"Public" Entities are Neutral, Right?
The meltdown of Freddie Mac and Fannie Mae brought to light a bit of the dark side, but it is not the dark side of the private sector. But who foresaw this problem in 2005 and sponsored legislation to deal with it? None other than "the original maverick!"
Sen. McCain sponsored and fought for the Federal Housing Enterprise Regulatory Reform Act of 2005, and here are his exact words from a speech he gave in 2006: "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 onto 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 six 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'sexamination 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 governs Fannie Mae and Freddie Mac ... and the report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act,American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. I urge my colleagues to support swift action on this GSE reform legislation." -- Senator McCain in a speech, May 25, 2006
In recent years the troubled mortgage companies have donated large sums of money to political campaigns. Can you say "Campaign Finance Reform?"
Here are the top recipients from 1998 to 2008 according to This Article in the Bulletin:
1. Sen. Chris Dodd, $133,900.
2. Sen. John Kerry, $111,000.
3. Sen. Barack Obama, $105,849.
4. Sen. Hillary Clinton, $75,550.
I was under the impression that so-called "public" entities would be in conflict of interest if they gave money to political campaigns. When my dad worked at NASA, I believe they had such a policy. He couldn't even put political bumper stickers on his car. While I think that's stepping on individual First Amendment rights, I can see the reasoning behind it.
The Public Electric Company, surely, must be a neutral entity? Not in California. Pacific Gas & Electric (PG&E) [remember Erin Brokovich]? gave $250,000 donation to defeat Proposition 8 -- the statewide ballot initiative to restore the definition of marriage in California to the union of one man and one woman.
Nancy McFadden, a senior vice-president with PG&E, stated: "We are proud to join NO on 8 and Equality California to protect the freedom to marry for all Californians." Nancy, you are entitled to lobby as a private citizen all you want, but the money I pay for electricity is to be used for electricity. Can California Citizens deduct the portion of their bill used for lobbying? I think not! Likewise, when I pay my mortgage, I simply want to pay off the loan. I'll make my own campaign contributions, thank you!
Her Bio gives you some insight into her activism. Again, I stress, as a Private Citizen she has every right to express her views but in my way of thinking she has no right to impose them through her position as an officer of PG&E.
If you live in California, call the Utilities Commission today and tell them you object to PG&E's involvement in a ballot measure unrelated to energy issues. Call: (800) 649-7570
Update: Do Facts Matter?
Thomas Sowell Has This Insight!
John McCain's 2006 Letter About Fannie Mae
Following his lead would have avoided our present crisis!