Published by admin on 18 Sep 2008 at 01:47 pm
Democrats prevented Bush overhaul of Fannie and Freddie back in 2003 (NY Times)
HT: Hot Air
This is hot! And directly from a NY Times article published on September 11, 2003…President Bush wanted to tighten oversight for the two agencies but the Democrats wouldn’t hear of it.
Ouch! It’ll be interesting to see how Obama will spin this.
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
[...]
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Tags: Bush, democrats, Fannie Mae, Freddie Mac, George Bush, obama, overhaul of Fannie and Freddie, uh oh bama
Who's responsible for the Freddie/Fannie mess? The Democrats in Congress (FoxNews video embed) | DARK SKIES BLOG on 25 Sep 2008 at 12:11 pm #
[...] 2003 President Bush was prevented by the Democrats from overhauling Fannie and Freddie (see video embed here) and now we see that the same thing occurred in 2005 when Senate Republicans tried to correct the [...]
Larry Reavis on 25 Sep 2008 at 4:40 pm #
It’s interesting how you managed to leave out the other pertinent portion of the article………..
“The administration’s proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies’ exemptions from taxes and antifraud provisions of federal securities laws.“
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bluesman on 01 Oct 2008 at 9:28 am #
The truth is that Oxley (R., Ohio) pulled the bill before a vote because of opposition from the Bush Administration. The GOP had control of both houses of Congress in 2003.
Oxley pulls bill under fire from Bush
Squabble over powers of Treasury over Fannie, Freddie
By David Weidner, CBS.MarketWatch.com
Last update: 7:29 p.m. EDT Oct. 7, 2003NEW YORK (CBS.MW) — Strong opposition by the Bush administration forced a top Republican congressman to delay a vote on a bill that would create a new regulator for mortgage giants Fannie Mae and Freddie Mac.
The vote on Rep. Michael Oxley’s bill to reform oversight of government-sponsored entities including Fannie Mae and Freddie Mac was scheduled for Wednesday. Oxley, an Ohio Republican, is chairman of the House Financial Services Committee.
Oxley’s plan to reform oversight of the nation’s biggest home lenders “falls short of real reform,” a senior Treasury Department official said Tuesday in Washington.
Both Oxley and the administration support a proposal to remove regulatory oversight of the GSEs from the Department of Housing and Urban Development. Oxley’s bill would maintain HUD’s oversight of new products designed to encourage home ownership.
Assistant Treasury Secretary Wayne Abernathy, speaking before the Institute of International Bankers in New York, said the Treasury Department would not have enough power under Oxley’s proposal.
“The marketplace would be impressed,” Abernathy said. “But the players in the markets are too sophisticated to be misled by such leisure.”
Reforms are being considered because of recent accounting problems at Freddie Mac (FREFreddie Mac
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FRE) . The mortgage company is expected to restate more than $4 billion in past earnings. The new regulator would also oversee Fannie Mae (FNMFannie Mae
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The bill drafted by Oxley would limit the Treasury’s role in new product regulation. The Treasury Department would be focused on overseeing financial safety and soundness. Everything else would fall under the watch of HUD.
Treasury Secretary John Snow suggested on Sept. 10 that HUD be given the power to set and enforce affordable housing goals for the two government-sponsored companies and the Treasury would have new authority to review and approve new products and activities.
Another problem with the committee plan, Abernathy said, was that moving regulatory functions under Treasury would reinforce the false impression that the government would make good any losses suffered by Fannie and Freddie.
While they have no federal guarantee against losses, Fannie and Freddie have federal charters that provide access to below-market borrowing. And the perception in the market is widespread that Fannie and Freddie would be bailed out by Washington.
Abernathy said the new regulator would have “a burden to demonstrate how it can overcome the view that the government will stand behind the obligations.”
An alternate plan might have the new regulator separate from both HUD and the Treasury, not unlike the Federal Reserve and the Federal Trade Commission, Abernathy said.
David Weidner covers Wall Street for CBS MarketWatch.com. Washington-based reporters Corbett Daly and Rex Nutting contributed to this report.
David Zeckser on 02 Oct 2008 at 9:03 pm #
It is so obvious that Liberals like Barney Frank and Barrack Obama did not want a reform of Fannie May and Freddie Mac because that would restrict the utilization of the CRA as well as the efforts of Acorn and other such groups bent on suing banks to force them to lend to home buyers who could not afford the property.