“Mr. Raines Returns to Washington….”

[STORY RESTORED . COMMENTS ARE AT THE END OF THE STORY. Go ahead and add new comments as you normally would. Thank you - nasuS]

In the midst of the economic turmoil, the Obama transition, the “rescue” of the domestic auto industry, and the Blagojevich fiasco, the biggest story of all in terms of “$$$” is getting limited coverage in the media, but not here at NQ!!

The core of the global economic meltdown is centered on our domestic housing market and the core of that market is centered on Freddie Mac and Fannie Mae.

It is a shame that the Congressional hearing of the four senior executives (Richard Syron and Leland Brendsel of Freddie Mac and Daniel Mudd and Franklin Raines of Fannie Mae) is not front and center on every media outlet in our country.

It is also a shame that the respective heads of the Congressional Banking Committees are not heavily involved in these hearings. Those individuals, Barney Frank and Chris Dodd, along with their colleague, Chuck Schumer should not only be compelled to question these executives, but they themselves should be compelled to be questioned by their colleagues.

Read here as to how “Fannie, Freddie Executives Knew of Risks….”   The fact that the executives “generally dodged demands by committee members that they accept blame for those problems” is the height of shamelessness and hypocrisy.

How I wish that we had real statesmen in Washington who had the courage to question these individuals on the following points, which were highlighted here at NQ on October 16 in a piece entitled “A Wall St. Insider’s View of Freddie/Fannie.”

1. The lobbying power exerted by Freddie and Fannie. Who received how much money???!!!
2. The growth of Freddie/Fannie business model via the massively levered internal “hedge fund” portfolios.
3. How Senator Richard Baker (R-LA) and the editorial page of the WSJ railed against the business model and escalating risks at Freddie and Fannie starting in the late ’90s.
4. How FM Watch, a consortium of Wall St. banks, lobbied unsuccessfully in the early part of this decade against the growth of Freddie/Fannie funded by implicitly guaranteed government debt.
5. How independent and extensive research highlighted that the benefit of the Freddie/Fannie model was a whopping 3 to 4 basis points for the American homeowner.
6. Why did not one single Democrat vote in committee to support the Baker/McCain legislation to reform Freddie/Fannie in 2003?   Feel free to reread that piece if you’d like.

I commend Rep Darrell Issa (R-CA) and Rep Carolyn Maloney (D_NY) for carrying the torch as best they could in the midst of the parrying by the aforementioned shameless execs.

Do we have any other leaders or statesmen who are willing to ask the tough questions and demand answers. The American public and American taxpayers deserve so much better! — LD

