State Department Transition Advisor Was Former Fannie Mae Lobbiest

Thomas Donilon, another Clinton Administration throw over, is part of Team Obama’s transition team and it turns out he was made millions lobbying for Fannie Mae. His efforts to prevent increased oversight were rewarded in payments in the millions.

I love how Team Obama dismisses this as he is unpaid and his experience in crucial… Another words, everything that is going on in todays economy and the cause of it does not matter.

I wonder what cabinet position Donilon will be rewarded with… Remember Obama said no lobbyist influence in his administration…

More Change You Can Believe In!

A transition adviser to President-elect Barack Obama earned millions of dollars overseeing an office that led a lobbying effort to prevent increased oversight of mortgage giant Fannie Mae, the company at the heart of the ongoing turmoil in the nation’s financial markets, public records show.

The unpaid adviser, Thomas E. Donilon, held several senior positions at Fannie Mae from 1999 to 2005, including vice president of law and policy, at a time when the company’s officers and lobbyists were insisting that now-troubled Fannie’s finances were sound.

In a 2006 report, the Office of Federal Housing Enterprise Oversight (OFHEO) said Fannie Mae lobbyists, whose office was overseen by Mr. Donilon, tried to use their ties to members of Congress to discredit federal regulators through a campaign aimed at securing the release of a U.S. Department of Housing and Urban Development report to discredit OFHEO.

“Thus, Fannie Mae succeeded in creating a large volume of negative publicity about the OFHEO examination report, in an effort to distract attention from its multibillion-dollars accounting errors,” the OFHEO report found.

“That initiative, although conceived and executed by the [Fannie Mae] government and industry relations department, was well-known by many members of senior management,” including then-Chairman and Chief Executive Officer Franklin Raines, Mr. Donilon and Fannie Mae’s general counsel, according to the OFHEO report.

Mr. Donilon wasn’t involved in the accounting irregularities that ultimately prompted OFHEO to seek more than $100 million that Fannie Mae paid out in compensation to Mr. Raines and two other top officials.

Obama aides say that Mr. Donilon will have no say in housing matters and that as a former State Department official, he’s providing valuable input during the transition.

“Mr. Donilon is volunteering his time and more than 30 years of accomplishment to help prepare the State Department for an efficient transition to the president-elect, who is taking office at a time of war and when we are confronting a complex and challenging environment,” said Obama transition spokesman Tommy Vietor.

“Mr. Donilon’s experience in foreign affairs as assistant secretary of state and chief of staff at the State Department is critical to this review process,” Mr. Vietor said.

After his years as a State Department official in the Clinton White House, Mr. Donilon was paid more than $1 million in salary and cash bonuses in 2002 and 2003 from Fannie Mae. He was registered as a lobbyist for Fannie Mae as recently as 2005, according to regulatory filings and court records.

He was dropped in 2005 from a pair of shareholder lawsuits filed by retirement plans that said he and other Fannie executives earned millions of dollars in salary, bonuses and stocks based on the company’s “improper financial results.”

The mortgage giant’s collapse loomed large during Mr. Obama’s campaign against Republican Sen. John McCain. Both sides accused the other of having top advisers with ties to Fannie Mae. McCain campaign manager Rick Davis came under fire during the campaign because of reports that he headed an advocacy group that worked against attempts to increase regulation of Fannie Mae and Freddie Mac.

Peter J. Wallison, a former general counsel in the Treasury Department who also served as counsel to President Reagan, called Fannie’s lobbying operation “a back-scratching system.”

“He was one of the archetypes of the kind of people Fannie hired,” he said referring to Mr. Donilon, saying the mortgage company often sought out well-connected political operatives.

As a former registered lobbyist, Mr. Donilon isn’t precluded from working on the transition team, which announced what it called “the strictest and most far-reaching ethics rules” last week.

The rules say federal lobbyists cannot contribute to the transition team or perform any lobbying while they work on the transition.

In addition, if a transition team member has lobbied in the past year, they’re not allowed to work in the “fields of policy on which they lobbied,” according to the rules.

Craig Holman, legislative director for Public Citizen, a nonpartisan group that tracks political fundraising and its influence on government policy, said the transition rules don’t go as far as Mr. Obama’s ban on lobbyists during his White House campaign.

Rahm Emanuel Was Freddie Mac Board Member When They Cooked The Books

Astonishing. Change. Yep, this is a glimpse at the near future under Barack Obama. He is going to bring about lots of change. He offered the position of Chief of Staff to Rahm Emanuel.

There are many disturbing aspects to this pick. Emanuel may be a genius in tax evasion. He may be part of the Illinois corruption machine, I wonder if Rezko is going to out Emanuel too. He is extremely partisan, possibly more so than Obama himself.

