Selective Liberal Outrage: Fannie’s $210 Million In Bonuses A-OK

Boy, do you remember all the meltdown over the $165 million AIG bonuses?  Remember all the Democrats climbing all over each other to win the coveted title of “most outraged”?  Remember how they passed that unconstitutional law to specifically target the AIG employees receiving bonuses by singling them out to punish them with a 90% tax?  Remember Barney Frank claiming on the floor of the House of Representatives that Republicans who opposed this completely unconstitutional Bill of Attainder somehow suffered from a “psychological disorder”?

The funny thing was that Democrats – who came so unglued over the AIG bonuses – eventually were found out to be the very ones who had forced it into the stimulus package that Republicans didn’t even get to READ, let alone write any part of.  Democrat Chris Dodd as the Chairman of the Senate Banking Committee inserted the special language protecting AIG’s bonuses at the specific request of Barack Obama’s Treasury Department.

The fact that Democrats had been caught red-handed with their hands in the “outrageous political patronage” jar didn’t stop them from blaming everybody but themselves for the AIG bonuses.

Now, all that having been said, where’s the outrage over the even LARGER bonuses being handed out to Fannie Mae and Freddie Mac execs?

Mortgage finance giants Fannie Mae and Freddie Mac plan to pay more than $210 million in bonuses through next year to give workers the incentive to stay in their jobs at the government-controlled companies.

Certainly some Republicans are outraged:

“It’s hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year,” Grassley said in a statement. “It’s an insult that the bonuses were made with an infusion of cash from taxpayers.”

But where’s the frothing-at-the-mouth mainstream media?  Does the fact that AIG was a government-bailed-out private business, whereas Fannie and Freddie are government-sponsored quasi-public/private liberal entities (i.e., the losses are public, the profits are private) have anything to do with it?

Fannie Mae and Freddie Mac – the nexus of the financial meltdown – is a liberal bastion, filled to the gills with Democrats.  Recently the Fannie Mae CEO told THE most liberal group of Democrats – the Congressional Black Caucus – that they were “family” and the “conscience” of Fannie Mae.  Kind of like when Congressional Black Caucus member Bobby Rush met with communist dictator Fidel Castro and said, “It was kind of like listening to an old friend.”  And of course don’t think for a second that Fidel didn’t gush over his fellow communist dictator, Barack Obama.

Which is why Democrats such as Barney Frank were so utterly determined to prevent Fannie Mae and Freddie Mac from being regulated (which is why I get so crazy when I hear Frank claim that Republicans refused to regulate).

We can go back to 9/11/2003 to find Barney Frank and Congressional Black Caucus Democrats REFUSING and BLOCKING any regulation of Fannie and Freddie.  Frank said then:

”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.”

[Congressional Black Caucus member] 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.

And JUST BEFORE Fannie and Freddie were seized by federal authorities after its stock had collapsed more than 90% under the oversight of Barney Frank’s House Financial Services Committee chairmanship, Barney Frank was still assuring the American people that everything was fine:

REP. BARNEY FRANK, D-MASS.: I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They’re not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.

What was the uberliberal Fannie and Freddie culture that Democrats worked so hard to protect like?  An Associated Press story has something to say:

“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.

Don’t think that Fannie and Freddie were to blame for the colossal financial crisis?  Peter Wallison predicted it in 1999 in a New York Times article, saying of Fannie Mae’s enormous financial exposure and risky policies:

”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.” . . .

And all the buckets in the world can’t bail the mortgage industry out now.

We have the germ of the financial meltdown in a nutshell, as described in a single paragraph of the Los Angeles Times from May 31, 1999:

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more. . . . .

Bundled mortgage securities?  Now why does that sound familiar?

The ability to create mortgage-backed securities was authorized by the 1968 Charter Act which created Fannie Mae.

From the government’s own lips on the origin and source of mortgage-backed securities:

Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. The entity then issues securities that represent claims on the principal and interest payments made by borrowers on the loans in the pool, a process known as securitization.

Most MBSs are issued by the Government National Mortgage Association (Ginnie Mae), a U.S. government agency, or the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), U.S. government-sponsored enterprises.

