A look back to Federal Housing Enterprise Regulatory Reform Act of 2005 the media won't tell you

The end of this statement says it all please look to the end of this article and you will find out why no legislation was ever done regarding Fannie Mae & Freddie Mac. “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.'' Then the democrats want to blame republicans for the Banking Industry turmoil.

Article By STEPHEN LABATON New York Times
Published: September 11, 2003
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.
Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.
The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.
The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.
After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.
''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.
''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.
The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.
At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.
Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.
After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.
''We welcome the administration's approach outlined today,'' Mr. Raines said ( Current Obama Advisor). The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.
Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.
Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''
The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.
Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.
''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''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.''
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.

AIG, bad investment for taxpayers

The buyout of AIG is a another failed blunder of the Bush Administration,and both Democrats and Republicans who are in favor of this buy out still don’t get it. All these folks are following all over themselves taking our tax payer dollars and giving it to corporations who have failed, so they can say look at we did. The U.S Government was never designed to use tax payer money to bailout failed companies where CEO’s have been allowed to look the other way when it comes to running companies then walk away with millions of dollars in retirement packages, leaving these companies a mess. The U.S Government only has limited powers when it comes to private corporations and buying failed corporations is not what the writers of our constitution wanted. We are not Venezuelan Hugo Chavez Government that can just but private companies because we don’t like the way there being run and make them a government run agency. These companies should fail, they have made bad decisions without caring about the repercussions of doing bad business and now we are going to award them by throwing good money at bad dealings, it doesn’t make since. Look at the market today it still lost 449 points there was no rebound. Right now Harry Reed and Nancy Pelosi are in discussions with the 3 big automakers to give them a 5 billion dollar bailout, it must be Christmas time.

Deposit Insurance Fund may be wiped out

Posted by Anthony Landaeta Jr 9/15/08

Washington Mutual Inc., the biggest U.S. savings and loan, had its credit rating cut to junk by S & P because of the deteriorating housing market. WaMu was one of the biggest lenders pushing option arms programs where the borrower would only have to pay 50% of the mortgage payment with the other 50% going to the outstanding balance of the Mortgage.
Because of the last Government takeover of Indy Mac Bank FDIC’s Deposit Insurance Fund only has $45 billion of assets. With the downgrade of WaMu and its $140 billion of insured deposits, the Deposit Insurance Fund may be wiped out by WaMu’s failure.

Bush Heckled at Naturalization Ceremony

By PETE YOST,AP
Posted: 2008-07-04

CHARLOTTESVILLE, Va. (July 4) - President Bush invoked the memory of Thomas Jefferson Friday in welcoming new U.S. citizens at a naturalization ceremony at Monticello, saying "I'll be proud to call you a fellow American."

On his final Fourth of July as president, Bush told an audience at the home of the Declaration of Independence's author that he was honored to be present for the naturalization.Anti-war protesters shouted out calls for Bush's impeachment on nine occasions during Bush's brief remarks, and the president responded by saying he agrees that "we believe in free speech in the United States of America."The last six Fourth of July holidays have taken place amid continuing violence in Iraq. Bush's addition of 28,000 U.S. troops last year in Iraq helped foster a measure of stability in what is now the sixth summer of the war.The 150 or so demonstrators, from a variety of groups opposing Bush's policies on the war in Iraq, also rallied along the path of the president's motorcade to Monticello.Bush mentioned neither the war in Iraq nor the battle against terrorism in his speech, other than to say that "we pay tribute to the brave men and women who wear the uniform."For the people assembled with him at the naturalization ceremony, he said: "When you raise your hands and take your oath, you will complete an incredible journey. ... From this day forward, the history of the United States will be part of your heritage.""Throughout our history," he said, "the words of the declaration have inspired immigrants around the world to set sail to our shores. ... They made America a melting pot of culture from all across the world. They made diversity a great strength of our democracy.""Those of you taking the oath of citizenship at this ceremony hail from 30 different nations," Bush noted. " ... You all have one thing in common - and that is a shared love of freedom ... and this is the love that makes us all Americans."Said Bush: "This is a fitting place to celebrate our nation's independence. Thomas Jefferson once said he'd rather celebrate the Fourth of July than his own birthday. To me, it's pretty simple - the Fourth of July weekend is my birthday weekend."Before his brief remarks, the president was given a tour of Jefferson's home including the room where the author of the Declaration of Independence died on July 4, 1826, the same day as the death of Jefferson's predecessor, John Adams.

FHA chief balks at taking on more bad loans

FHA chief balks at taking on more bad loans
Federal Housing Administration Commissioner Brian Montgomery said a plan for his agency to take on two million at-risk loans could make the housing crisis worse
NEW YORK (CNNMoney.com) -- A Bush administration official warned Monday that a proposal to have the government back more bad loans would hurt taxpayers and could make the housing crisis even worse.
Federal Housing Administration Commissioner Brian Montgomery told the National Press Club that Congress legislation proposing that the FHA back up to $300 billion worth of troubled mortgages - or about two million loans - would weaken the agency.
"This is a worrisome idea," Montgomery said. "FHA is designed to help stabilize the economy, operating within manageable, low-risk loans. It's not designed to become the federal lender of last resort, a mega-agency to subsidize bad loans."
New real estate realities
Montgomery also argued that the agency has been "hobbled by low loan limits and higher down payment requirements," adding that the FHA "was literally priced out of some housing markets."
He said that the new, higher loan limits announced in March - which range from $271,000 to $729,000 - opened up the market for FHA loans in high priced areas and have already helped about 100,000 homeowners. He argued that higher loan limits should be made permanent to help the housing market.
Montgomery noted that the FHA has already begun pricing the loans it makes according to borrowers' risk levels - a first in the agency's 74-year history - and said that this policy should also be made permanent.
The conventional wisdom had been that charging higher-risk borrowers more would hurt those who need help the most. But Montgomery said such a policy is actually in line with FHA's mission to provide home financing for low income and minority home buyers.
"Contrary to conventional wisdom, FHA families with the lower incomes have higher FICO scores," he said. The target FHA client, then, the lower income American, would pay a lower rate for an FHA loan under risk-based pricing.
"These are hard-working American families who live within their means and pay their bills," said Montgomery.
Montgomery also is re-proposing a rule shot down in court last year that would end seller-financed down payments for any FHA-insured loan.
In these transactions, home sellers - or any entity that would profit from a sale - give 10% or 20% of the sale price to buyers, who can then use that cash as a down payment.
Seller-funded down payment loans now account for a third of all loans in FHA's portfolio, and Montgomery said the practice has contributed to the foreclosure crisis.
And the FHA reports that these loans are three times more likely to go into foreclosure than loans in which borrowers come up with their own down payments.
"We had to book an additional of $4.6 billion in unanticipated long-term losses, mostly due to the increased number of certain types of seller-funded loans in the FHA portfolio," said Montgomery.
These loans are much more risky, since the buyers don't have a down payment of their own. With little or none of their own money invested, they may be less able or less inclined to keep up with their mortgages payments should they run into trouble. They are also more inclined to walk away from their loans entirely, leaving lenders on the hook.
"We are concerned about this business [practice]," he said, "because the substantial losses affect FHA's bottom line and FHA's ability to serve American citizens who need access to prime-rate home loans."