The most disturbing is his past position as a Clinton appointed Board of Director at Freddie Mac during the time it was deceiving investors. This is the change that Obama wants to bring about. Freddie Mac & Fannie Mae are the leading cause of today’s financial crisis and Barack is bring in one of the people responsible for the meltdown to be his Chief of Staff.

Not to mention his extensive ties to Wall Street. He spent many years working as an investment banker and earned millions, he also has received about $1.5 million in campaign funds from Wall Street, making them his single largest financial backer. This year alone, Wall Street backed him heavily even though he had no real competition, he was the large recipient in the House. 

My fellow Americans who voted for Barack Obama you have been duped. Your vote was stolen from you.

More Change You Can Believe In!

President-elect Barack Obama’s newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot “red flags,” according to government reports reviewed by ABCNews.com.

Rahm_Emanuel

According to a complaint later filed by the Securities and Exchange Commission, Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002.

Emanuel was not named in the SEC complaint (click here to read) but the entire board was later accused by the Office of Federal Housing Enterprise Oversight (OFHEO) (click here to read) of having “failed in its duty to follow up on matters brought to its attention.”

In a statement to ABCNews.com, a spokesperson said Emanuel served on the board for “13 months-a relatively short period of time.”

The spokesperson said that while on the board, Emanuel “believed that Freddie Mac needed to address concerns raised by Congressional critics.”

Freddie Mac agreed to pay a $50 million penalty in 2007 to settle the SEC complaint and four top executives of the Federal Home Loan Mortgage Corporation were charged with negligent conduct and, like the company, agreed to settle the case without admitting or denying the allegations.

The actions by Freddie Mac are cited by some economists as the beginning of the country’s economic meltdown.

The federal government this year was forced to take over Freddie Mac and a sister federal mortgage agency, Fannie Mae, pledging at least $200 billion in public funds.

Freddie Mac records have been subpoenaed by the Justice Department as part of its investigation of the suspect accounting procedures.

Emanuel was named to the Freddie Mac board by President Bill Clinton in 2000 and resigned his position when he ran for Congress in May, 2001.

During the years 2000, 2001 and 2002, according to the SEC, Freddie Mac substantially misrepresented its income to “present investors with the image of a company that would continue to generate predictable and growing earnings.”

The role of the 18-member board of directors, including Emanuel, was not addressed in the SEC’s public action but was heavily criticized by the oversight group (OFHEO) in 2003.

The oversight report said the board had been apprised of the suspect accounting tactics but “failed to make reasonable inquiries of management.”

The report also said board members appointed by the President, such as Emanuel, serve terms that are far too short “for them to play a meaningful role on the Board.”

As a Congressman, Emanuel recused himself from any votes dealing with Freddie Mac until just this year.

In dealing with the nation’s economic crisis, the new White House chief of staff will almost certainly be involved in discussions about the house and mortgage markets.

Emanuel’s spokesperson said, “As White House chief of staff he will work with President-elect Obama and his economic advisers to help ensure we protect taxpayers and homeowners.”

Barack Obama+Fannie Mae+Freddie Mac = Financial Disaster

Unfortunately John McCain did not go after Barack last night with the truth. John, please in the next debate bring this too the table along with everything Sarah has been doing. This is what the American people need to here from you. This will instill their confidence. The Presidential Debates are were you can reach out to those undecided voters. 

Democrats Omit Freddie & Fannie From Investigation Into Financial Collapse

Congressional Liberals are still trying to avoid being blamed in the financial crisis. In order to prevent themselves from being implicated they are trying to keep Fannie Mae and Freddie Mac out of ANY investigation into the collapse of the financial market which started with Fannie and Freddie…

Congressional Democrats and Republicans traded accusations Monday over what and whom to blame for the financial crisis amid startling new revelations surrounding the bankruptcy of the Lehman Brothers investment bank. 

Democrats aimed their harshest attacks at deregulation and CEO pay, using former Lehman Chairman and Chief Executive Officer Richard Fuld as an example during a recess hearing of the House Oversight and Government Reform Committee. 

Chairman Henry Waxman (D-Calif.) also released internal documents showing Lehman’s compensation committee recommended $20 million in “special payments” to three departing executives on Sept. 11, four days before the firm filed for bankruptcy.
 

Republicans, for their part, launched a campaign to pin the financial meltdown on Fannie Mae and Freddie Mac, and attacked Waxman for not holding a hearing to dig into the now-nationalized mortgage giants.

“Any hearing on oversight that does not begin with Fannie and Freddie and [former Fannie Mae CEO] Franklin Raines will be a sham,” said Rep. John Mica (R-Fla.). “This is like investigating a train robbery and only talking to the dining car stewards.”

