Bush Administration predicted Financial Crisis in 2001?! Proof within

I found this article entitled "Just the Facts: The Administration's Unheeded Warnings About the Systemic Risk Posed by the GSEs" on the whitehouse.gov web site stating specific dates etc. that prove? that the Bush administration foresaw the financial crisis or at least some form way back in 2001.....possible conspiracy considering they predicted it? or is it just propaganda? ... i'm not sure what to think considering all of these dates revolve around true statements made by the administration....

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.
2001 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."
2002 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)
2003 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)

Many more dates ... too many to list...here

[edit on 30-9-2008 by baseball101]

Can these be independently verified? This sound a lot like Propaganda otherwise.

That sounds like complete bull, that lets on that Bush was actually trying to save those two banks..

Its pretty obvious from this standpoint that he was trying to run he US into the ground and those banks were the catalyst.

I did find an interesting report from 2004 (from stern.nyu.edu)

Fannie Mae was created in 1938, under the authority of the National Housing Act of 1934. Until 1968, it was a unit within the federal government. Its function was to expand the availability of residential mortgage finance, by buying mortgages from originators and holding the mortgages; these purchases were funded through debt issuances that were direct obligations of the federal government. As part of the Housing and Urban Development Act of 1968, Fannie Mae was spun off from the federal government and became a publicly traded corporation, but it retained an array of special government features (which will be discussed below).

It goes on to explain exactly what kind of companies they are.

In fact the whole document is interesting and may hold some clues to the OP above.
www.stern.nyu.edu...

Advantages - They were created by Congress and thus hold special federal charters (unlike virtually all other corporations, which hold charters granted by a state, often Delaware); - The President can appoint five of the eighteen board members of each company;7 - Each company has a potential line of credit with the U.S. Treasury for up to $2.25 billion; - Both companies are exempt from state and local income taxes; - They can use the Federal Reserve as their fiscal agent;8 - Their debt is eligible for use as collateral for public deposits, for purchase by the Federal Reserve in open-market operations, and for unlimited investment by commercial banks and S&Ls; - Their securities are exempt from the Securities and Exchange Commission's registration and reporting requirements and fees;9 - Their securities are explicitly government securities under the Securities Exchange Act of 1934; and - Their securities are exempt from the provisions of many state investor protection laws.

Originally posted by Dermo
That sounds like complete bull, that lets on that Bush was actually trying to save those two banks..

Its pretty obvious from this standpoint that he was trying to run he US into the ground and those banks were the catalyst.

Ha, the nervousness that Bush kept warning Congress about this is starting to kick in.
It was Chris Dodd and Barney Frank that kept saying the economy was OK and Bush kept warning.
Although it happened during Bush's wash Clinton and Carter are more to blame.

It is true. I have heard sound bites of the warnings and how the congress kept down playing it and blowing it off. If I can find the audio clips I will post a link.

It is just so lame that the media does not report this and those who are innocent and warned of the problem don't defend themselves, etc..

The United States Senate
May 25, 2006
Sen. John McCain [R-AZ]: 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 view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.

ca.youtube.com...

Here is just one link and you can here it in their own words.

Amazes me how those on ATS listen and believe everything they hear on CNN.

Dig deeper!

hmm i'm not really sure what to think it seems like their is some legitimacy to this whole claim though ... I just wonder why it's just now being brought to the public's attention considering that bulletin was posted on the white house web site the 19th of sep 2008

I guess some people conveniently refuse to listen to the truth because it goes against everything they choose to believe, especially if they already have a unfavorable view of Bush.

I still have a strong feeling this financial crisis was intentionally created by the spiteful libs to somehow make Bush look bad.

Since they weren't able to pin him on the Iraq war, which lately has been going well, they instead decided to pin the economy on him.

Hell of a game of spite putting the fate of a country at risk to advance a partison agenda.

Alxandro,
I can't get over how many people just believe everything they hear on CNN, etc or what they read in the paper. I find it really shocking that so many people on ATS who are in search of the truth also fall for everything the MSM puts out. I have talked to people who refuse to even give any alternative view a chance.

Originally posted by Alxandro
Although it happened during Bush's wash Clinton and Carter are more to blame.

My friend sent me this from the San Francisco Chronicle. I posted it in another thread but it might be something to read here.

The average American listening to all the news of bank failures, and Fannie Mae and Freddie Mac (who?) being taken over by the government, and now a “bail-out” of large, privately owned and well known companies, is at first bewildered, and then angry. The average American should be furious.
But whom should Americans be furious? That seems to be the big question as political fingers are pointing in every direction. Was it greedy CEO’s with their “golden parachutes?” Was it the Democrats? Was it the Republicans? Was it Wall Street? (Who, exactly IS “Wall Street?”) The simple answer is that it is all of the above.

Treasury Secretary Henry Paulson, Jr., and Federal Reserve Chairman Ben S. Bernanke were on Capital Hill taking a verbal beating from some of the very people who should not be asking the questions, but answering them and answering those questions under oath.

