Financial Crisis: Obama Democrats Have Red Ink All Over Them

Whether Franklin Raines is an Obama adviser or not is a rather entertaining question.  He sure seemed to be one until not very long ago:

Raines was an Obama adviser on July 16, when The Washington Post reported:

“In the four years since he stepped down as Fannie Mae’s chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case’s D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.”

And Raines was still an Obama adviser on August 28, when The Washington Post said:

In the current crisis, their biggest backers have been Democrats such as Senate Banking Committee Chairman Christopher J. Dodd (Conn.) and House Financial Services Committee Chairman Barney Frank (Mass.). Two members of Mr. Obama’s political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.

In fact, Raines was still an Obama adviser as of September 18, when a Baltimore Sun blogger cited a Wikipedia article as follows:

“Franklin Delano Raines (born January 14, 1949 in Seattle, Washington) is the former chairman and chief executive officer of Fannie Mae who served as White House budget director under President Bill Clinton. He is currently employed by Barack Obama’s Presidential Campaign as an economic adviser.”

But that last sentence has been scrubbed from Wikipedia within the last two days, and all of a sudden Franklin Raines somehow isn’t an Obama adviser anymore.  It’s almost like when Barack Obama said of Jeremiah Wright, “I can no more disown him than I can disown the black community. I can no more disown him than I can my white grandmother — a woman who helped raise me…”, until, you know, he denounced him.

But when Barack Obama denounces something, all mention of it as being in any way associated with him somehow gets purged – even if that relationship lasted 23 years.  Now when it comes to the McCain denunciation of Franklin Raines as an Obama adviser, The Washington Post faults McCain for relying on…the Washington Post.

McCain spokesman Brian Rogers noted that Obama didn’t contradict the claim when it first appeared in the Post (MORE THAN TWO MONTHS AGO!!!).  But that doesn’t seem to matter.  What matters is that Franklin Raines is black, and therefore McCain is a racist for connecting Obama and Raines.  Apparently, the card deck of Barack Obama, “new politician” of “hope” and “change,” contains a whole bunch of race cards.

But, try as he might to distance himself from his erstwhile adviser, what Barack Obama CAN’T do is deny that Franklin Raines is a DEMOCRAT.  A Democrat who dredges up all sorts of bad mojo for Democrats as they try to frantically scrub their hands of all the red ink and all the corruption that took place during Franklin Raines’ tenure at Fannie Mae.

It reminds us of the October 7, 2004 Los Angeles Times story that appeared titled, “Ex-Fannie Mae Accountant Says CEO Knew of Concerns“:

The former Fannie Mae accountant who raised questions about the mortgage giant’s bookkeeping said Wednesday that he took his concerns directly to Chief Executive Franklin Raines in 2002 and asked him to investigate.

The disclosure by Roger Barnes, who left Fannie Mae in October 2003, came as Raines and Chief Financial Officer Timothy Howard defended the company’s accounting and told Congress that regulators’ allegations of earnings manipulation represented an interpretation of complex rules.

At a House subcommittee hearing, Raines and Howard testified under oath in their first public appearance since news surfaced Sept. 22 about the allegations and a Securities and Exchange Commission inquiry into government-sponsored Fannie Mae. Lawmakers questioned them closely about an instance in 1998 in which accounting rules were said to have been deliberately violated so that top executives could collect full bonuses.

This is a very serious allegation, and I deny that it occurred,” Raines testified.

The thing is, it DID occur, and much worse.  And it was discovered that Raines had manipulated accounting practices so that senior executives could make millions in bonuses:

WASHINGTON (AP) — Employees at mortgage giant Fannie Mae manipulated accounting so that executives could collect millions in bonuses as senior management deceived investors and stonewalled regulators at a company whose prestigious image was phony, a federal agency charged Tuesday.

The blistering report by the Office of Federal Housing Enterprise Oversight, the product of an extensive three-year investigation, was issued as the government-sponsored company struggles to emerge from an $11 billion accounting scandal.

Earlier, a person familiar with the situation said that Fannie Mae was being fined between $300 million and $500 million for the alleged manipulation of accounting to facilitate executives’ bonuses, in a settlement with the housing oversight agency.

