its foreclosure processing to avoid repeating robo-signing abuses, in which bank employees signed hundreds of documents a day, testifying to statements they had no knowledge of.

Million-dollar foreclosures rise as rich walk away

The deal is one of a series of government-led initiatives aimed at tackling the foreclosure crisis. The latest effort came on Tuesday when the Obama administration announced a plan to reduce refinancing costs for FHA-insured loans.

The U.S. Department of Housing and Urban Development (HUD) advises borrowers who believe they were subjected to foreclosure abuse and may be eligible for a mortgage modification under the settlement to call their servicers and ask for a review of their cases.

HUD said once the agreement was submitted to a court for approval, which was expected to happen on Friday, it would hold a press conference to go over the details.


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Sources: Bank Of America, CNN, Wikipedia, Google Maps

A Call For Rahm Emanuel's Resignation From Liberals & Conservatives!

Congresswoman Maxine Waters slams White House Chief of Staff and Blue Dogs Congressional group founder, Rahm Emanuel.






Unlikely Allies Want Rahm Out!


There are few stranger political bedfellows than Conservative anti-tax crusader Grover Norquist and Liberal blogger Jane Hamsher. But the two joined forces on Wednesday to call for the resignation of White House chief of staff Rahm Emanuel, in a letter they penned to Attorney General Eric Holder.

The duo contends that Emanuel’s service on the board of the government-sponsored mortgage company Freddie Mac from 2000 to 2001 may have given him some knowledge of alleged financial irregularities at the time.

Norquist and Hamsher say in a letter to Holder that “stonewalling by Mr. Emanuel and the White House” leave them “no redress” other than to call for his resignation. Norquist is the head of the Conservative group Americans for Tax Reform, and Hamsher is the publisher of the liberal blog Firedoglake.

In a press release, Norquist said, "Fannie Mae and Freddie Mac should be transparent. There is only one reason that Rahm Emanuel and others have fought to keep how they handled billions of dollars of other people's money hidden from public scrutiny; they are hiding corruption.

What would they have us believe they are hiding? Their unexpected business acumen?"

Said Hamsher in the same release, “This administration is pushing for an $800 billion bailout while the organization has no Inspector General or basic oversight, a bullish tactic Emanuel seems to favor while his activities with Freddie Mac are questioned by investigative reporters.”

In the letter to Holder, the two activists noted:

“A 2003 report by Freddie Mac's regulator indicated that Freddie Mac executives had informed the board of their intention to misstate the earnings to insure their own bonuses during the time Mr. Emanuel was a director. But the White House refused to comply with a Freedom of Information Act request from the Chicago Tribune for those board minutes on the grounds that Freddie Mac was a 'commercial' entity, even though it was wholly owned by the government at the time the request was made.”

The White House did not immediately respond to a request for comment.






Rahm Emanuel's Profitable Stint At Mortgage Giant


Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation's mortgage woes and fulfilling the administration's pledge to impose responsibility on the financial world.

Emanuel's Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation's current economic mess.

Though just 49, Emanuel is a veteran Democratic strategist and fundraiser who served three terms in the U.S. House after helping elect Mayor Richard Daley and former President Bill Clinton. The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker a decade ago.

In business as in politics, Emanuel has cultivated an aggressive, take-charge reputation that made him rich and propelled his rise to the front of the national stage. But buried deep in corporate and government documents on the Freddie Mac scandal is a little-known and very different story involving Emanuel.

He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals.

The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board's working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.

On Emanuel's watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass.

The accounting scandal wasn't the only one that brewed during Emanuel's tenure.

During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago.

The board was throttled for its acquiescence to the accounting manipulation in a 2003 report by Armando Falcon Jr., head of a federal oversight agency for Freddie Mac. The scandal forced Freddie Mac to restate $5 billion in earnings and pay $585 million in fines and legal settlements. It also foreshadowed even harder times at the firm.

Many of those same risky investment practices tied to the accounting scandal eventually brought the firm to the brink of insolvency and led to its seizure last year by the Bush administration, which pledged to inject up to $100 billion in new capital to keep the firm afloat. The Obama administration has doubled that commitment.