The GOP attack from the dais came as the National Republican Campaign Committee and House Minority Leader John Boehner (R-Ohio) sent nearly simultaneous news releases criticizing Fannie and Freddie.

Boehner’s statement echoed Mica’s, saying, “Chairman Waxman’s refusal to hold hearings to examine their role says a lot about where the Democrats’ priorities lie.”

The mortgage giants aren’t part of the five-hearing investigation Waxman is planning for the rest of October, but Waxman said he is looking into their failure. He said committee staffers are reviewing documents and he might call a hearing.

“I don’t think we ought to use these hearings to be partisan,” Waxman said. “To look at Lehman is appropriate. To look at Fannie Mae and Freddie Mac is appropriate.”

Waxman also retorted that looking back at Congress’s interaction with Fannie Mae could be dangerous territory for the GOP, since it controlled Congress for 12 years until 2007.

The presidential campaign played a key role at the hearing, with Republicans pointing to Barack Obama’s national finance chairman’s involvement in a bank failure, and Democrats highlighting an embarrassing e-mail from President Bush’s cousin, a Lehman board member, that mocked attempts to rein in executive compensation.

The e-mails showed Fuld and Bush’s cousin, George H. Walker, mocking a recommendation from a Lehman subsidiary that executives give up their bonuses.

“Sorry team,” Walker wrote in the e-mail. “I’m not sure what’s in the water at 605 Third Avenue [the address of the subsidiary] today. I’m embarrassed and I apologize.”

Fuld added in an e-mail, “Don’t worry, they are only people who think about their own pockets.”

In a two-hour run-up to Fuld’s testimony, Democrats chomped at the bit to sink their teeth into the former CEO, having pored over his prepared statement and found he did not take responsibility for Lehman’s failure. 

“He’s going to come in here and say it was everybody’s fault but his own,” said Rep. Elijah Cummings (D-Md.). “The people on my block, in Baltimore, if they do poorly, they get fired. They don’t get a bonus.” 

But Fuld, who’d listened to the first part of the hearing, headed off the lawmakers when he sat down at the witness table by taking responsibility.

“I want to make one thing clear,” Fuld said. “I take full responsibility for the decisions I made and the actions that I took. With the benefit of hindsight, would I have made decisions differently? Yes.”

Waxman, though, faulted Fuld for not acknowledging anything he’d done wrong. He also tallied Fuld’s compensation from 2000 to 2007 at $484.5 billion, and noted that Lehman’s shareholders have lost their investment and the economy has been plunged into chaos.
 

“Is this fair?” Waxman asked.

Fuld took off his glasses and shifted in his seat. He said he wasn’t paid that much, and he and Waxman eventually agreed he’d been paid $350 million. But he never answered Waxman’s question of fairness.

In his prepared testimony, Fuld said the financial crisis was greater than any single firm.
 

“As incredibly painful as this is for all of those connected to or affected by Lehman Brothers — this financial tsunami is much bigger than any one firm or industry,” Fuld said.

Fuld resisted efforts by Republicans to tie Lehman’s bankruptcy to Fannie Mae. 

When Mica asked what Lehman’s financial exposure was to the mortgage buyer, Fuld demurred. “De minimis,” he said. 

Mica then held up Lehman’s contributions and lobbying expenditures of $300,000 over 10 years, and said Fannie Mae spent $175 million during the same time.

“You were out-lobbied,” Mica said. “What would you say to that?”

Fuld again held back, saying, “I think that’s more a matter for your committee.”

He also bucked Democrats’ attempts to see if he’d say that Treasury Secretary Henry Paulson’s ties to Lehman rival Goldman Sachs biased him against bailing out Lehman and helping Goldman trading partner AIG.

But he did make it clear that he still didn’t understand why the federal government bailed out other companies, but not his.

“Until the day they put me in the ground, I will wonder,” Fuld said. “I do not know why we were the only one.”

Finally Someone Calls Franks Out

Nothing More To Say

An Inconvenient Truth For Liberals

The truth behind the economic crisis. Liberals would have you believe that this is all the fault of McCain. They use the Bush administration as a proxy to attack McCain. The truth of the matter is the Bush administration, McCain and the conservative base has been warning and trying to prevent this mess.

Timeline

Money For Nothing

Detailed points of 2004 attempt to regulate Fannie Mae and Freddie Mac by Conservatives and the undermining by Liberals in Congress. Please listen to the whole think. Listen to the Money Made by the leaders of Fannie Mae…

 

 

Supplement Bailout By Having Banks Contribute Through Insurance Purchases

The Republicans want the bailout to implement an insurance program to reduce the taxpayers liability and risk in the bailout of financial giants. The plan would require the banks to pay for insurance on some of the mortgage risk, thus reducing the amount of money the government must use to purchase these bad mortgages. This is good for us as taxpayers, I am curious on how much they would be responsible for and how much of a reduction it would be on the bailout numbers…

I would like to see the banks have to be responsible for at least half of the amount.

