What do Chris Dodd, Barney Frank, Jim Johnson, Franklin Raines and Tim Howard have in common (besides being engineers on the Barack Obama Election Express)? I try not to just scrape the content of other sites but Mcauleys World has a great article with info that is essential for everyone to know.
Five Key Players In Washington who had chances to prevent the Financial Crisis but who, by their actions or inactions helped to bring down Wall Street.
Democrat from Connecticut. Dodd has been in the Senate for 28 years. Dodd has served as Chairman of the Democratic National Committee. Dodd is Chairman of the Senate Banking Committee. As Chairman he had responsibility for acting as a “watch-dog” of Fannie Mae and Freddie Mac. Dodd has responsibilty for assisting in the selection of the CEO’s who run Fannie Mae and Freddie Mac. Dodd was a leading contender to be Obama’s Vice Presidential selection until his receipt of VIP loans from Countywide Financial were disclosed.
It has been reported that Dodd received $7,000,000 in loans from Countywide. Dodd’s Committee was responsible for overseeing Banks in the United States. Countrywide is one of the leading culprits responsible for the lending policies that brought on this Crisis. Countrywide is under FBI investigation for securities fraud. The Government Watchdog Group, The Center For Responsive Politics, reports that Senator Dodd received more campaign contributions from Fannie Mae and Freddie Mac than any other Senator. Dodd voted against two proposed laws that would have strengthened oversight of Fannie Mae. Laws that could have stopped the current crisis long before it reached this proportion. Dodd was a consistent opponent of the attempts to increase regulation over Fannie Mae and Freddie Mac. Dodd opposed similar legislation that would have prevented the Enron collapse. Enron & Fannie Mae are examples of what happens when proper Accounting Practices are ignored. Both organizations collapsed. Dodd opposed accounting practices that would have prevented “NINJA” or “Liar” loans. To read about specific accounting practices go here:
Wikipedia, a non-partisan web site, states the following about Dodd; The Center for Public Integrity criticized Dodd for “being the leading advocate in the Senate on behalf of the accounting industry.” Political consultant and commentator Dick Morris wrote that Dodd had received more from accounting firm Arthur Andersen than any other Democrat and bore responsibility for trying to shield accounting firms from investor fraud liability in cases such as the Enron scandal. Arthur Anderson was forced to surrender its license to conduct CPA business in the US
Democrat Massachusetts, Frank has been in Congress for 27 years. As Chairman of the House Financial Services Committee, Frank “sits at the center of power.” In 2003, Frank rejected Bush administration and Congressional Republican efforts for the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis of the 1980’s. Under the plan a new agency would have been 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 site where this boast is posted, suggests that his action in opposing the regulation is a “badge of honor”.
Imagine that – Barney Frank, the de-regulator. “These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis,” Frank said. He added, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” The legislation in question was aimed at creating additional “watchdogging” of Fannie Mae and Freddie Mac, watchdogging that would have prevented this crisis. Frank also opposed the “watchdog” reforms presented by John McCain in 2002 and 2006. Frank has consistently opposed any attempt to reform the practices at Fannie Mae or Freddie Mac. Frank has been described as “The Patron Saint of Fannie Mae”. Read specific examples of Frank’s obstruction of reform here:
In 2002, shortly before accounting irregularities were exposed at both companies, Frank said, “I do not regard Fannie Mae and Freddie Mac as problems,” reported the Wall Street Journal. After the Freddie Mac accounting scandal in 2003, Frank said, “I do not think we are facing any kind of a crisis.”
A former aid to Walter Mondale, a former executive at Goldman Sachs and Lehman Brothers, Johnson was an Executive Assistant for Vice President Walter Mondale (1977-1981) and a U.S. Senate staff member. Johnson also helped screen running mates for Democratic presidential nominees Walter Mondale in 1984 and John Kerry in 2004. The National Review suggested – “Look at the former Fannie Mae Chief Obama choose for the job (selecting Biden). Specifically, look at the Office of Federal Housing Enterprise Oversight’s May 2006 report on mismanagement and corruption inside Fannie Mae, and you’ll see some interesting things about Johnson. Investigators found that Fannie Mae had hidden a substantial amount of Johnson’s 1998 compensation from the public, reporting that it was between $6 million and $7 million when it fact it was $21 million.