Freddie Mac reported recently that it lost $50 billion in 2008. It so far has tapped $14 billion of the government's guarantee and said it soon will need an additional $30 billion to keep operating.

Like its larger government-chartered cousin Fannie Mae, Freddie Mac was created by Congress to promote home ownership, though both are private corporations with shares traded on the New York Stock Exchange. The two firms hold stakes in half the nation's residential mortgages.

Because of Freddie Mac's federal charter, the board in Emanuel's day was a hybrid of directors elected by shareholders and those appointed by the president.

In his final year in office, Clinton tapped three close pals: Emanuel, Washington lobbyist and golfing partner James Free, and Harold Ickes, a former White House aide instrumental in securing the election of Hillary Clinton to the U.S. Senate. Free's appointment was good for four months, and Ickes' only three months.

Falcon, director of the Office of Federal Housing Enterprise Oversight, found that presidential appointees played no "meaningful role" in overseeing the company and recommended that their positions be eliminated.

John Coffee, a law professor and expert on corporate governance at Columbia University, said the financial crisis at Freddie Mac was years in the making and fueled by chronically weak oversight by the firm's directors. The presence of presidential appointees on the board didn't help, he added.

"You know there was a patronage system and these people were only going to serve a short time," Coffee said. "That's why [they] get the stock upfront."

Financial disclosure statements that are required of U.S. House members show Emanuel made at least $320,000 from his time at Freddie Mac. Two years after leaving the firm, Emanuel reported an additional sale of Freddie Mac stock worth between $100,001 and $250,000. The document did not detail whether he profited from the sale.

Sarah Feinberg, a spokeswoman for Emanuel, said there was no conflict between his stint at Freddie Mac and Obama's vow to restore confidence in financial institutions and the executives who run them. At the same time, Feinberg said Emanuel now agrees that presidential appointees to the Freddie Mac board "are unnecessary and don't have long enough terms to make a difference."

Former President George W. Bush voluntarily stopped making such appointments following Falcon's assessment of their uselessness.

In an interview, Falcon said the Freddie Mac board did most of its work in committees. Yet proxy statements that detailed committee assignments showed none for Emanuel, Free or Ickes during the time they served in 2000 or 2001. Most other directors carried two committee assignments each.

Contrary to the proxy statements, Feinberg said she believed that Emanuel served on board committees that oversaw Freddie Mac's investment strategies and mortgage purchase activities. But Feinberg acknowledged she had no official documents to back up that assertion.

The Obama administration rejected a Tribune request under the Freedom of Information Act to review Freddie Mac board minutes and correspondence during Emanuel's time as a director. The documents, obtained by Falcon for his investigation, were "commercial information" exempt from disclosure, according to a lawyer for the Federal Housing Finance Agency.

Emanuel's board term expired in May 2001, and soon after he launched his Democratic congressional bid.

One of Emanuel's fellow directors at Freddie Mac was Neil Hartigan, the former Illinois attorney general. Hartigan said Emanuel's primary contribution was explaining to others on the board how to play the levers of power.

He was respected on the board for his understanding of "the dynamics of the legislative process and the executive branch at senior levels," Hartigan recalled. "I wouldn't say he was outspoken. What he was, was solid."

By the time Emanuel joined Freddie Mac, the company had begun to loosen lending standards and buy riskier sub-prime loans. It was a practice that later blew up and contributed to the current foreclosure crisis.

In his investigation, Falcon concluded that the board of directors on which Emanuel sat was so pliant that Freddie Mac's managers easily were able to massage company ledgers. They manipulated bookkeeping to smooth out volatility, perpetuating Freddie Mac's industry reputation as "Steady Freddie," a reliable producer of earnings growth. Wall Street liked what it saw, Freddie Mac's stock value soared and top executives collected their bonuses.

Another focus of Freddie during Emanuel's day—and one that played to his skill set—was a stepped-up effort to combat congressional demands for more regulation.

During a September 2000 board meeting—midway through Emanuel's 14-month term—Freddie Mac lobbyist R. Mitchell Delk laid out a strategy titled "Political Risk Management" aimed at influencing lawmakers and blunting pressure in Congress for more regulation. Through Delk's initiative, Freddie Mac sponsored more than 80 fundraisers that raised at least $1.7 million for congressional candidates despite a federal law that bans corporations from direct political activity.

