Friday, October 31, 2008
Thursday, October 30, 2008
Wednesday, October 29, 2008
Monday, October 27, 2008
Friday, October 24, 2008
Tuesday, October 21, 2008
Monday, October 20, 2008
Friday, October 17, 2008
Tuesday, October 14, 2008
Saturday, October 11, 2008
Friday, October 10, 2008
Thursday, October 9, 2008
Tuesday, October 7, 2008
Friday, October 3, 2008
We are getting sold out. Who said that the Constitution will never fail you, but your leaders will and be wary of anyone who tries to convince you that it's the other way around. When did we as a country start heading down the prim rose path to socialism? It seems that the Emergency Economic Stabilization Act of 2008 is going to help us move down that path. The act simply believes, from each, according to his ability; to each, according to his need.
The Department of Housing and Urban Development said in 2005 that Fannie and Freddie should increase financing for low-income areas or moderate-income regions with high minority populations to 37 percent of new business from 34 percent in 2001 through 2004. That rose to 39 percent last year. Since many people wanted their own home subprime mortgages were given to people with poor credit scores. In 2006 Dan Mudd, a former CEO who left in late 2008, said in a 2006 interview that he planned to expand the companies' holdings to include more higher-risk loans. A short time later it was said that Freddie wouldn’t lose anything on about 95 percent of its uninsured subprime bonds unless more than 90 percent of borrowers already two months late are foreclosed upon and more than half of the rest default, according to slides from a company presentation in August. It seems that he was right because that was pretty much what happened.
As of August 2008 57.3% of their entire subprime loans were past due and 10.7% were in foreclosure. The former CEO of Freddie Mac had his salary last year was $900,000, although in a radio interview last month, he didn't deny reports that he raked in a total of $43 million in stock options, bonuses and overall compensation from 2005 to 2008. When Fannie Mae and Freddie Mac went into conservatorship the Government Sponsored Enterprises became the owner of 79.9% of the company. This means that the government now holds the mortgages of 55 million families at Fannie Mae and Freddie Mac holds 30 million. The U.S. government controls at least 85 million homes with more on the way as Freddie and Fannie are to manage the subprime mortgage securities.
Wednesday, October 1, 2008
Fannie Mae under the leadership of James A. Johnson worked to keep up with Wall Street expectations. The company began holding on to more mortgages and mortgage-backed securities for investment purposes. The same practice nearly drove the company into bankruptcy in the early 1980s, when interest rates strayed into the double digits. Its smaller rival, Freddie Mac, copied the strategy.
Around the time Freddie Mac's accounting scandal broke in 2003, the companies' combined portfolios totaled $1.5 trillion. Then-Federal Reserve Chairman Alan Greenspan and others came to fear that a sudden meltdown at Fannie Mae could bring down the financial markets with it -- an argument that Johnson and his successor, Franklin D. Raines, fought at every opportunity.
They assured investors and policymakers that no such thing could happen because the company was so well managed. James was also a managing director with Lehman Brothers (1985-1990). Mr. Johnson has been a director of Goldman Sachs since May 1999. Its sizable profits made during the 2007 Subprime mortgage financial crisis led the New York Times to proclaim that Goldman Sachs is without peer in the world of finance. Then a crisis hit and in September 2008 Goldman Sachs became a traditional bank. It had been an investment bank since 1869 during which time it had survived the Great Depression.
Franklin Raines served from 1991 to 1996 he served as the vice chairman of Fannie Mae. He left the company in 1996 to join the Clinton Administration as the Director of the U.S. Office of Management and Budget, where he served until 1998. In 1999, he returned to Fannie Mae as CEO, "the first black man to head a Fortune 500 company." In 2004 the New York Times reported that regulators "have said that of the $90 million paid to Mr. Raines from 1998 to 2003 at least $52 million—more than half—was tied to bonus targets that were reached by manipulating accounting." Raines agreed to a $24.7 million settlement with a federal regulator in exchange for charges being dropped, but he admitted no wrongdoing. As so often happens with large scandals, the cost will fall on everyone except the responsible parties. He was forced to leave Fannie Mae in 2004, when regulators discovered it had broken accounting rules "in an effort to conceal fluctuations in profit and hadn't maintained adequate risk controls." In 2006, federal regulators sued Franklin Raines and two other Fannie Mae executives to recover $115-million of compensation. The case was settled for $3-million, plus the surrender of some of the then probably valueless stock options and other contingent benefits. The $3-million was paid from Fannie Mae’s own insurance. An editorial in The Wall Street Journal called it a "paltry settlement" which allowed Raines and the other two executives to "keep the bulk of their riches."
Jamie S. Gorelick, whose official résumé describes her as "one of the longest serving Deputy Attorneys General of the United States," a position she held from 1997 to 2003. Although she had no background in finance, she joined Fannie Mae in 1997 as vice chair and departed in 2003. Gorelick collected a staggering $26.4 million in total compensation, including bonuses, during her time at Fannie Mae. Once again Fannie Mae was under investigation. Investigators would later say that "Fannie Mae's management directed employees to manipulate accounting and earnings to trigger maximum bonuses for senior executives from 1998 to 2003." The New York Times called the manipulations an "$11 billion accounting scandal." Gorelick, it should be noted, has never been charged with any wrongdoing. Then again she was a Deputy Attorneys General of the United States during the period in question. She also served on the 9/11 commission.