Fannie, Freddie and Obama

So who’s in the pocket of lobbyists? As Obama bloviated about economic issues, what does he do behind the scenes? It’s quite a different picture that what he tells the crowds…

When Barack Obama came to congress in 2005 with his extraordinarily inquisitive mind, he had every reason to know that Fannie and Freddie were bad news. So what did the relentless agent of change blessed with the magnificent judgment do? He instantly became the twins’ favorite kissing cousin in congress. Since 1988, only Chris Dodd has raised more money from Fannie and Freddie than Obama, and Dodd had 20 years to shake down the twins where Obama has had only four.

But Obama’s relationship with the twins runs still deeper. The two Fannie CEOs who did the most to corrupt the company, Franklin Raines and Jim Johnson, have close ties with Obama. Raines is one of Obama’s ranking economic advisors. Jim Johnson was actually in charge of vetting Obama’s potential running mates until Obama responded to public pressure and threw Johnson under the bus where he now resides comfortably with Tony Rezko.

Obama’s dealings with Fannie and Freddie are consistent with his pattern. He talks a big game about change, and yet his actions belie the bravado. It’s not that Obama merely fails to live up to his reformer rhetoric. Both in Chicago and in Washington, he somehow wound up keeping close company with the least desirable denizens. In both locales, he showed a bewildering combination of poor judgment and rank hypocrisy.

Just more Chicago-style politics. Obama presents nothing new, except the ability to fool people into believing he’s something he’s not. Change? Nope — unless you mean Obama could move up to number one on the most money taken from Fannie and Freddie (instead of #2). McCain is correctly pointing out Obama’s involvement, while reminding people for McCain this isn’t a new issue; read what McCain said about this mess several years ago.

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my [McCain] view that the GSEs need to be reformed without delay.

And who was #2 on the lobbyist money list? Obama — with Dodd #1 and Kerry #3 (With Reid/Pelosi up there trying to make the top 10 at the trough as well). Some change — no wonder Obama/Reid/Pelosi don’t want to do anything but adjourn until after the elections. After all, they’re looking out for those who pay them, not the citizens.

Obama speaks a good game, but when he had the chance to actually do something, he passed on the opportunity, not only taking considerable lobbyist money, but having two of the CEO’s involved in his campaign.