“The image of Fannie Mae as one of the lowest-risk and ‘best in class’ institutions was a facade,” James B. Lockhart, the acting director of OFHEO, said in a statement as the report was released. “Our examination found an environment where the ends justified the means. Senior management manipulated accounting, reaped maximum, undeserved bonuses, and prevented the rest of the world from knowing.”

The report also faulted Fannie Mae’s board of directors for failing to exercise its oversight responsibilities and failing to discover “a wide variety of unsafe and unsound practices” at the largest buyer and guarantor of home mortgages in the country.

The OFHEO review, involving nearly 8 million pages of documents, details what the agency calls an arrogant and unethical corporate culture. From 1998 to mid-2004, the smooth growth in profits and precisely-hit earnings targets each quarter reported by Fannie Mae were “illusions” deliberately created by senior management using faulty accounting, the report says.

The accounting manipulation tied to executives’ bonuses occurred from 1998 to 2004, according to the report, a much longer period than was previously known.

Lest any not know it, Franklin Raines was a Clinton appointee.

A Wikipedia article (we’ll see how soon it takes to purge it!) talking about the Clinton years is extremely informative in the current ruinous aftermath:

The Clinton Administration’s regulatory revisions [1] with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. [2] The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent. [3] [4]

Bill Clinton walks off the stage as the conquering hero in the mythical narrative of the liberal media, but IT WAS THESE VERY LOANS BY THESE VERY LENDERS THAT RESULTED IN THE DISASTER WE ARE NOW SUFFERING.

President Bush tried to reform Fannie Mae, Freddie Mac, and the entire housing finance industry before it was too late:

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By STEPHEN LABATON
Published: September 11, 2003

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.

But his effort to reform the housing finance industry by reforming Fannie Mae and Freddie Mac was blockedBY DEMOCRATS.

The same New York Times article cited above, dated September 11, 2003 (yet another 9/11 that Democrats caused, and Republicans took the blame for ) ends with these words:

Significant details must still be worked out before Congress can approve a bill. 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.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

Barney Frank – the same liberal doofus who said that Fannie Mae and Freddie Mac were fine and not facing any kind of financial crisis – is still around, and still in charge of the Financial Services Committee.

Mel Watts, the race-card playing liberal who opposed reform of Fannie Mae and Freddie Mac on the grounds that it would prevent poor blacks from getting home loans, is also still around.

And though Barack Obama may be able to distance himself from Franklin Raines – however falsely – he can’t distance himself from another prominent “adviser” – Jim Johnson.  Johnson was briefly appointed to head Obama’s vice presidential selection committee until it was discovered that he had benefited from sweetheart Countrywide loans.  And Johnson was another Fannie Mae CEO who was Franklin Raines’ predecessor at Fannie Mae.  He joins a long list of Clinton Democrats who “served” at Fannie Mae and Freddie Mac and walked away with millions.  Jim Johnson also sits on the board at Goldman Sachs, a company that was also massively invested in subprime loans but managed to sell them short and preserve itself.

And Obama is personally up to his eyeballs in the housing finance collapse in other ways, as well.  Obama is second on the list of Fannie Mae and Freddie Mac campaign money recipients only after fellow Democrat Chris Dodd; and he is second on the list of Lehman Bros’ campaign money recipients only after fellow Democrat Hillary Clinton.  Is it any wonder he would appoint Penny Pritzker – who was at the very epicenter of what would come to be the biggest financial scandal in American history, and who paid a $460 million fine to bribe her way out of jail – as his national campaign finance chair.  He also named Joe Biden as his Vice Presidential nominee, in spite of the fact that Biden championed the very bill that many experts and at least two studies attribute to creating the mess that caused hundreds of thousands of Americans to lose their homes and precipitated much of the ensuing financial market meltdown.