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Comment by gregoryp | 2008-12-12 13:54:44 | Edit This
What I want to know is why can’t Congress just seize the personal assets of these people? Seems only fair to me. Same with Haliburton. Seize the money and get it back. It wasn’t theirs to start with as they defrauded the government, their shareholders and their clients to get it. All I ask is that we get our money back and Raines and co. don’t ride off into the sunset with the GNP of an entire nation in their back pockets as traveling money.
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Comment by tek | 2008-12-12 13:57:09 | Edit This
That’s my stand on it. And why shouldn’t government officials who didn’t do their jobs and maintain regulations and standards and over sight be dismissed, tried, and their fortunes forfeit to the People? You’d see some of these politicians shaping up big time if they could be prosecuted and punished.
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Comment by motorcitymadmen | 2008-12-12 14:11:17 | Edit This
I’m not sure it’s worth anything, anymore.
The January Vanity Fair has an article about Wall Street and the loss some of the high flyers took, the totality of their assets pretty much on paper, and now, wiped out.
One example was of a broker worth about 8 million on paper, taking a loan for 2 million, on a house, based on that paper, then Lehman failing, and the broker losing everything — but still owing the 2 million, with no way to pay it back.
Paper millionaires losing the paper, hence, the millions.
Same for many of those in Raines class, though, of course, they’re still left with something, they did take substantial hits, with more to come, I think, until the economy is stabilized again —
which will not happen under Obama, unprepared and unqualified to be President.
The rich people who put him there, IMO, who bought this election for him, deserve what they get —
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Comment by jbjd | 2008-12-12 14:17:58 | Edit This
Visit your Congressperson’s local district office and propose this idea. And get a dozen or so of your friends and neighbors to join you.
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Comment by Murray | 2008-12-12 15:22:24 | Edit This
GregoryP – My thoughts exactly, thank you.
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Comment by AF catfish | 2008-12-12 15:25:37 | Edit This
Fannie and Freddie should be totally seized, they have socialized risk and privatized profits.
Some wanted to seize more of the mortgages (Hillary AND McCain!) but recall Kucinich alerted us before the bailout vote in October, Obama had all homeowner provisions removed from the bill before a vote.
What are the chances some Wall Street guys ‘Bam played basketball with at Harvard Law rang up the candidate and asked him for this favor? ‘Bam want them to think he was on their side? “Oh he’s a good guy. I played basketball with him at Harvard Law.” Look for that quip in the next four years.
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Comment by tek | 2008-12-12 13:58:05 | Edit This
GNP of an entire nation in their back pockets–LOL!
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Comment by felizarte | 2008-12-12 14:08:32 | Edit This
It would seem that the government, in collusion with segments in our society with vested interests in perpetuating the corrupt system, are still continuing to figure out means to siphon off taxpayer resources to satisfy their own greed.
It would also seem that the ‘change’ sold to the people is really a change from bad to worse and worst.
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Comment by AF catfish | 2008-12-12 15:27:38 | Edit This
That’s been going on since forever. Seriously, war profiteers existed before Ike’s “military-industrial complex” speech.
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Comment by AF catfish | 2008-12-12 14:14:39 | Edit This
Note to NOQuarter: when users click to comment on a diary, your site’s bgcolor changes to black. It’s very hard to read!
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Comment by Northwest rain | 2008-12-12 16:43:57 | Edit This
When I clicked on the “read more” — this page came up with the black background. It was a struggle to read LD’s excellent article with the black background.
The comments section is using the normal/usual background.
Must be another wordpress glitch.
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Comment by felizarte | 2008-12-12 14:14:58 | Edit This
It would seem that the ‘change’ sold to the people is really a change from bad to worse and worst.
It would seem that the government, in collusion with the media, giant corporate entities segments in our society with vested interests in perpetuating the corrupt system, are still continuing to figure out means to siphon off taxpayer resources to satisfy their own greed. Their idea of solving problems is always to choose the most complicated and expensive.
Imagine the impact of 700 billion given directly to consumers to spend and pay-off delinquent accounts. It would put the money back into the businesses and financial institutions strapped for cash.
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Comment by jbjd | 2008-12-12 14:20:39 | Edit This
That’s an idea going around; and very good one. Instead of $700b to the same people who ran the delinquent GSE’s into the ground; the Treasury should issue a check for $40,000 to every citizen in the country over the age of 18. That’s 200,000,000 of us. Stimulate the economy, anyone?
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Comment by Chris | 2008-12-12 16:33:31 | Edit This
Good idea but you know it makes too much sense. The hirees in Congress left their common sense at the door after they got elected. That money would enter the economy in a hurry if they would do it. Paying down debt, new mortgages, refis, starting new businesses etc. and just plain old fun spending on goods and services. If they lowered business taxes and took out capital gains then we’d have a smokin’ run going on. I vote yes!
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Comment by felizarte | 2008-12-12 14:22:23 | Edit This
David Brooks has a relevant piece in the New York Times: The Ambassador
http://www.nytimes.com/2008/12/12/opinion/12brooks.html?_r=1
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Comment by AF catfish | 2008-12-12 15:45:25 | Edit This
Good tip, worth the read.
And this leads, sad to say, to the third layer of emotion: anxiety. Many of those swept up in the excitement of this historical moment also have the nagging sensation that perhaps the laws of gravity, economics and history have not been repealed. Perhaps Mr. Obama’s talents, while great, are not as great as his self-confidence. Perhaps the New Deal paradigm everybody is applying doesn’t actually fit the circumstances. Certainly something big needs to be done to calm this crisis, but perhaps in the doing, some unholiness is being unwittingly and rashly created.
Why is it, some ask, that America is so slavishly following the same failed route earlier taken by the Japanese — from bank capitalization, to industrial bailouts to infrastructure spending? Why is it that the pork-meisters in Congress are already distorting the best-laid stimulus plans? Why are there so few saying “no” to any budget request? Why do so many of the plans being offered rely upon a Magic Technocrat — an all-knowing Car Czar who can reorganize Detroit, an all-seeing team of Olympians who decide which medicines doctors will be allowed to prescribe?
Chilling. Sometimes Brooks is spot on.
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Comment by AF catfish | 2008-12-12 14:27:31 | Edit This
Slightly off-topic, but look at this friggin revisionist history happening right under our eyes!!
WaPo today: Obama-the-saintly emerged squeaky clean from the cesspool of Chicago!
The president-elect’s connection to Blagojevich is emblematic of his political rise in Chicago. Obama had contact with corruption, but rarely firsthand. He relied on the establishment when he needed it, but he maintained enough distance to cast himself as an outsider.
“Few people I’ve ever known have as good a sense about who might end up getting you in trouble,” said Denny Jacobs, a retired Illinois politician from East Moline who befriended Obama when they both served in the state Senate. “It’s like a sixth sense. Chicago’s a mess, and he was surrounded by it. But he knew the people that could drag you down and tarnish your image.”
CAN WE PUKE NOW? JUST A FEW MONTHS AGO … IT WAS SO DIFFERENT
Chi Sun-Times, March:
Is Rezko still a friend?
“Yes,” Obama said, “with the caveat if it turns out the allegations are true, then he’s not who I thought he was, and I’d be very disappointed with that.”
And it’s that friendship, Obama said, that probably kept him from realizing it was a mistake to enter into a real estate deal with Rezko.
“Probably because I’d known him for a long time, and he’d acted in an aboveboard manner with me,” he said. “And I considered him a friend. … It’s further evidence that I’m not perfect.”
Newsweek, March:
The alleged crimes probably wouldn’t have gotten much attention outside the clannish world of Chicago politics, except for one detail: Rezko is an old friend and onetime financial backer of Barack Obama.
Obama is not implicated in Rezko’s alleged illegal activities. But the candidate’s name could surface in the trial, and the murky relationship between the two men—especially Rezko’s part in Obama’s purchase of a house—has become an issue in the campaign.
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Comment by jjsmoof | 2008-12-12 14:40:46 | Edit This
I know. On the local news the squawking heads were saying obie is clean because blago and he don’t even like each other and haven’t for the past few years. How these people keep a straight face when they say sh*t like this is beyond me.
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Comment by kat in your hat | 2008-12-12 15:27:51 | Edit This
Thank you for writing this. This has been an ongoing complaint of mine. This is and has been very big news.
Can’t believe it just gets swept under the rug everywhere else.
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Comment by AF catfish | 2008-12-12 15:34:57 | Edit This
Admittedly, there’s a lot of very big news going on. But yes, it’s a very “teachable moment” to highlight the socialized risk/privatized profit of Fannie and Freddie.
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Comment by LD | 2008-12-12 15:41:04 | Edit This
Get the “real news” at NQ!! Thanks for the plug.
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Comment by kat in your hat | 2008-12-12 15:29:58 | Edit This
(no quarter blog is showing up as the color black for me…happened a few times today–hyperlinks still pop as blue.)
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