Fannie & Freddie's Friends In High Places

Inside Look At How Influential Mortgage Financers Kept Regulations At A Distance

(CBS)  It was during the Great Depression that Fannie Mae was founded - in 1938 - with a simple purpose in mind: to give lower and middle income Americans more access to the Great American Dream, owning your own home.

It did it by guaranteeing if a homeowner defaulted on a loan the bank would get paid, CBS News chief investigative correspondent Armen Keteyian reports.

Today Fannie and its smaller sibling, Freddie Mac, hold a pivotal place in the home loan market - one that has grown to include special advantages, such as:

guaranteed lines of credits from the U.S. Treasury

exemption from state and local taxes

limited government oversight

Their privileged status is that of government-sponsored Fortune 500 companies, powered by a vast political machine.

"Fannie and Freddie have probably had more influence than any set of institutions in modern times," said former Rep. James Leach.

As the former chairman of the House Financial Services Committee, Leach tried for years to hold Fannie and Freddie to tougher financial standards.

"You'd have people in Congress that would make it very clear that they wanted nothing to touch Fannie and Freddie," Leach said.

CBS News has learned Fannie and Freddie now boast nearly 150 lobbyists - spending more than $5 million this year alone.

In addition, the mortgage giants have doled out about $2 million more in campaign donations in the last four years to key member of Congress.

"The view was always held that if they lost even a small battle, it might slide into something more meaningful," said former Rep. Richard H. Baker, R-La. "So every threat was taken seriously."

A few years ago, Fannie was fined nearly $400 million after overstating earnings by $10 billion to maximize bonuses. In 2006, Freddie paid a record $4 million fine for illegal fundraisers.

Both Fannie and Freddy say they've changed their ways. But, more and more, it appears two companies designed to help average Americans have, in fact, been helping themselves.

© MMVIII, CBS Interactive Inc. All Rights Reserved.

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Add a Comment See all 26 Comments

by whiskyrocker July 15, 2008 11:31 PM EDT

I expected no more from these greedy scumbags. "overstating earnings by more than $10 billion to maximize bonuses." Sound''s worthy of some jail time to me.

Reply to this comment

by missingamerica July 15, 2008 11:38 PM EDT

It is ALWAYS the financial industry that gets America into trouble - and for every Republican like Leach who cared enough about his nation to try to curtail their corruption, there are nine other Republicans singing and dancing on the deregulation chorus line.

Inevitably to America''s regret.

Reply to this comment

by l8c6 July 16, 2008 12:37 AM EDT

It is ALWAYS the financial industry that gets America into trouble - and for every Republican like Leach who cared enough about his nation to try to curtail their corruption, there are nine other Republicans singing and dancing on the deregulation chorus line.

Inevitably to America''''s regret.

Posted by ibsteve2u

And the privatization and profiteering chorus line. The key words are "limited government oversight"

Reply to this comment

by rushlimpdrug July 16, 2008 12:44 AM EDT

So vote as many of these
skum out of office
every chance you get.

This includes REPUBLICANS
and DEMOCRATS.

Send the old ones to china
to work for pennies on the dollar.

If so many Americans weren''t in
such awe and fear of these thugs
we''d all be in better shape.

Reply to this comment

by txlakeside July 16, 2008 1:01 AM EDT

This is the great "less gov" is "good gov" jerks that should be arrested and thrown in jail! Our economy has been for 8 years in a Repub sponsored, BS bubble that is fueled by greed, corruption and fear. Impeach Bush and Cheney and send the Bas..rds to jail! They have ruined our posture and status in the world (the rest of the world laughs at us for letting them run us) and they ripped us all off for decades to come!

Reply to this comment

by relee42 July 16, 2008 1:19 AM EDT

Oh! Oh! Somebody needs impeachment and/or firing immediately if not sooner. Fannie and Freddie is our money and should not be spent in political campaigns. Throw those bums out, NOW!

Reply to this comment

by singingrick July 16, 2008 1:36 AM EDT

Here''s how it works.

The banking industry buys several Congessmen and has them pass bills that deregulate them. Then they go apeshittt raping consumers and engaging in wild speculative ventures. When the partie''s over they know they''ll all be rich and the federal government will have to bail them out or the entire economy will tank. The same thing happened during the Reagan and Bush 1 terms with the Savings and Loan crisis. That one cost the American taxpayers 1 trillion dollars in a massive bailout.

Thanks for voting Republican.

Reply to this comment

by wardoglrs July 16, 2008 1:41 AM EDT

Yea just vote them out and replace them with new ones cause you stupid Americans cant see an honest one.