While he was at the in charge at Fannie Mae, Johnson acknowledged his goal, “”We are on course to meet the $1 trillion target we set, we’re ahead of schedule on the 11 initiatives put in place to carry out the commitment, and our efforts already have fundamentally transformed how millions of American families now gain access to the mortgage credit system.” The Trillion dollar commitment included the use of “NINJA” and “Liar Loans” In order to meet this 1 trillion target, Johnson oversaw the implementation of the accounting schemes that came to light during his successor, Franklyn Raines, term as Fannie CEO. Johnson also took preferential loans from Countrywide while serving as CEO at Fannie MAE. The same type of loans, from the same bank, as those taken by Senator Chris Dodd. Post-Enron, the Sarbanes-Oxley law, requires disclosure of this type of “special deal” loan. No disclosure was made by Johnson.
Countrywide Financial Corporation is a diversified financial marketing and service holding company engaged primarily in residential mortgage banking and related businesses. In 1997 Countrywide spun off Countrywide Mortgage Investment as an independent company called IndyMac Bank. Federal regulators later seized IndyMac Bank. A criminal investigation has been launched by the FBI into possible Securities Fraud violations by Country Wide. The fraud involves the resale of subprime moragaes to the financial markets, including Fannie Mae.
Johnson hid part of his income, received preferential loans from a major lender invoved in this crisis and fostered the implementation of accounting practices that masked the sub-prime losses by stating the losses as assets. Johnson went on to work for the Obama campaign. The Obama campaign denies any current involvement, however, one press report notes that Johnson helped prepare Obama for an economic speech last week.
Raines was a former member of the Carter and Clinton Administrations. In the Carter Administration Raines served as Associate Director for Economics and Government in the Office of Management and Budget and Assistant Director of the White House Domestic Policy Staff, in the Clinton Administration Raines served as the Director of the U.S. Office of Management and Budget Raines was Chairman and CEO at Fannie Mae.
Raines was forced to retire from this position at Fannie Mae when Regulators discovered severe irregularities in accounting activities. At the time of his departure The Wall Street Journal noted, Raines, who long defended the company’s accounting despite mounting evidence that it wasn’t proper, issued a statement conceding that mistakes were made” and that he would assume responsibility as he had earlier promised. Reports indicate the company was under growing pressure from regulators to shake up its management in the wake of findings that the company’s books ran afoul of generally accepted accounting principles for four years.”
Fannie Mae had to reduce its surplus by $9 billion because $9 billion in liabilities were listed as assets. Raines total compensation package while he was at Fannie exceeded $90 Million. The Government filed suit against Raines when the depth of the accounting scandal became clear.” The Government noted, “The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public. The Notice explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner.” The Court fined Raines $3,000,000 and fined Fannie Mae $400,000,000.
In June 2008 The Wall Street Journal reported that Franklin Raines was one of several public officials who received below market rates loans at Countrywide Financial. Raines joined Jim Johnson and Christopher in receiving the VIP loans. Raines has been reported to be an Economic Advisor in the Barack Obama Campaign. At present the Obama Campaign denies that Raines is associated with the Campaign. At least two web sites have re-written prior biographies on Raines. The Wikipedia Biography on Raines has been rewritten, deleting a claim that Raines was an Obama Advisor. The Web site “Top Blacks, Positive Profiles of People of Color” has not only rewritten the Raines profile to delete such a reference, the profile is no longer available at the site.
Howard was the Chief Financial Officer of Fannie Mae. Howard, “was a strong internal proponent of using accounting strategies that would ensure a “stable pattern of earnings. In everyday English – he was cooking the books. The Government Investigation determined that, “Chief Financial Officer, Tim Howard, failed to provide adequate oversight to key control and reporting functions within Fannie Mae,”
On June 16, 2006, Rep. Richard Baker, R-La., asked the Justice Department to investigate his allegations that two former Fannie Mae executives lied to Congress in October 2004 when they denied manipulating the mortgage-finance giant’s income statement to achieve management pay bonuses. Investigations by federal regulators and the company’s board of directors have since concluded that management did manipulate 1998 earnings to trigger bonuses. Howard, like Raines, resigned under pressure in late 2004.
Howard’s Golden Parachute was estimated at $20,000,000.
The Wikipedia links keep break so I have removed them.