One citation (reference) I did not see in his letter is the New York Times 2003 article on the Bush Administration's attempt to regulate Fannnie & Freddie, warning of the potential outcome if they were not reined in.
Why The Sub-Prime/Fannie-Mae meltdown?
* Throughout the 1990s, the Clinton Adminstration and Democrat-controlled Congress pressured FannieMae to start offering more sub-prime loans to people with poor credit who couldn't normally afford or qualify for home loans (including many minorities).
"Fannie Mae has agreed to buy more loans with very low down payments-or with mortgage payments that represent an unusually high percentage of a buyer's income. That's made banks willing to lend to lower-income families they once might have rejected."(Source: LA Times, 1999)
* Warnings were raised as early as 1999 that this program could come back to devastate Fannie Mae.
(Source: NYTimes, Sept. 1999)
* Starting in 2001, President Bush has been publicly calling for Congressional reform of FannieMae/FreddieMac - including 17 times in 2008 alone.
(Source: WhiteHouse, Sept 2008.)
* In 2003, President Bush recommended a new agency to oversee FannieMae/Freddie Mac which was even then known to be broken. Democrats not only blocked this effort - they DENIED there was even a problem:
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.
(Source: NYTimes, Sept. 2003)
* Barney Frank, who is openly gay, was actually involved long-time romatic relationship with a FannieMae executive Herb Moses for ten years throughout most of the 1990s. Frank had in the past been called upon to use his influence on the House Financial Services Committee to support FannieMae.
(Source: Business & Media Institute)
* In 2004, House Democrats continued to vehemently deny there were any problems with FannieMae/FreddieMac and viciously attacked those who suggested that they were heading into trouble and needing reform.
(Source: Video of House Democrats)
* In 2005, Republicans in Congress did create legislation to regulate and reform FannieMae/FreddieMac and to try to avert this coming disaster. John McCain supported and was a co-sponsor of that bill. McCain did what he could to stop this disaster years ago.
(Source: Congressional Record)
* Democrats in the Senate killed that Republican Bill to regulate and reform Fannie/Freddie right before the 2006 election. After that Democrats took control of the House and Senate in 2006, there were no more serious attempts made to avert the coming meltdown of FannieMae/FreddieMac by the Democrat-controlled Congress.
* Since 2006, Barack Obama has received $125,000 in campaign contributions from FannieMae/FreddieMac employees and PACs - more per year than any other member of Congress.
(Source: 1989-2008)
* Obama is the second largest recipient of total campaign contributions from Fannie/Freddie PACs - fellow Democratic Senator Chris Dodd is #1. Dodd also oversees the Senate Committee on Banking, Housing and Urban Development - and he made sure that no one did anything to address the long-standing problems with FannieMae.
* In the 1990s, Jim Johnson was Chairman and CEO of FannieMae. In 2004, a Federal Investigation found that during Johnson's tenure, FannieMae had improperly deferred $200 million in expenses, over-reported its value and later found that FannieMae substantially under-reported Johnson's compensation to the tune of almost $20 million.
* After Johnson's tenure, Franklin D. Raines was Fannie Mae Chairman/CEO until 2004 and he also supported these risky, sub-prime loan programs. In 2004, Raines was forced to take an "early retirement" from Fannie Mae while under investigation by the Securities & Exchange Commission and lawsuits over "accounting irregularities". Raines settled those lawsuits this year by paying millions in penalities.
* Franklin Raines has been tapped as an economic advisor to Barack Obama's Presidential campaign and Jim Johnson worked on Barack Obama vice-presidential search committee.
(Sources: Wash. Post July 2008, Wash. Post Aug 2008)
BOTTOMLINE:- The FannieMae "subprime" problem began with the Clinton Administration and the Democrat-controlled Congress in the early 90s.
- Warnings were sounded in the late '90s of a coming financial disaster.
- President Bush tried repeatedly to fix this problem since 2001 - but Democrats denied the problem it even existed.
- Republicans in Congress tried to fix this problem - but Democrats effectively blocked them.
- Proposals for bipartisan solutions stopped when Democrats took control of Congress.
- Democrats even viciously attacked people who tried to alert Congress of the growing FannieMae problem.
- Democrats who are NOW claiming they can fix the problem (like Frank, Dodd, Obama, etc.) are the exact same ones who ignored the problem, who denied the problem, who are tained by FannieMae contributions and obvious conflicts of interest and who are still associated and entwined with failed and discredited FannieMae CEOs.