And on how these bundled mortgage securities blew up our economy:

Most U.S. mortgages are tied to global investment markets on Wall Street, where investment banks bundle them up and convert them into securities. These mortgage backed securities (MBS) are in turn sold to private and government institutions both in the U.S. and abroad. With the rise in mortgage defaults, a wave of financial loss has spread worldwide.

As the value of these assets decline, investors are demanding steep discounts on mortgage investments (their discount = our cost) or are staying away from mortgages altogether. With no one to sell to, lenders can’t free up their credit lines and take on new loans. As a result, over 100-mortage companies have shut down ‘ and thousands of homeowners and home buyers have been left with no way to finance their transactions.

Now, this vicious cycle has begun to hurt home values as fewer buyers can qualify and sellers are forced to lower their prices. As we are seeing, this slow-down poses plenty of danger to real estate equity here in the U.S. and global investment fortunes the world over.

And for a personal story of abuse and the spreading of misery to YOUR neighborhood:

There were unfamiliar names, too: Mortgage Pass Through Certificates M Series 2006 HE2, the kind of mortgage-backed security that still poisons many banks’ balance sheets. The certificates bundled hundreds of mortgages, the monthly payments on which were to flow through to investors, mainly banks. Among those mortgages was one to a Chesterfield truck driver, now in his third bankruptcy.

Oh, THAT’S why “mortgage backed securities” sounds so familiar.  Thanks for being the vessel that sent the torpedo blasting through the bow of our economy, Democrat-controlled Fannie Mae and Freddie Mac.

The entire financial collapse was created by government attempting to subsidize the mortgages of poor minorities by “bundling” them together with financially stable mortgages in order to spread out (and conceal) the risk.  The moment the housing market took any kind of a downturn, the mortgage-backed securities would become like a depth charge exploded directly under the exposed under-belly of the U.S. economy.

Thank you, Fannie Mae and Freddie Mac.  Thank you, Democrats.  Thank you, Barney Frank.

Russel Roberts described more fully what Wallison predicted armed with the superior vision of hindsight in an October 2008 Wall Street Journal article: liberal government social policies, combined with Fannie and Freddie’s complicity, both created and burst the housing bubble.

Republicans tried repeatedly to regulate these GSEs (Government Sponsored Enterprises), which implemented all of these disastrous liberal policies, but they were blocked at every turn by Democrats determined to keep their fiefdom, and determined to continue imposing the risky policies and programs that Fannie and Freddie in turn imposed upon the mortgage market.  One Youtube video makes this as clear as crystal.

And then when it all blew up, Democrats did what they do best: they blamed Republicans, and counted on the propaganda-machine otherwise known as the mainstream media to repeatedly broadcast their charges against Republicans while covering up their own crucial role in the disaster.

A Harvard law student named Joel Pollak confronted Barney Frank with the question as to whether Frank and Democrats – who blamed and demonized Republicans for the whole financial disaster of 2008 – had borne any responsibility themselves.  Frank frankly went nuts on the young man, and for all his yelling and accusing never did get around to answering his simple question.

At one point Frank asked, “I’m still waiting for you to tell me what you think I should have done.”  I sure wish I could have grabbed the microphone and started reading Frank’s own statements protecting Fannie and Freddie back to him, and said, “to begin with, you could have stood up for the American people instead of standing up for your Democrat special interests and your liberal ideology!  You could have allowed Republicans to regulate Fannie and Freddie when regulation would have actually done some good instead of blocking that regulation and then lying about Republicans failing to regulate!  You could have played a role in protecting the American economy instead of helping to destroy it, you @#%*&#%!”

I found dozens of forums and bloggers asking the question that I’m asking: After all the media coverage of the outrage surrounding AIG bonuses, “where’s the outrage now?”  The answer is, “It’s in the cans of the propagandists in the mainstream media, waiting to be opened up the next time it can be used to benefit liberals.”

One Response to “Selective Liberal Outrage: Fannie’s $210 Million In Bonuses A-OK”

  1. ARESAY Says:

    The mainstream media wouldn’t do it. So we are trying to get your important messages to the American people. This post is a suggested read at, http://aresay.blogspot.com/ 2

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: