Where is the congressional investigation of Fannie and Freddie?

Around 2001 a major debacle occurred in the business world. Enron stocks went from 90$ a share to less than 50 cents.

As the scandal was revealed, Enron shares dropped from over US$90.00 to less than 50¢. As Enron had been considered a blue chip stock, this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements.

wiki source

The executives were tried and rightfully so

Lay and Skilling were indicted for securities and wire fraud in July 2004, leading to a highly-publicized trial in which Lay was convicted on all six counts and Skilling on 19 of 28 counts on May 25, 2006. On July 5, 2006, Lay died at age 64 while vacationing in Aspen, Colorado, after suffering a heart attack on July 4. Skilling was convicted and sentenced to 24 years, 4 months in a federal prison on October 23, 2006. As well as his sentence of 24 years, 4 months, he was ordered to restore the Enron pension fund with $26 million out-of-pocket. It is expected that he will appeal.

There were investigations called for by members of Congress...

New congressional investigation of Enron collapse

"Something was very rotten in the state of Enron," said Sen. Carl Levin, D-Michigan, the chairman of the Senate Permanent Subcommittee on Investigations.

What is known so far, said Levin, indicates "layer upon layer of conflicts of interest."

What senators want to know, said Levin, is whether new laws and regulations are needed to prevent another collapse or whether "laws and regulations were violated" in Enron's collapse.

There was screaming from all over congress about Enron. There were accusations left and right that Bush was a part of it all. To this day, Enron is a term used to describe how Bush rips off the American people through some failed business scheme.

In fact there are regular Congressional investigations on a wide variety of subjects, from Bush's emails to oil prices to air travel.

Enron was an $80 billion company.

Fannie owns or guarantees more than 5 trillion in mortgages. The bailout of Fannie and Freddie will officially cost $700 billion (for now).

Yet there is no calls from our esteemed leaders of Congress for an investigation. One would think that if Bush's policies were the cause of all this mess, as some high profile democrats like to say, there would be screams to investigate and expose Bush's involvement into the biggest financial disaster since the Great Depression.

The Fannie and Freddie collapse is way larger than the Enron fiasco and can potentially make Enron look like a failed lemonade stand start-up. Yet the only thing Congress wants is just some oversight. Congress always wants oversight, that is their keyword to CYA, make sure that the people think you are doing something. How about really doing something and finding out what went wrong by dragging out people to testify under oath, Mr Congressperson?

Instead of screams form Congress to haul the executives of Fannie, Freddie, Countrywide, Lehman, and all these other failed and bailed out financial institutions that had to do with the sub-prime crisis and financial shock, we had a Congress that for a while "didn't know what to do."

I wonder if Federal Housing Finance Reform Act of 2005 has anything to do with the silence on an investigation into one of the largest financial shocks in history?

Or maybe this?

The Republican nominee, Mr. McCain of Arizona, has numerous close relationships with and contributions from current and former company lobbyists. Mr. Obama, his Democratic rival from Illinois, is second among members of Congress in donations from the firms’ employees and political action committees.

article

Right now there are calls for accountability yet really no action or investigation. The American people are calling for accountability. How can there be accountability if members of Congress don't want to call for an investigation?

Why are there no scheduled hearings of some of the many CEO's that had the fat payouts?

Is Congress afraid that an executive under oath will say things that might expose some members of Congress? The inaction in Congress is very revealing. It is obvious that the Fannie and Freddie bailout is on a much greater magnitude than the Enron disaster and yet there is no investigation. I wonder if some members of Congress are afraid that their terms will end in a trip to jail.

These two organizations have already cost us billions of dollars. A Congressional investigation will only cost us more. In the end the politicians will blame each other for the collapse and everyone will walk away. I think instead of a Congressional investigation there should be a criminal investigation and people should be prosecuted for the fraud they knew was going on. Maybe use the RICO law or something similar against them.

reply to post by jam321


It would cost us more if nothing is done to find out how Fannie and Freddie got to the position they are in.

It would cost us more if the same people who brought this huge bail out scenario are still running the show in whatever new position they can find.

If hearing were held and every current and former member of the failed parts financial industry were dragged out, at least they would be forced to name names under oath and would be used in the voting process giving a chance to clean up the corruption in government.

I would gladly pay extra to see some heads roll especially with what happened to the economy.

I think you are right to say that there should be an investigation. I also believe that it should be a criminal one. I like the comment about RICO. They are nothing but do nothin' criminals and should be tried as such.

reply to post by wutone


you speak the truth. I agree. But I feel that many in Congress would be implicated in this as well. And for them to be examining what their own role contributed to this would be ridiculous. It would be a circus show. I would go for an independent investigation which is impartial and name every TOM, DICK, and HARRY involved regardless of who they are.

good post

Most everything in this thread is wrong. Fannie and Freddie were not insolvent or bankrupt. Big money wanted them to buy all the worthless mortgage crap and they refused to do so. In turn the goverment decides they are not completing their mission although buying worthless crap isn't one of their missions and fixed that by just taking them over.