Senator Chris Dodd, (D-Conn.) and Congressman Barney Frank, (D-Mass.) are the first two who should be grilled, not by fellow politicians, but by an independent and hopefully very clever, angry, and mean attorney hired by the American people. No one from the present Justice Department need apply. Both should be asked how much money they have taken from lobbyists hired by the CEO’s of Freddie Mac and Fannie Mae. Since that is public record, they should then be asked what Fannie and Freddie got in return for that money.

Barney Frank should be questioned about his House Bill, H.R. 3838, that is clearly designed to keep Fannie and Freddie afloat as long as possible despite all the signs that there was serious trouble ahead. But all his bill did was make the hole bigger in the side of the Titanic. Basically all H. R. 3838 did was: “To temporarily increase the portfolio caps applicable to Freddie Mac and Fannie Mae, to provide the necessary financing to curb foreclosures by facilitating the refinancing of at-risk subprime borrowers into safe, affordable loans, and for other purposes.”

Barney Frank and his counterpart in the Senate, Chuck Schumer, (D-N.Y.) did everything they could to delay and cover-up the outright fraud and book-cooking that was going on within Freddie and Fannie.

As far back as 2003, Freddie and Fannie were $9 billion dollars in debt because of bad loans that continued to be accepted on a daily basis. Pressure from liberals in Congress to continue giving out bad loans was relentless and for years it continued with CEO’s, who happen to be friends of Dodd, Frank, Schumer, and Clinton, leaving with millions in their bank accounts as the companies they ran went under.

The truth is that this financial disaster for the American taxpayer didn’t begin under George Bush, or Bill Clinton, or George Herbert Walker Bush, or Ronald Reagan. It started under Jimmy Carter . It started with the passing of The Community Reinvestment Act in 1977. Basically, this act pushed local community banks and lenders, to “bend” the rules a little and give loans to low-income families. Like many liberal schemes, it seemed like a good idea at the time. There was a provision that protected the nervous lender in the clause that stated that loans should be given “in a safe and sound manner.” This gave the bank some leeway and choice in the loans that were given out.

Under Bill Clinton, The Community Reinvestment Act was revised. Basically, the revision started to put pressure on lenders to take more financial risks. It was felt that lenders were not being “fair” to minorities and the poor who only wanted to share in the American dream of owning their own home. Janet Reno began to outwardly threaten banks and mortgage lenders with prosecution if home loans were not approved for those who wanted to purchase homes that, in truth, they could not afford.

Fearing federal retribution, loans started being approved for people who had no down-payment, no jobs, no collateral, and absolutely no hope of ever being able to meet any mortgage payment after the grace period of low interest ran out.

Then, the greed took over. Banks would “bundle” up loans, good and bad, and sell them to Fannie Mae and Freddie Mac, making all their money up front for loans they knew would default eventually. As these loans did default, in larger and larger numbers, even Fannie and Freddie could no longer stand up under the hemorrhage of money loss. Wall Street panicked and so did the federal government.

Were there warning signs that a disaster was looming? Of course, there were. But there was money to be made and politicians and CEO’s alike were not about to give up the gravy train of money being crammed in their pockets. The CEO’s of Freddie and Fannie would hire lobbyists to slip money into the pockets of Senator Chris Dodd, (D-Conn.), chairman of the Senate banking committee, who was supposed to be overseeing the banking industry, to the tune of $133,900 since 1989. Barack Obama was number two at the trough with over $120,000 which was no small feat since he has only been in the Senate for three years. Dodd and Obama were closely followed by the last Democratic nominee, John Kerry, (D-Mass.) and then Senator Hillary Clinton, (D-N.Y.)

What were these lobbyists buying for the millions they sprinkled around the Senate and House of Representatives? They were buying a blind eye. They were buying little or no oversight into the juggernaut that has finally crashed on the heads of the American taxpayer. CEO’s got rich, politicians got rich and they got votes, being able to tell minorities and the poor, “See what we are doing for you?” For years, the red flags were stuffed under the desk and ignored.

Early in his administration, George Bush sounded an alarm over the small amount of working capital Fannie and Freddie had on hand. He urged them to sell more shares to increase their reserve in funding and put them on more stable ground. He urged them to be more selective in the loans they bought. This suggestion was declined because the current stockholders would n ot make as much profit.

Franklin Raines, the Fannie Mae CEO from 1999 to 2004, decided to retire early, taking millions with him, under a cloud of accusations that he had cooked the books to make it appear the company was making money instead of going head-long into debt. Another player in this financial kabuki dance is Jamie Gorelick. That name should ring a bell with every American. She seems to surface right at the heart of every American disaster in the last 15 years. Ms. Gorelick was vice-chair of Fannie Mae from 1997 to 2003. Like all the others, she left with millions in her pocket while declaring that Fannie Mae “is among the handful of top-quality institutions."

The next year it was found that Fannie was $9 billion dollars in the red. Oddly, this $9 billion had been overlooked in the books Ms. Gorelick and Mr. Raines kept.

Let’s put Mr. Raines and Ms. Gorelick on the stand. The American people deserve to hear how much they gave lobbyists to pass on to their friends in Congress to keep the blinders on. That number is a staggering $16.2 million dollars since 1997. That amount bought very large blinders. And, it bought time. It bought time for the likes of Raines and Gorelick to make their millions and bow out before the bottom fell out.

Republican nominee John McCain raised the alarm two years ago but his plan for more oversight was killed in the Democrat-controlled committee. Over 20-year span, McCain took $20,000 but this did not stop him from voicing his concerns. The problem was that Democrats didn’t want to hear about it.

President Bush’s warnings were also ignored. Should Bush have done more? Yes. Unfortunately, Bush was distracted by the 9/11 attack and wars in Afghanistan and Iraq. So now, nearly every hour Americans watch as a pompous Chris Dodd or Barney Frank struts to a microphone to declare the “failed economic policies of the Bush administration are responsible for this mess.”

No, Senator, he is not. YOU and your greedy friends are responsible. It took three decades to reach the point of no return and some were there with their hands out nearly all of those years.

The Federal Bureau of Investigation is launching a full investigation into all of this. This investigation will abruptly end should Barack Obama win in November. The last thing Democrats want is the American people learning how complicit so many of them are in the illegal practice at Fannie and Freddie that led to the taxpayers bearing the brunt of the their unbridled greed.

While politicians want oversight over the “bail-out,” there has been little outcry for an investigation into how all this evolved.

It’s time for Americans to go to their windows and throw them open and yell, “We are mad as hell and we aren’t going to take it anymore!”

Then, in November, vote the lot of them out of office.

The Irony in this is the sheer amount of important people, have predicted the same thing.

In fact - I think ALOT of people over the past couple of years have had something to say about the 'oncoming' financial crisis.

If anyone were to know about it ahead of time, it would start in the White House - or other Government head quarters - in other words this doesn't surprise me.

It has been a problem for a while, the democrats voted against this and said a free market will fix itself. It is no mystery.

How is it people are blaming Bush and Greenspan?I don't get it. Bush keeps us safe from terrorists, he raises education to it's highest levels of achievement, and he warns against the Fannie Mae problem starting in 2001, and then he is the first to act and push Congress for the Bailout. Then Congress doesn't pass it until there are pork barrel monies for there constituents. What the # is wrong with this country? Then everyone jumps on the band wagon and blames Bush for this problem. My prediction is that this country will never get better until it's citizens want to know the truth and care enough to search it out. But contrary to this end, Nancy Palossi said there will be no congressional investigation into this matter, until after the election. It never ends. The stock market is at 50% and dropping, the housing market is at 50% and dropping, the whole world is melting down. And who benefited from the excesses? I think that's what we need to look at. Who are these people and where are they hiding and who protects them? I think this is the most important issue of our time and certainly of this election. By the way "VOTE FOR CHANGE" I couldn't agree more. We do need a change. The same people who claim to be taking from the rich and giving to the poor have actually done the opposite haven't they? Get poor people to buy more than they can afford then take it from them and bail out the investors who facilitated it. Talk about redistribution of wealth. But just the opposite from the way it's been packaged and sold to voters.

Glad to see this getting a little attention here at ATS…or anywhere for that matter.

It's true that while people find it very convenient to blame Bush for this mess, that he did try and warn of this crisis. It was the republicans, who time and time again tried to warn about the practices of Fannie and Freddie, only to be shut down and ridiculed by democrats. Not to say this is a purely partisan problem, because it isn't. You just can't say we didn't warn you.

It's also frustrating to hear Obama repeatedly say that this mess is a result of the failed Bush policies which McCain supported. When in fact Bush and McCain were trying their best to get peoples attention on this years ago.

Originally posted by Alxandro


Ha, the nervousness that Bush kept warning Congress about this is starting to kick in.
It was Chris Dodd and Barney Frank that kept saying the economy was OK and Bush kept warning.
Although it happened during Bush's wash Clinton and Carter are more to blame.

Chris Dodd and Barney Frank were in charge of everything from 2000-2006? G.W. Had all the power he wanted and we all know that. He had a rubber stamp congress and never vetoed a thing in those 6 years did he? So what, those two guys tied him up? Get real. Stop blaming Clinton. What job do you have that you get to keep blaming the last guy for 8 years? Bush had time and power and intel to do anything he wanted.

reply to post by jerico65


It does not matter where it started. Bush had time and power to change/stop anything he wanted to didnt he? Republicans had complete control for 6 years. Blaming Democrats for what they did is one thing but ignoring the fact that your heros did nothing to save you from it when they could have is pretty sad.

If all these people knew about it and this is the end result of their collective efforts to stave off financial armageddon, it is a sad sad testiment to those we have voted into positions of power, and an even sadder testiment to our ability as citizens to have our voices heard.

If just one of these supposed 'in the know' types stood up and bluntly said Hey you plundering putzwads, if you don't to this, this, this, this and this, there's going to be a monetary apocalypse that'll make your shorts fill up with poo faster than you can blink," it would have at least attracted enough attention by the media that it would be reported and we'd start forcing them into action.

But we're all mired in this 'make the other look bad' pile of political hwerf and this is the ultimate result.

I hear Ron Paul saying we are broke. We cannot afford war. I guess he was right!