Bush and McCain Tried to Increase The Regulation of Fannie and Freddie, But the Democrats in Congress Stopped Them

George Bush and John McCain tried repeatedly to reign in and regulate Fannie Mae and Freddie Mac, but the Democrats, who created and grew these Government sponsored agencies (“GSE’s”), stopped them each time. Under Clinton the GSE’s had been greatly expanding their loans to borrowers, who did not qualify for loans under normal lending standards. On September 30, 1999, The New York Times quoted Franklin Raines, Clinton’s appointee as CEO of Fannie, as saying, “’Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements.” The Times article went on to say, “In moving…into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.” “Fannie Mae Eases Credit to Aid Mortgage Lending,” The New York Times, 9/30/99, www.nytimes.com.

As a result of the Clinton era extension of risk at Fannie and Freddie, in 2003 and again in 2005, the Bush Administration introduced legislation to increase the regulatory oversight of Fannie and Freddie by increasing the review and control power of the Office of Federal Housing Enterprise Oversight over the GSE’s. On September 11, 2003, The New Times acknowledged Bush’s efforts by stating, “The Bush Administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.” John McCain was a co-sponsor of the ’05 legislation and stood up in the Senate and fought hard for its passage. The Democratic opposition was led by Senator Chris Dodd of Connecticut, first as the ranking Democrat on the Senate Banking Committee in’03 and in ’05 as the Chairman of the Committee, and by Barney Frank, in ’03 as the ranking Democrat on the House Financial Services Committee and in ’05 as its Chairman.

Fannie and Freddie donated millions of dollars to compliant members of Congress and various left-wing groups to make sure that no reform, or at least no meaningful reform, was enacted. “Saddest Thing About This Mess: Congress Had Chance To Stop It,” Investor’s Business Daily, 9/29/08, p. 1, www.ibdeditorials.com. Franklin Raines, Clinton’s appointee as CEO of Fannie stated in 1999, “’We manage our political risk with the same intensity that we manage our credit interest rate risk.’” Id. Since 1989, Dodd has received more campaign contributions from Fannie and Freddie than any other member of Congress. Frank came in 5th among Representatives and 16th overall. “Congress Lies Low To Avoid Bailout Blame,” Investor’s Business Daily, 1/19/08, www.ibdeditorials.com. This article, based on contributions from 1989 to 2008, also listed Barack Obama as third overall, but several more recent reports have said Obama had moved into second place in Fannie and Freddie campaign contributions, despite the fact that he has only been in the Senate less than four years. The Dodd and Frank efforts to block regulatory reform of Fannie and Freddie were backed up by most Democrats, including the entire Democratic Black Caucus. See, “Saving Our Economy: What’s Next,” on Fox News Channel, 10/5/08.

When will the liberal press get this story out?