Now allow me to provide the contrast between Obama – who is tied by both party and by big money contributions to his political career – with John McCain.  The previously quoted Washington Post says:

This is not an easy one for the Illinois senator because of the companies’ close ties to his party. To be sure, both Republican and Democratic politicos have held well-paid positions in the two firms or have partaken of the tens of millions that they spend on lobbying. But a few Republicans, such as Mr. McCain and Sen. Richard C. Shelby (Ala.), who has been chairman and ranking Republican on the Senate Banking Committee, have taken them on over the years, warning about their use of an implicit government guarantee to pursue private profits. Meanwhile, Democrats were not only politically but intellectually committed to the companies, seeing them as innovative public-private institutions that have been a boon to home ownership. In the current crisis, their biggest backers have been Democrats such as Senate Banking Committee Chairman Christopher J. Dodd (Conn.) and House Financial Services Committee Chairman Barney Frank (Mass.). Two members of Mr. Obama’s political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.

John McCain fought hard to pass regulations that would control Fannie Mae and Freddie Mac back in May 25, 2006.  But again the measure was killed by Democratic opposition.  Hot Air takes up McCain’s efforts and who killed them:

In this speech, McCain managed to predict the entire collapse that has forced the government to eat Fannie Mae and Freddie Mac, along with Bear Stearns and AIG.  He hammers the falsification of financial records to benefit executives, including Franklin Raines and Jim Johnson, both of whom have worked as advisers to Barack Obama this year.  McCain also noted the power of their lobbying efforts to forestall oversight over their business practices.  He finishes with the warning that proved all too prescient over the past few days and weeks.

John McCain fought in vain to prevent the collapse of the housing finance market, and would have succeeded had it not been for utterly determined Democratic opposition.  Barack Obama, for his part, led the lists of campaign contribution recipients from both Fannie and Freddie and from disgraced and belly-up Lehman Bros.

There are only 43 days left in this election.  That is not very long for the American people to realize that they are being lied to by the very people and the very party that caused the disaster that has so angered the electorate.

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7 Responses to “Financial Crisis: Obama Democrats Have Red Ink All Over Them”

  1. Old but not Stupid GA Says:

    This article not only tells us there is a problem in the Financial Markets [we all know the unpleasant fact by now] but it actually tells us it has been coming a long time. It also tells us who is responsible, who benefited most and who protected and still protect the sleaze balls responsible for it. And way I read it the Man, the Messiah, He who cares more than anyone else for the poor amongst us He the Chosen One is up to his eyeballs in the sleaze. Seems to me Obama and his pals should be under criminal investigation.

  2. Michael Eden Says:

    That’s the thing. People are being told the simplistic story that Bush was President, therefore it is Republicans’ faults. The real genesis of this fiasco took place during the Clinton years. And the real motivation was to give poor minorities home loans – even if they couldn’t pay the loans back. You couple that with the fact that Fannie Mae and Freddie Mac loans were guaranteed by the government, and you’ve got a real disaster in the making.

    Republicans TWICE tried and failed to regulate the housing financial market.

    And no politician took more money from this broken system than Barack Obama. Presumably, they got something for their money.

  3. Lone voice with Michael Says:

    Your article is well researched and documented without the mumbo jumbo dished out by other News Agencies. It presents a sound analysis of the real problem and points the finger at the origin of the unholy mess.

    I am against blanket regulation as much as I am against Obama’s “solution” as he proposed in a FoxNews article “to give the Feds a broad authority” to bail the crooks out. McCain acted wisely to support the Fed to save AIG for the sake of the small man but that’s where it should stop. The crooks in Wall Street must be prosecuted together with any House Representative or Senator [doesn’t matter what Party affiliation] who protects the crooks. If found guilty send them to prison for as long as possible and strip them of the assets that they acquired while having their hands in the till. Sounds harsh? Yeah, but it is not nearly as harsh as reality will be to the ordinary citizen if you don’t stop the rot.

    Keep scratching in the same place Michael. You are right at the root cause.

  4. Just one more point please! Says:

    All you Small-Town country folks clinging to your guns and religion must not start queuing to emigrate. It won’t help because the current financial turmoil is not unique to America right now. Whatever the Messiah is telling you is just rhetoric. The whole world out there is going through the same thing with one difference only. They are not forced to cope with a young upstart blaming all woes including the ingrown toenails of the family poodle on President Bush. Ignore Obama. He’s just wind; knuckle down, bite the bullet and work harder, yes. But ignore hot wind; there is a problem yes, but hot wind doesn’t solve problems.

    America still feeds her own people and half of the World [they are dying of hunger in Africa again and America must comply] and there is still gasoline at the pumps [some countries don’t have any] so say thank you for a tank full to President Bush. He has done an outstanding job given the hand he was dealt to start with.

  5. Michael Eden Says:

    There are two things that I think are quite clear:

    1) We are at a point in which a catastrophic economic disaster of global proportions is literally a single mouse-click away. This is now just as true for the economy as it is for launching a nuke. In this sense, the world is scarier than ever before.

    2) In large part, I feel that the economic disaster – which was years in the making (getting us to the ‘mouse click’ point) – was created by Democrats getting their way in some things over Republican attempts to block it; followed by Republicans getting their way in other things over Democrat attempts to block it. The resulting hodge podge was inherently flawed. Then you add greed and stupidity to the mix, and you get something more “flammable” than rocket fuel.

    I write as a conservative – one who is outraged by the blame-game and the finger-pointing by some of the very people who contributed to the disaster. But that doesn’t mean I can’t see clearly.

    One of our biggest problems was creating quasi-public-private entities like Fannie and Freddie that are too big to be allowed to fail, which promoted terrible loans in the name of giving the poor access to mortgages and then guaranteed those same loans with the power of government backing. That’s what happened. And then the big boys like AIG and Lehmans Bros. bought the bundled products.

    Greed permeates the whole thing, just like when an investor becomes convinced that he’ll get some enormous rate of return by investing something that goes against the standard way of doing business.

    The saddest reality of all is that – in order to “save” us from the crisis – we are going to make the whole thing even bigger and even more globalized.

    The cure will ultimately prove to be worse than the disease. We are literally solving a problem of becoming too big and too socialized by becoming bigger and more socialized.

  6. JOANNE MCGILL Says:

    THIS IS OUTRAGOUS TO THINK THESE SO CALLED AMERICANS WENT TO FOREIGN COUNTRIES TO SET UP A DEMOCRACY FOR THE PEOPLE, WHILE PLANNING TO OVER TAKE UNITED STATES, SCREW THEM ALL , AND JOHN MCCAIN MUST STAND UP FOR THE CONSERVATIVES, HE IS RUNNING ON OUR TICKET AND BELIEFS, WHAT I WORKED FOR ALL MY LIFE, AND PAID FOR THROUGH THE NOSE IS HANDED DOWN TO MY CHILDREN AND GENERATIONS TO COME,THEY HAVE PAID THEIR WAY THROUGH THE EDUCATION FIELD, NO HELP FROM GOV. ARE WORKING FOR THEIR WELFARE AND THEIR CHILDREN’S, SERVED IN THE MILITARY , AND NOW YOU WANT THEM TO GIVE ALL THEY WORK FOR TO THE LAZY! WE WILL FIGHT, YOU THINK YOU CAN TAKE US DOWN WITH OUT A GUN FIRED, YOU ARE WRONG, WE WANT WHAT WE BUILT UP OUR COUNTRY TO BE, WE WELCOME FORIEGNERS IN ONLY IF THEY WORK THEIR WAY THRU, AS WE DID NO HANDOUTS FOR US AND NO HAND OUTS FOR THEM, IF THEY DON’T INTEND TO LIVE BY OUR CONSTITUTION, GOODBY, AND AS FAR AS THE CROCKS IN THE GOVERNMENT, DEFACING OUR COUNTRY’S STANDING IN THE WORLD, THROW THEM OUT AND CHARGE THEM WITH THEFT, NOT JUST FIRING THEM

  7. Michael Eden Says:

    We are about to decide whether ‘USA’ stands for United States of America or United Socialist America. Sounds like you and I are in the former group.

    I worry greatly for the next generation for precisely the reasons you give.

    A lot of young people want Obama; what they don’t realize is that the government he envisions will consume debts NOW that they will never be able to hope to repay. They are literally voting to starve later so they can feast now.

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