Reply to this comment

by July 16, 2008 2:02 AM EDT

Throughout the ninteenth century and and for the firsst couple of decades of the twentieth, freewheeling capitalism ruled the day. And it was boom and bust, boom and bust, over and over again. Every few years there would be a run on the banks. Then in 1929, the capitalists threw the whole world into the ditch. Along came FDR and we put a few leashes on these "free marketeers". Now every since the end of WW2, the "free marketeers" have been chipping away at those controls. A little here, a little there. Phil Gramm chipped out a pretty good chunk a few years ago. And this week, we have a run on a bank!! Hmmmm.

Reply to this comment

by tucano2 July 16, 2008 2:05 AM EDT

These guys are 100 percent "Daddy Warbucks" till their greed and stupidity cause them to trip and fall, at which time they magically become "Little Orphan Annie" and want ''big government'' to give them a hand(out). The Helll with them! If they are capitalists then they ought to know THEY, and not the USA taxpayer, are entitled to the profits AND THE LOSSES they have earned.

Reply to this comment

by oneworldusa July 16, 2008 3:25 AM EDT

Yeah.

Talk about friends in high places. Check out the scandal going on at VCU (Virginia Commonwealth University) regarding the issuance of an unearned degree by the university to the city chief of police.

Recent graduates and current students are outraged.

Reply to this comment

by gmond July 16, 2008 3:42 AM EDT

Where were Fannie and Freddie when I needed them?

Reply to this comment

by Gary Kempf July 16, 2008 8:52 AM EDT

Both Fannie and Freddy say they''ve changed their ways. But, more and more, it appears two companies designed to help average Americans have, in fact, been helping themselves.

It is a sad fact that until we get people in office that will represent all Americans, and not just the wealthy. We are fooling ourselves if believe that change can happen, Corruption is on both sides of the party system. These corrupt individuals must be thrown out, and prosecuted. Stripped of all gain acquired as a elected official, this includes any retirement or benefits. It is time we insure those we elect are held responsible.....

Reply to this comment

by ajaxtheleast July 16, 2008 10:24 AM EDT

IT''S ALL IN THEIR NAMES !!

"Fannie and Freddie" could easily be

accepted as the bank robbing duo of

"Bonnie and Clyde".

Their down-to-earth names just
wore on them.

They weren''t living up to their
down-to-earth names.

So Fannie had an out-of-weddlock
baby and Freddie got caught with an
eight-year-old-ostrich affecting a
perfect name / character matchup

Wonder what the options were that
had these geniuses name an American
Financial Institution "Fannie"?

Visually swayed by ambient conditions?

Reply to this comment

by fstop100 July 16, 2008 11:01 AM EDT

lets start by making lobbying congress illegal.

Reply to this comment

by txgrouch2006 July 16, 2008 12:37 PM EDT

HERE''S MY SOLUTION.

Go to www.congress.org . Enter your ZIP+4 to get a list of YOUR elected representatives.

CLICK ON EACH NAME, and check the rep''s bio.

VOTE AGAINST anyone who was born 1946-1957.

CLEAN OUT THE BABY BOOMERS. SIXTEEN YEARS OF A BABY BOOMER GOVERNMENT HAS BEEN A DISASTER.

SIXTEEN YEARS IS ENOUGH!

Reply to this comment

by drinuk July 16, 2008 12:39 PM EDT

FSTOP100 Agreed ! but why stop there, shoot every politician and government empoyee who takes a back hander from any crooked corporate. Start with Big Pharma and the FDA, they most of all are harming the nation and the next generations.

Reply to this comment

by brianbwb-2009 July 16, 2008 1:09 PM EDT

Where are the right wing neocons that usually post pro business, pro bush tripe? They should be all over this one, trying to explain how "limited government oversight" is such a good thing.

(Chrrrp...chrrrp...) "Mighty quiet on the right there, Marshall..."

"Yeah, too quiet..."

Reply to this comment

by Gary Kempf July 16, 2008 2:23 PM EDT

brianbwb;

They are swarming around the inflation post site.

Reply to this comment

by frankbowers July 16, 2008 3:51 PM EDT

Their fines that ws charged for the bonus were paid by the tax payers, the bonus were all kept not one cent returned so the tax payer took it in the rear not once but twice thanks to the 400M $ fine which the U and I''s had to pay while congress looked real good and smuge. The president of the two companies (freddi and fanny) continue to raid our pockets and get rich doing so.
Frank Bowers

Reply to this comment

by aggiekat2004 July 16, 2008 4:02 PM EDT

Yeah, but whoever wrote this article needs to go back to school and revisit GRAMMAR 101.

Sheeeesh...these writers never cease to amaze me!

