Tuesday, May 23, 2006

Fannie Mae, Fannie Mae not...

I do not know why things ever suprise me anymore, but they do. How deep can this administration's rotten roots bore? Marcy Gordon (AP Business Writer), has a story out on the wire today detailing an $11 billion accounting scandal. What she fails to tell you is just how deep and bold the roots of deception were. In the article, the Office of Federal Housing Enterprise Oversight's blistering report on Fannie Mae, the government-sponsored mortgage company, is looked at in a narrow focus related to today's reactions by the SEC and Justice Department. The SEC levied a $400 million fine against the company, the article says,

The report also faulted Fannie Mae's board of directors for failing to exercise its oversight responsibilities and failing to discover "a wide variety of unsafe and unsound practices" at the largest buyer and guarantor of home mortgages in the country.

In December 2004, the SEC ordered Fannie Mae to restate its earnings back to 2001 - a correction expected to reach an estimated $11 billion. The Justice Department has been pursuing a criminal investigation

Now make note of the dates, "back to 2001". In December of 2001, the Bush appointed Board of Directors had the shear audacity to write this letter to then OFHEO Director, Armando Falcon, protesting quite publicly over "our serious concerns regarding OFHEO's proposed corporate governance regulations." These people were actually so bold as to defy government oversight as a matter of principle? The letter begins with what I percieve as one of the all time gross misrepresentations on Public record, given the light of todays findings. It reads as follows,

We write as President Bush's appointees to the Fannie Mae Board of Directors. We come from various regions of the country and diverse backgrounds, but share a deep commitment to ensuring that the U.S. housing finance system remains safe and sound, accessible to all Americans, and the envy of the world. We are writing to express our serious concerns regarding OFHEO's proposed corporate governance regulations.......If the proposed regulations are adopted, board members appointed by President Bush will have more potential personal liability and less financial protection than the directors appointed to Fannie Mae's board by any previous president.

Now granted, none of the board members who drafted this letter remain on the board, but the gravity of procedings motivated by these Bush appointees, has led directly to the scandal we see today. This letter is nearly five years old, and is just now coming to play in the administration's policies it seems.

"The image of Fannie Mae as one of the lowest-risk and 'best in class' institutions was a facade," James B. Lockhart, the acting director of OFHEO, said in a statement as the report was released. "Our examination found an environment where the ends justified the means. Senior management manipulated accounting, reaped maximum, undeserved bonuses, and prevented the rest of the world from knowing."

Are there going to remain any sacred cows when Bush gets through? And he will be through, not soon enough for me.

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