Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 (and all the way back to 2001!)
- From: ST <sdsteve@xxxxxxxxxxxxx>
- Date: Wed, 24 Sep 2008 15:22:48 -0700
The White House released this list of attempts by President Bush to reform
Freddie Mae and Freddie Mac since he took office in 2001.
Unfortunately, Congress did not act on the president's warnings:
April: The Administration's FY02 budget declares that the size of Fannie Mae
and Freddie Mac is "a potential problem," because "financial trouble of a
large GSE could cause strong repercussions in financial markets, affecting
Federally insured entities and economic activity."
May: The President calls for the disclosure and corporate governance
principles contained in his 10-point plan for corporate responsibility to
apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
January: Freddie Mac announces it has to restate financial results for the
previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO)
releases a report explaining that "although investors perceive an implicit
Federal guarantee of [GSE] obligations," "the government has provided no
explicit legal backing for them." As a consequence, unexpected problems at a
GSE could immediately spread into financial sectors beyond the housing
market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,"
OFHEO Report, 2/4/03)
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's
review found earnings manipulations.
September: Treasury Secretary John Snow testifies before the House Financial
Services Committee to recommend that Congress enact "legislation to create a
new Federal agency to regulate and supervise the financial activities of our
housing-related government sponsored enterprises" and set prudent and
appropriate minimum capital adequacy requirements.
October: Fannie Mae discloses $1.2 billion accounting error.
November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw
explains that any "legislation to reform GSE regulation should empower the
new regulator with sufficient strength and credibility to reduce systemic
risk." To reduce the potential for systemic instability, the regulator would
have "broad authority to set both risk-based and minimum capital standards"
and "receivership powers necessary to wind down the affairs of a troubled
GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank
Supervisors State Banking Summit And Leadership, 11/6/03)
February: The President's FY05 Budget again highlights the risk posed by the
explosive growth of the GSEs and their low levels of required capital, and
called for creation of a new, world-class regulator: "The Administration has
determined that the safety and soundness regulators of the housing GSEs lack
sufficient power and stature to meet their responsibilities, and
therefore?should be replaced with a new strengthened regulator." (2005
Budget Analytic Perspectives, pg. 83)
February: CEA Chairman Mankiw cautions Congress to "not take [the financial
market's] strength for granted." Again, the call from the Administration was
to reduce this risk by "ensuring that the housing GSEs are overseen by an
effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And
Freddie's House In Order," Financial Times, 2/24/04)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed
by the GSEs and called for reform, saying "We do not have a world-class
system of supervision of the housing government sponsored enterprises
(GSEs), even though the importance of the housing financial system that the
GSEs serve demands the best in supervision to ensure the long-term vitality
of that system. Therefore, the Administration has called for a new, first
class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie
Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House
Financial Services Subcommittee on Oversight and Investigations Testimony,
April: Treasury Secretary John Snow repeats his call for GSE reform, saying
"Events that have transpired since I testified before this Committee in 2003
reinforce concerns over the systemic risks posed by the GSEs and further
highlight the need for real GSE reform to ensure that our housing finance
system remains a strong and vibrant source of funding for expanding
homeownership opportunities in America? Half-measures will only exacerbate
the risks to our financial system." (Secretary John W. Snow, "Testimony
Before The U.S. House Financial Services Committee," 4/13/05)
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
August: President Bush emphatically calls on Congress to pass a reform
package for Fannie Mae and Freddie Mac, saying "first things first when it
comes to those two institutions. Congress needs to get them reformed, get
them streamlined, get them focused, and then I will consider other options."
(President George W. Bush, Press Conference, The White House, 8/9/07)
September: RealtyTrac announces foreclosure filings up 243,000 in August
up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the
previous month the lowest level in nine years. Median sale price of
existing homes fell six percent from the year before.
December: President Bush again warns Congress of the need to pass
legislation reforming GSEs, saying "These institutions provide liquidity in
the mortgage market that benefits millions of homeowners, and it is vital
they operate safely and operate soundly. So I've called on Congress to pass
legislation that strengthens independent regulation of the GSEs and
ensures they focus on their important housing mission. The GSE reform bill
passed by the House earlier this year is a good start. But the Senate has
not acted. And the United States Senate needs to pass this legislation
soon." (President George W. Bush, Discusses Housing, The White House,
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms,
says "A new regulatory structure for the housing GSEs is essential if these
entities are to continue to perform their public mission successfully."
(David Nason, Testimony On Reforming GSE Regulation, Senate Committee On
Banking, Housing And Urban Affairs, 2/7/08)
March: Bear Stearns announces it will sell itself to JPMorgan Chase.
March: President Bush calls on Congress to take action and "move forward
with reforms on Fannie Mae and Freddie Mac. They need to continue to
modernize the FHA, as well as allow State housing agencies to issue tax-free
bonds to homeowners to refinance their mortgages." (President George W.
Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)
April: President Bush urges Congress to pass the much needed legislation and
"modernize Fannie Mae and Freddie Mac. [There are] constructive things
Congress can do that will encourage the housing market to correct quickly by
? helping people stay in their homes." (President George W. Bush, Meeting
With Cabinet, the White House, 4/14/08)
May: President Bush issues several pleas to Congress to pass legislation
reforming Fannie Mae and Freddie Mac before the situation deteriorates
"Americans are concerned about making their mortgage payments and keeping
their homes. Yet Congress has failed to pass legislation I have repeatedly
requested to modernize the Federal Housing Administration that will help
more families stay in their homes, reform Fannie Mae and Freddie Mac to
ensure they focus on their housing mission, and allow State housing agencies
to issue tax-free bonds to refinance sub-prime loans." (President George W.
Bush, Radio Address, 5/3/08)
"[T]he government ought to be helping creditworthy people stay in their
homes. And one way we can do that and Congress is making progress on this
is the reform of Fannie Mae and Freddie Mac. That reform will come with a
strong, independent regulator." (President George W. Bush, Meeting With The
Secretary Of The Treasury, the White House, 5/19/08)
"Congress needs to pass legislation to modernize the Federal Housing
Administration, reform Fannie Mae and Freddie Mac to ensure they focus on
their housing mission, and allow State housing agencies to issue tax-free
bonds to refinance subprime loans." (President George W. Bush, Radio
June: As foreclosure rates continued to rise in the first quarter, the
President once again asks Congress to take the necessary measures to address
this challenge, saying "we need to pass legislation to reform Fannie Mae and
Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For
Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)
July: Congress heeds the President's call for action and passes reform of
Fannie Mae and Freddie Mac as it becomes clear that the institutions are
In 2005-- Senator John McCain partnered with three other Senate Republicans
to reform the government¹s involvement in lending.
Democrats blocked this reform, too.