Reply to this comment

by randynason July 16, 2008 4:27 PM EDT

Where are the right wing neocons that usually post pro business, pro bush tripe?
Posted by brianbwb

I think they''re probably tripping all over themselves to get in line and kneel in front of whoever is in charge to worship their "leaning tower of *enis." That''s what they''re best at doing.

Reply to this comment

by rushlimpdrug July 16, 2008 4:44 PM EDT

There is no need to worry you liberals, the Bush admiinistration has had a recievership plan for Fannie and Freddie for months now. This administration is very forward thinking.
Posted by GOP_forever at 09:02 AM


This is forward thinking for the GOP?

How wonderful.

It''s like showing your kids how
to plan to go broke / bankrupt.

Guess that''s better a plan to
be responsible.

Reply to this comment

by PacificGatePost July 16, 2008 10:10 PM EDT

What is needed is leadership out of Washington. Leadership with simple common sense.

http://pacificgatepost.blogspot.com/2008/07/where-is-economic-leadership.html

Reply to this comment

by wardoglrs July 17, 2008 1:17 PM EDT

Dont worry we will have the new printers running as soon as we can get more green ink.

Reply to this comment

by forthepeopl1 July 17, 2008 1:35 PM EDT

Concerns about the international breadth of the fallout from Fannie and Freddie''s problems also eased. South Korea''s central bank denied a media report that it had unrealized losses of more than $7 billion in investments in U.S. agency debt including bonds issued by Fannie Mae and Freddie Mac.

Bank of China 3988.HK 601988.SS , meanwhile, may hold roughly $20 billion worth of bonds issued by Fannie and Freddie, according to a research note by analysts at CLSA.

A Bank of China spokesman could not immediately be reached for comment. Because the U.S. government has taken steps to support Fannie and Freddie, CLSA said in its note that it regards the credit risk for the two as near to that of a sovereign credit rating for the government itself.

Reply to this comment

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[whiskyrocker]

I expected no more from these greedy scumbags. "overstating earnings by more than $10 billion to maximize bonuses." Sound''s worthy of some jail time to me.

[missingamerica]

It is ALWAYS the financial industry that gets America into trouble - and for every Republican like Leach who cared enough about his nation to try to curtail their corruption, there are nine other Republicans singing and dancing on the deregulation chorus line.

Inevitably to America''s regret.

[l8c6]

It is ALWAYS the financial industry that gets America into trouble - and for every Republican like Leach who cared enough about his nation to try to curtail their corruption, there are nine other Republicans singing and dancing on the deregulation chorus line.

Inevitably to America''''s regret.

Posted by ibsteve2u

And the privatization and profiteering chorus line. The key words are "limited government oversight"

[rushlimpdrug]

So vote as many of these
skum out of office
every chance you get.

This includes REPUBLICANS
and DEMOCRATS.

Send the old ones to china
to work for pennies on the dollar.

If so many Americans weren''t in
such awe and fear of these thugs
we''d all be in better shape.

[txlakeside]

This is the great "less gov" is "good gov" jerks that should be arrested and thrown in jail! Our economy has been for 8 years in a Repub sponsored, BS bubble that is fueled by greed, corruption and fear. Impeach Bush and Cheney and send the Bas..rds to jail! They have ruined our posture and status in the world (the rest of the world laughs at us for letting them run us) and they ripped us all off for decades to come!

[relee42]

Oh! Oh! Somebody needs impeachment and/or firing immediately if not sooner. Fannie and Freddie is our money and should not be spent in political campaigns. Throw those bums out, NOW!

[singingrick]

Here''s how it works.

The banking industry buys several Congessmen and has them pass bills that deregulate them. Then they go apeshittt raping consumers and engaging in wild speculative ventures. When the partie''s over they know they''ll all be rich and the federal government will have to bail them out or the entire economy will tank. The same thing happened during the Reagan and Bush 1 terms with the Savings and Loan crisis. That one cost the American taxpayers 1 trillion dollars in a massive bailout.

Thanks for voting Republican.

[wardoglrs]

Yea just vote them out and replace them with new ones cause you stupid Americans cant see an honest one.

Throughout the ninteenth century and and for the firsst couple of decades of the twentieth, freewheeling capitalism ruled the day. And it was boom and bust, boom and bust, over and over again. Every few years there would be a run on the banks. Then in 1929, the capitalists threw the whole world into the ditch. Along came FDR and we put a few leashes on these "free marketeers". Now every since the end of WW2, the "free marketeers" have been chipping away at those controls. A little here, a little there. Phil Gramm chipped out a pretty good chunk a few years ago. And this week, we have a run on a bank!! Hmmmm.

[tucano2]

These guys are 100 percent "Daddy Warbucks" till their greed and stupidity cause them to trip and fall, at which time they magically become "Little Orphan Annie" and want ''big government'' to give them a hand(out). The Helll with them! If they are capitalists then they ought to know THEY, and not the USA taxpayer, are entitled to the profits AND THE LOSSES they have earned.