Emanuel spokeswoman Sarah Feinberg said Emanuel "can't remember the meeting or topic" but might have been in attendance when Delk outlined his plans. Feinberg downplayed the significance of the fundraiser thrown for Emanuel, which brought in $7,000, stressing that it was but one of many hosted by Delk. The event stood out in at least one respect, however.

The Freddie Mac-linked events were mostly for Republicans, and only a handful benefited Democrats like Emanuel. "Rahm was a good friend of mine. He was on Freddie Mac's board. He was very much supportive of housing," said Delk, who resigned under pressure in 2004.

Then-Freddie Mac CEO Leland Brendsel also hosted a fundraising lunch for Emanuel's 2002 campaign that netted $9,500 from top company executives. Brendsel was later ousted in the accounting scandal.

Federal campaign records show that Emanuel received $25,000 from donors with ties to Freddie Mac in the 2002 campaign cycle, more than twice the amount collected that election by any other candidate for the U.S. House or Senate.

Emanuel joined the House in January 2003 and was named to the Financial Services Committee, where he also sat on the subcommittee that directly oversaw Freddie Mac. A few months later, Freddie Mac Chief Executive Officer Leland Brendsel was forced out, and the committee and subcommittee launched hearings to sort out the mess, spanning more than a year. Emanuel skipped every hearing, congressional records indicate.

Feinberg said Emanuel recused himself "from deliberations related to Freddie Mac to avoid even the appearance of favoritism, impropriety or a conflict of interest."



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Sources: Politico, Chicago Tribune, Fire Dog Lake, Americans For Tax Reform, MSNBC, Huffington Post, AP, House.gov, Youtube, Google Maps

Democrats Covered Up Fannie Mae, Freddie Mac Crisis?...Shocking!

How Democrats Created the Financial Crisis With Fannie Mac & Freddie Mac



The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Commission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.





Bail-Out Policy Killing FHA, Fannie Mae, and Freddie Mac


One of the key aspects of the futile effort to "rescue" the global monetary system, has been the effort to prop up the values of U.S. real estate by having the Federal government guarantee mortgages and mortgage-related securities. We warned, when Fannie Mae and Freddie Mac were taken over by the government last year, that they would be turned into bail-out facilities, and that the move would ultimately destroy them. Together, the two companies have already been given $96 billion in Federal funds, and now they need more.

Testifying before the Senate Banking Committee Thursday, Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said that Fannie Mae and Freddie Mac "likely will require additional draws" of Federal funds, and described their outlook as "troubled." The FHFA regulates Fannie and Freddie, which own or guarantee half of all U.S. residential mortgages.

Another victim of the bail-out scam is the Federal Housing Administration (FHA), an agency that insures mortgages. The FHA's loan-insurance volume has soared since the crisis began, with the agency insuring a fifth of all new mortgages issued in the first half of the year. In testimony prepared to be delivered to Congress tomorrow, former Fannie Mae executive Edward Pinto said that the FHA "appears destined for a taxpayer bail-out in the next 24 to 36 months," noting that it faced $54 billion more in losses than it had the funds to cover.

Reality is even worse than these dire statements suggest. The Federal government is desperately trying to prop up the value of real estate in the hope of saving the value of trillions of dollars of mortgage-related securities held by banks and other financial institutions, and has turned the FHA, Fannie Mae, and Freddie Mac into insurance mills which guarantee the inflated values of properties even as the market values of those properties continue to fall.

This is a scheme which is guaranteed to produce huge losses for the Federal government, and the taxpayers. On top of that, it will fail to save the fictitious values of all the mortgage-backed securities, CDOs, and related toxic waste, and thus fail to save the zombie financial institutions which hold that waste. It would be far better to put the whole mess through bankruptcy reorganization and turn our attention to rebuilding our productive base. Let the zombies die, so that we may save the living.

"Whoever would overthrow the liberty of the nation must begin by subduing the freeness of speech".
Benjamin Franklin 1706-1790...



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Sources: C-Span, Fox News, Politico, Bloomberg, AP, Youtube, Google Maps