In history the only taxpayer money to go to Freddie and Fannie is the latest $1 billion in preferred stock(Secured by 1 trillion in assets, goverment gets paid first). The goverment has also given them credit lines of $100 billion each, most likely to require them to buy worthles debt in my opinion. Since the bailout was proposed after the FRE/FNM seizure, I would think that they will not be touching that 100 billion and instead will be completely nationalized or returned to the market and released by the goverment.

This crisis is not the fault of Freddie and Fannie. It is because of Investment banks gone wild. Through some perverse way of thinking the investments banks think their problems are because Fannie and Freddie won't buy their worthless crap.

Make a phone call, I did, to many:

www.visi.com...

Why no investigations?

Follow the money!

www.opensecrets.org...

All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008


Dodd, Christopher J S CT D $165,400 $48,500 $116,900
Obama, Barack S IL D $126,349 $6,000 $120,349
Kerry, John S MA D $111,000 $2,000 $109,000

The top 3 are Democrats.....Investigations? Not going to happen.


[edit on 23-9-2008 by RRconservative]

Originally posted by disgustedbyhumanity
This crisis is not the fault of Freddie and Fannie. It is because of Investment banks gone wild. Through some perverse way of thinking the investments banks think their problems are because Fannie and Freddie won't buy their worthless crap.

Wasn't Fannie over leveraged around 50:1? Didn't Fannie and Freddie insure many sub-prime and Alt-A loans?

Maybe if the FHMA standards were a little higher and people had to do more than state their incomes to get a home, the housing collapse wouldn't have had such a huge effect.

Fannie and Freddie wouldn't have collapsed if their underwriting was like that of Bank of America or Wells Fargo. The thing is that B of A wasn't forced to create a mortgage industry that would allow people who aren't able to afford homes to get a home loan.

reply to post by RRconservative

Oh RR.. What are we to do with you. You are pointing out that politicians are corrupt as if this is a new thing and only applicable to Democrats. Why don't you go and do some reading up on what is happening right now? Who are involved. Who are responsible. I am sure the line between the Parties would fade. Corruption is every where my friend.

reply to post by RRconservative


Ouch and Obama was there for only a few years.

He must have some powerful friends.

RR, I see what you mean but this overall crisis is too much to blame one party. All of them are to blame. People could go tit for tat on the blame game all day.

Jump in on this one. There seems to be one person consistent on blamin Reps for all of this.....

www.abovetopsecret.com...

Reply to Lebowski achiever:

Democrats have openly stated they would like to take over the oil industry, and the health care industry, what makes you think they want to stop there?

Banks were pushed into making loans to people who couldn't afford them for the sake of "diversity". When government trys to step in and engineer fairness and diversity in the marketplace, this kind of thing happens. Then when it fails, they want to be the hero and take over another huge part of our economy. Government caused the problem and should not take it upon themselves to fix it.

I also stand by my reasons there will not be investigations. Fannie Mae and Freddie Mac knew who their allies were, and they made their political contributions accordingly. Follow the money!

reply to post by RRconservative


Yes do follow the money! But have an open mind as you will be amazed. Who are the greatest detractors of the current Bail Out proposals? Who are the greatest supporters. Come back here with your findings. No Obama slamming allowed, Mkay?

There is now breaking news, by the AP, on FOX (gasp) that the FBI is NOW investigating F&F, AIG and LB....

Looking for link now...

hosted.ap.org...

FBI investigating companies at heart of meltdown

By LARA JAKES JORDAN
Associated Press Writer



WASHINGTON (AP) -- The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration.

Two law enforcement officials said the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc., and insurer American International Group Inc.

[edit on 9/23/2008 by greeneyedleo]

reply to post by greeneyedleo


I hope the FBI doesn't go half-ass like they did 4 years ago

"Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.

latimesblogs.latimes.com...

Or maybe someone stopped them, who knows?

Originally posted by Lebowski achiever
reply to post by RRconservative

 

Yes do follow the money! But have an open mind as you will be amazed. Who are the greatest detractors of the current Bail Out proposals? Who are the greatest supporters. Come back here with your findings. No Obama slamming allowed, Mkay?

According to some in the MSM, there is a growing Republican backlash to the bailouts although I don't really believe McCain on this.

They're getting support from Republican lawmakers, who are stepping up their efforts to put a halt to further rescues. Yesterday a group of 100 lawmakers released a letter asking Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson to ``refrain from conducting any additional government-financed bailouts for large financial firms.''

www.bloomberg.com...

They might be doing this for political posturing though. The American public is largely against the bailouts and it would be smart politics for the minority party to play on this.