[oneworldusa]

Yeah.

Talk about friends in high places. Check out the scandal going on at VCU (Virginia Commonwealth University) regarding the issuance of an unearned degree by the university to the city chief of police.

Recent graduates and current students are outraged.

[gmond]

Where were Fannie and Freddie when I needed them?

[Gary Kempf]

Both Fannie and Freddy say they''ve changed their ways. But, more and more, it appears two companies designed to help average Americans have, in fact, been helping themselves.

It is a sad fact that until we get people in office that will represent all Americans, and not just the wealthy. We are fooling ourselves if believe that change can happen, Corruption is on both sides of the party system. These corrupt individuals must be thrown out, and prosecuted. Stripped of all gain acquired as a elected official, this includes any retirement or benefits. It is time we insure those we elect are held responsible.....

[ajaxtheleast]

IT''S ALL IN THEIR NAMES !!

"Fannie and Freddie" could easily be

accepted as the bank robbing duo of

"Bonnie and Clyde".

Their down-to-earth names just
wore on them.

They weren''t living up to their
down-to-earth names.

So Fannie had an out-of-weddlock
baby and Freddie got caught with an
eight-year-old-ostrich affecting a
perfect name / character matchup

Wonder what the options were that
had these geniuses name an American
Financial Institution "Fannie"?

Visually swayed by ambient conditions?

[fstop100]

lets start by making lobbying congress illegal.

[txgrouch2006]

HERE''S MY SOLUTION.

Go to www.congress.org . Enter your ZIP+4 to get a list of YOUR elected representatives.

CLICK ON EACH NAME, and check the rep''s bio.

VOTE AGAINST anyone who was born 1946-1957.

CLEAN OUT THE BABY BOOMERS. SIXTEEN YEARS OF A BABY BOOMER GOVERNMENT HAS BEEN A DISASTER.

SIXTEEN YEARS IS ENOUGH!

[drinuk]

FSTOP100 Agreed ! but why stop there, shoot every politician and government empoyee who takes a back hander from any crooked corporate. Start with Big Pharma and the FDA, they most of all are harming the nation and the next generations.

[brianbwb-2009]

Where are the right wing neocons that usually post pro business, pro bush tripe? They should be all over this one, trying to explain how "limited government oversight" is such a good thing.

(Chrrrp...chrrrp...) "Mighty quiet on the right there, Marshall..."

"Yeah, too quiet..."

[Gary Kempf]

brianbwb;

They are swarming around the inflation post site.

[frankbowers]

Their fines that ws charged for the bonus were paid by the tax payers, the bonus were all kept not one cent returned so the tax payer took it in the rear not once but twice thanks to the 400M $ fine which the U and I''s had to pay while congress looked real good and smuge. The president of the two companies (freddi and fanny) continue to raid our pockets and get rich doing so.
Frank Bowers

[aggiekat2004]

Yeah, but whoever wrote this article needs to go back to school and revisit GRAMMAR 101.

Sheeeesh...these writers never cease to amaze me!

[randynason]

Where are the right wing neocons that usually post pro business, pro bush tripe?
Posted by brianbwb

I think they''re probably tripping all over themselves to get in line and kneel in front of whoever is in charge to worship their "leaning tower of *enis." That''s what they''re best at doing.

[rushlimpdrug]

There is no need to worry you liberals, the Bush admiinistration has had a recievership plan for Fannie and Freddie for months now. This administration is very forward thinking.
Posted by GOP_forever at 09:02 AM


This is forward thinking for the GOP?

How wonderful.

It''s like showing your kids how
to plan to go broke / bankrupt.

Guess that''s better a plan to
be responsible.

[PacificGatePost]

What is needed is leadership out of Washington. Leadership with simple common sense.

http://pacificgatepost.blogspot.com/2008/07/where-is-economic-leadership.html

[wardoglrs]

Dont worry we will have the new printers running as soon as we can get more green ink.

[forthepeopl1]

Concerns about the international breadth of the fallout from Fannie and Freddie''s problems also eased. South Korea''s central bank denied a media report that it had unrealized losses of more than $7 billion in investments in U.S. agency debt including bonds issued by Fannie Mae and Freddie Mac.

Bank of China 3988.HK 601988.SS , meanwhile, may hold roughly $20 billion worth of bonds issued by Fannie and Freddie, according to a research note by analysts at CLSA.

A Bank of China spokesman could not immediately be reached for comment. Because the U.S. government has taken steps to support Fannie and Freddie, CLSA said in its note that it regards the credit risk for the two as near to that of a sovereign credit rating for the government itself.