After temporarily derailing the Bush administration’s $700 billion proposal to bail out the financial system on Thursday, House Republicans pared back their goals on Friday and demanded that the plan rely at least partly on an industry-financed insurance program for troubled mortgages.

Issuing a vague declaration of “economic rescue principles” to limit the use of taxpayer money, the Republican lawmakers focused primarily on the insurance program.

The proposal would have banks and investment firms that own mortgages and mortgage-backed securities pay premiums for insurance that would guarantee them against losses if the mortgages default.

Supporters of the plan said it would restore confidence in mortgage-backed securities without putting taxpayer money at risk. “Instead of making the taxpayers pay, the securities holders would pay,” said Representative Paul Ryan, a Wisconsin Republican who helped create the plan.

That would be sharply different from the plan developed by Treasury Secretary Henry M. Paulson Jr., which would have the government buy up to $700 billion worth of currently unsalable mortgage-backed securities.

Treasury officials have argued that their plan would address the heart of the financial crisis, which is that banks and investment firms are holding vast quantities of securities that have little or no market value. By having the government buy up and hold those securities until the panic dies down, Mr. Paulson has been hoping to free the balance sheets of financial institutions, allow them to raise fresh capital from investors and start making loans again.

But Republican lawmakers said on Friday that they were not trying to scrap Mr. Paulson’s plan entirely. Instead, they said, they would simply try to insert an insurance program into the overall package.

“We don’t want to undermine the negotiations,” Mr. Ryan said. “We want to honor the spirit of the negotiations.”

That was a retreat from Thursday, when John A. Boehner of Ohio, the House Republican leader, told President Bush and Democratic Congressional leaders that most House Republicans would oppose the administration’s plan.

The idea of the insurance plan, championed by Representative Eric Cantor of Virginia, was to reduce uncertainty and restore confidence without actually using taxpayer money.

The federal government would guarantee the underlying mortgages in a mortgage-backed security, much as Fannie Mae and Freddie Mac have done for years and as the Federal Housing Administration does, as well.

In theory, the cost of that insurance would be borne by the companies that hold the mortgages or mortgage-backed securities.

Treasury officials had already told Republican lawmakers they had considered an insurance approach, but rejected it. The problem, from Mr. Paulson’s standpoint, was that insuring against mortgage defaults would do little to increase liquidity, or the amount of money available for making loans. By contrast, the Treasury plan would inject hundreds of billions of dollars in fresh, although borrowed, money into the marketplace.

But the insurance plan could pose other risks to taxpayers. The government would be insuring the riskiest and most default-prone mortgages made during the housing bubble, including loans that required no down payment and no income verification by the borrowers.

The allure of insuring mortgages, rather than buying them as Mr. Paulson would, is that the government would not have to put up any taxpayer money. But because the government would be guaranteeing nearly all mortgages in the country, since it already owns Fannie Mae and Freddie Mac, taxpayers could face big losses if losses from defaults turn out to be higher than expected.

Many House Republicans, including Mr. Ryan, had come up with a far more detailed rival plan earlier in the week that included Republican policy evergreens like new tax breaks and more flexible regulation as well as the insurance idea.

Some lawmakers wanted to at least temporarily eliminate taxes on capital gains and dividends, though senior Republicans knew they had no chance of getting that past Democratic leaders.

Members of the Republican Study Group, a group of conservative House Republicans, proposed lifting the mortgage market by letting companies reap retroactive tax rebates from their current losses. A company would be able to apply its losses this year against its profits from any of the last five years and get a rebate for taxes it had already paid.

But with lawmakers hoping to wrap up their work by Monday, Republicans dropped the idea as impractical because it would take too long for the Joint Committee on Taxation to estimate the measure’s cost.

On the regulatory front, some House Republicans championed the idea of relaxing what are known as mark-to-market rules that require investment firms to revise the value of their securities in line with changes in market prices of those securities.

Over the last year, Wall Street’s biggest investment banks have been forced to take huge write-downs on mortgage-related holdings, not because the securities were actually losing money but because the securities had become almost impossible to sell in the open market. For many securities, especially the arcane derivative securities known as “collateralized debt obligations,” there are virtually no buyers and no market prices.

“If you don’t have to sell the securities today, you shouldn’t have to mark it at today’s value,” said Peter Ferrara, a senior researcher at the Institute for Policy Innovation, a research group in Virginia with ties to many Republican lawmakers.

But Mr. Ryan said the issue was complicated. While critics of the current rules complained that they artificially understated a company’s financial position, other experts argue just as vehemently that marking to market is a crucial way of preventing companies from covering up bad investments.