Franklin Raines played the Washington game of knowing all the right people.Crunch time came over the weekend and it is the tax payers who will get crunched. Once again the politicians in Washington will not be scrutinized and brought to account for their actions. Too bad that, but just to remind you about what happened I re-post this from July.
Beyond that we are getting the drumbeats from the Left and the Democrats about how awful it will be to have Sarah Palin, a heartbeat away from the Presidency. She does not have the experience so necessary to bring us good government in the way we are so used to having it served to us.
Here is an example and a result of the good government brought to us by the career Democrats in Washington DC:
A superb essay from Talkimag.com
The Diversity Recession, or How Affirmative Action Helped Cause the Housing Crisis
In 1992, Congress passed the Government Sponsored Enterprises bill, which set “targets” (i.e., quotas) for Fannie Mae and Freddie Mac, which are quasi-governmental publicly-traded for-profit thing-a-ma-bobs, to encourage “affordable” and “underserved” (more or less minority) home loans.
Both the Clinton and Bush departments of Housing and Urban Development raised the quotas repeatedly. For example, initially, the Clinton Administration required 21% of these quasi-governmental mortgages must go to ”underserved areas” (which are officially defined as “low-income census tracts or in low- or middle-income census tracts with high minority populations"), but the quota for 2008 established by the Bush Administration is 39 percent.
Reuters reported October 13, 1999:
The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership in underserved groups. ‘We need to push into these underserved markets as much as we can,’ said David Glenn, president and chief operating officer of Freddie Mac. …
In September, Freddie Mac launched a new lending program, based on research done in collaboration with five black colleges, to bring more African-Americans into the market.
The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories.
Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low-and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets.
Read the entire article at Talkimag.com
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Others saw it coming- From 2004:
Stop Franklin Raines’ Rape of Fannie Mae — and Taxpayers
Contact: Peter Flaherty 703-237-1970
Date: December 29, 2004
Website: www.nlpc.org
Peter Flaherty, President of the National Legal and Policy Center, today expressed surprise and disgust at the current attempt by fired Fannie Mae Chairman and CEO Franklin Raines to walk away with millions despite his central role in the accounting scandal rocking the company.
NLPC promotes ethics in public life, and sponsors the Corporate Integrity Project.
Flaherty said, “Let me get this straight. Raines apparently cooks the books, brings disgrace to the company, and imperils Fannie Mae’s standing with regulators, the Congress and administration. So for his punishment he is made wealthy for the rest of his life?”
According to a December 27 Form 8-K filing with the Securities and Exchange Commission, Raines is entitled to:
•“Deferred compensation” of $8.7 million
•Stock options currently worth $5.5 million, and potentially millions more
•”Performance Share Payouts” through 2006, potentially worth millions more
•A monthly pension of $114,393 for the rest of his life, and the for life of his spouse should she survive him
•Free medical and dental coverage for the rest of his life, as well as for his wife for the rest of her life, and his children until age 21
•Free life insurance in the amount of $5 million until age 60, and $2.5 million thereafter
The agreement even allows for Raines to receive a “cash bonus” for 2004.
Raines stated that, “By my early retirement, I have made myself accountable.” Flaherty reacted by saying, “It is like Enron and Tyco never happened. I cannot even fathom the level of arrogance and self-delusion necessary for Raines to claim he’s been made accountable for his mistakes.”
Flaherty continued, “The OFHEO regulators have taken the right step in reviewing Raines compensation. But if Fannie Mae executives inflated profits to increase their own bonuses, that is fraud. Political connections should not insulate corrupt executives from criminal prosecution, if it is warranted.”
“This is not a case of foolish or captive directors rewarding a failed executive with a golden parachute. Fannie Mae is not really a private company. It has been granted advantages in the marketplace by Congress, that are worth billions of dollars. Raines is not only fleecing Fannie Mae, but also the taxpayer.”
“Raines was paid $20 million in 2003 but was never really a private-secter corporate executive. His CEO position was more of a political plum. Most of his career was spent in political appointments or at Fannie Mae itself.”
FALLS CHURCH, Va., July 14, 2008 /PRNewswire-USNewswire via COMTEX/ -- The National Legal and Policy Center (NLPC) today criticized the managements of Fannie Mae (FNM) and Freddie Mac (FRE) for their recent sponsorship of the Rainbow/PUSH Coalition and Citizenship Education Fund Annual Conference. The event took place June 28 through July 2 in Chicago. It is Jesse Jackson's main fundraising event of the year.
ReplyDeleteAccording to the conference program, Freddie Mac was a "Platinum Sponsor," a designation costing $150,000, and Fannie Mae was a "Diamond Sponsor," a designation costing $100,000.
Fannie and Freddie are so-called Government Sponsored Enterprises (GSE) that own and guarantee mortgage securities. Shares of each are down approximately 85% in the last year. On Saturday, the Treasury announced it would offer a line of credit to help ensure the survival of each company.
NLPC President Peter Flaherty said, "It is outrageous that rapidly evaporating shareholder equity is still being dished out to Jesse Jackson. The CEOs of these companies have repeatedly shown poor judgment, and this is just more evidence."
Even before the present crisis, NLPC was a critic of the companies' financial backing of Jesse Jackson. In 2006, NLPC sponsored a Freddie Mac shareholder proposal critical of the support.
Jesse Jackson's relationship with Freddie Mac began in 1998 when Jackson accused Freddie Mac of racial discrimination and encouraged major shareholders to sell their stock. Freddie Mac began financial support for Jackson's organizations and his criticism of Freddie Mac stopped.
Freddie Mac signed a $1 million contract for Rainbow/PUSH to run an "Economic Literacy" program, a curious arrangement given the allegations of financial impropriety that have followed Jackson. This Company was embarrassed when the media reported that Rainbow/PUSH turned around and charged churches $1,000 to enroll in the program.
In 2003, an independent report commissioned by the Freddie Mac board criticized the company's accounting practices, singling out 13 improper transactions, involving Ron Blaylock, Jesse Jackson's longtime crony and financial backer. Trades involving billions of dollars in assets were executed between divisions of Freddie Mac by Blaylock & Partners LP for the purpose of avoiding federal income taxes. According to the report, Blaylock apparently received fees of $250,000 for making a handful of phone calls.
NLPC was also critical of the incredibly generous "golden parachute" Fannie Mae provided to fired CEO Franklin Raines in 2004.
At the time Flaherty said, "Let me get this straight. Raines apparently cooks the books, brings disgrace to the company, and imperils Fannie Mae's standing with regulators, the Congress and administration. So for his punishment he is made wealthy for the rest of his life?"
NLPC promotes ethics in public life and sponsors the Corporate Integrity Project.
Good grief.
ReplyDeleteFor some strange reason it reminds me of University of Idaho President Robert A. Hoover, 1996–2003, whose famous quote was "there's regular time, and then there's Hoover time." He got involved in a big effort to build some branch division down in Boise--which makes no sense anyway, as Boise State is there--and he and the U of I business office got to spending money that hadn't been properly appropriated, millions, to lawyers and architects and stuff, the whole things gets all fouled up, people get pissed, the legislature looks into it, the Governor, falls all to pieces, Hoover gets fired in disgrace, ends up getting hire by Albertson's College for his efforts, which is supposed to be a good school but isn't, lawsuits are filed against the business office for spending the money, some of the lawyers sue some of the other lawyers, and the last I heard, it's still winding around in the courts.
My realtor and I talked about it one day, deciding we could have done a lot better, as we wouldn't have started it in the first place, there being no sure market for the final product.
I'm glad I can see the way to the end of my life. There are worse things than actually working for a living.