House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Gregory Meeks, (D., N.Y.): . . . I am just pissed off at Ofheo [Office of Federal Housing Enterprise Oversight] because if it wasn’t for you I don’t think that we would be here in the first place.
And Freddie Mac, who on its own, you know, came out front and indicated it is wrong, and now the problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place, you have given them an excuse to try to have this forum so that we can talk about it and maybe change the direction and the mission of what the GSEs had, which they have done a tremendous job. . .
Ofheo Director Armando Falcon Jr.: Congressman, Ofheo did not improperly apply accounting rules; Freddie Mac did. Ofheo did not try to manage earnings improperly; Freddie Mac did. So this isn’t about the agency’s engagement in improper conduct, it is about Freddie Mac. Let me just correct the record on that. . . . I have been asking for these additional authorities for four years now. I have been asking for additional resources, the independent appropriations assessment powers.
This is not a matter of the agency engaging in any misconduct. . . .
Rep. Waters: However, I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn’t broke. Housing is the economic engine of our economy, and in no community does this engine need to work more than in mine. With last week’s hurricane and the drain on the economy from the war in Iraq, we should do no harm to these GSEs. We should be enhancing regulation, not making fundamental change.
Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. . . .
Rep. Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?
Mr. Raines: No, sir.
Mr. Frank: Mr. Gould?
Mr. Gould: No, sir. . . .
Mr. Frank: OK. Then I am not entirely sure why we are here. . . .
Rep. Frank: I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.
While we’re on the topic of calling out Democrats for their part in creating our financial crisis someone needs to hold Harry Reid accountable for the remarks he made to reporters yesterday.
While pressing for passage of the bailout bill Senator Reid told reporters one of the country’s premier insurance company’s was on the verge of bankruptcy.
“We don’t have a lot of leeway on time,” Reid told reporters in the Capitol. “One of the individuals in the caucus today talked about a major insurance company — a major insurance company — one with a name that everyone knows that’s on the verge of going bankrupt. That’s what this is all about.”
To his credit Senator Reid, is backing off that statement. According to Jim Manley, a spokesman for the Nevada Democrat “Senator Reid is not personally aware of any particular company being on the verge of bankruptcy. He has no special knowledge about [a bankruptcy] nor has he talked to any insurance company officials.”
“Rather, his comments were meant to refer to the conditions in the financial sector generally. He regrets any confusion his comments may have caused,” Manley added.
Unfortunately, the damage has already been done… As of 12:15 p.m. today the S&P Insurance 500 was down 4.5%, or $15 billion.