McCain in 2006: Fannie Mae Headed For Disaster Without Reforms
Talk about a crystal ball. The beauty of this is that in the ensuing two years, Fannie Mae and Freddie Mac, during their predicted death spirals, gave more money to Barack Obama than any other politician save Chris Dodd. Maybe if they had given fewer donations to politicians and focused more on running their business, we wouldn’t have to spend as many taxpayer dollars to bail them out. Maybe Obama can give back some of that cash in the form of rebates to the little guys he is always talking about.
McCain’s statement from the Congressional Record.
Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that gov