Barney Frank knocked on his Fannie

U.S. Rep. Barney Frank admitted he helped his ex-lover land a lucrative post with Fannie Mae in the early 1990s while the Newton Democrat was on a committee that regulated the lending giant...

Moses, who lived with Frank in Washington at the time, worked for Fannie until 1998, when he left the mortgage behemoth. Moses, who could not be reached for comment, and Frank split up that year.

Frank was a junior member on the House Financial Services Committee at the time he helped Moses land the job and served on the committee, which regulates lenders, for the duration of their relationship...

Frank’s assistance in helping Moses land the job was first reported in a new book about the fiscal meltdown by Pulitzer Prize-winning New York Times [NYT] reporter Gretchen Morgensen.

In an interview Tuesday on WBUR’s “Fresh Air,” Morgensen said Frank “was very aggressive and really tough on those who were testifying in Congress about reining in Fannie Mae and Freddie Mac” during hearings after Moses was hired. She said Fannie Mae “rolled out the red carpet” for Moses as part of a strategy to curry favor with Frank and other members of the Financial Services Committee.

Morgensen also noted that members of the committee raked in tens of thousands in campaign donations from Fannie and Freddie execs, including Frank, who received $42,000 in contributions from 1989 through 2008.

Barney Frank knocked on his Fannie - BostonHerald.com

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zimmer said:

This tool, along with Dodd should be behind bars. The damage they inflicted on the US makes Madoff look like a pauper.

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zimmer said:

This tool, along with Dodd should be behind bars. The damage they inflicted on the US makes Madoff look like a pauper.

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“What happened subsequently,” continued Congressman Frank, “in the years the Republicans wish to ignore because they cannot defend what happened – is that the Bush administration pushed for even more subprime lending, Alan Greenspan refused to use congressional authority he’d been given in 1994 to regulate it, and the House Republicans blocked any efforts to legislate against it. In fact, as quoted in a story in the Bloomberg News, when the Bush administration ordered Fannie Mae and Freddie Mac to increase significantly the number of loans they bought for people below median income, I objected saying that this would be good neither for the borrowers who could not repay the loans nor for Fannie Mae and Freddie Mac.”

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pbrauer said:

The damage to the U.S. and the world has nothing to do with Frank or Dodd, it's Wall Street and the investment banks where the blame lies.

House Financial Services Committee

Money quote:

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Summary of the Report
• Fannie Mae senior management promoted an image of the Enterprise as one of the lowest-risk financial institutions in the world and as “best in class” in terms of risk management, financial reporting, internal control, and corporate governance. The findings in this report show that risks at Fannie Mae were greatly understated and that the image was false.
• During the period covered by this report—1998 to mid-2004—Fannie Mae reported extremely smooth profit growth and hit announced targets for earnings per share precisely each quarter. Those achievements were illusions deliberately and systematically created by the Enterprise’s senior management with the aid of inappropriate accounting and improper earnings management.
• A large number of Fannie Mae’s accounting policies and practices did not comply with Generally Accepted Accounting Principles (GAAP). The Enterprise also had serious problems of internal control, financial reporting, and corporate governance. Those errors resulted in Fannie Mae overstating reported income and capital by a currently estimated $10.6 billion.
• By deliberately and intentionally manipulating accounting to hit earnings targets, senior management maximized the bonuses and other executive compensation they received, at the expense of shareholders. Earnings management made a significant contribution to the compensation of Fannie Mae Chairman and CEO Franklin Raines, which totaled over $90 million from 1998 through 2003. Of that total, over $52
million was directly tied to achieving earnings per share targets.
• Fannie Mae consistently took a significant amount of interest rate risk and, when interest rates fell in 2002, incurred billions of dollars in economic losses. The Enterprise also had large operational and reputational risk exposures.
• Fannie Mae’s Board of Directors contributed to those problems by failing to be sufficiently informed and to act independently of its chairman, Franklin Raines, and other senior executives; by failing to exercise the requisite oversight over the Enterprise’s operations; and by failing to discover or ensure the correction
of a wide variety of unsafe and unsound practices.
• The Board’s failures continued in the wake of revelations of accounting problems and improper earnings management at Freddie Mac and other high profile firms, the initiation of OFHEO’s special examination, and credible allegations of improper earnings management made by an employee of the Enterprise’s Office of the Controller.
• Senior management did not make investments in accounting systems, computer systems, other infrastructure, and staffing needed to support a sound internal control system, proper accounting, and GAAP-consistent financial reporting. Those failures came at a time when Fannie Mae faced many operational challenges related to its rapid growth and changing accounting and legal requirements.
• Fannie Mae senior management sought to interfere with OFHEO’s special examination by directing the Enterprise’s lobbyists to use their ties to Congressional staff to 1) generate a Congressional request for the Inspector General of the Department of Housing and Urban Development (HUD) to investigate OFHEO’s conduct of that examination and 2) insert into an appropriations bill language that would reduce the
agency’s appropriations until the Director of OFHEO was replaced.
• OFHEO has directed and will continue to direct Fannie Mae to take remedial actions to enhance the safe and sound operation of the Enterprise going forward. OFHEO staff recommends actions to enhance the goal of maintaining the safety and soundness of Fannie Mae.

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pbrauer said:

The damage to the U.S. and the world has nothing to do with Frank or Dodd, it's Wall Street and the investment banks where the blame lies.

House Financial Services Committee

Money quote:

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Marshabar said:

Bankers couldn't have done it without political cover and pressure from Freak and Dudd.

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pbrauer said:

The damage to the U.S. and the world has nothing to do with Frank or Dodd, it's Wall Street and the investment banks where the blame lies.

House Financial Services Committee

Money quote:

“What happened subsequently,” continued Congressman Frank, “in the years the Republicans wish to ignore because they cannot defend what happened – is that the Bush administration pushed for even more subprime lending, Alan Greenspan refused to use congressional authority he’d been given in 1994 to regulate it, and the House Republicans blocked any efforts to legislate against it. In fact, as quoted in a story in the Bloomberg News, when the Bush administration ordered Fannie Mae and Freddie Mac to increase significantly the number of loans they bought for people below median income, I objected saying that this would be good neither for the borrowers who could not repay the loans nor for Fannie Mae and Freddie Mac.”

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