Larry Johnson is not a fan of Bush or McCain, so when he steps forward with a story, you can believe it.
Barack Obama has a major Wall Street and Washington problem that the media so far is refusing to acknowledge or explore. He is in the pocket of the Wall Street firms and mortgage security companies that are at the center of the collapse of the real estate bubble. He is closely tied to at least two of the Fannie Mae principals. As Ricky Ricardo would say, “Barack, you got some splaining to do.”
Let’s start with the numbers. Why is a first term Senator pulling down almost $300,000 a year from Goldman Sachs, Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, AIG, Countrywide Financial, and Washington Mutual? He has not even completed his fourth year in the Senate and received a total of $1,093,329.00 from these eight companies and their employees. (all data from OpenSecrets.org). John McCain’s numbers, according to OpenSecrets.org for the period 1990-2008 (i.e., 18 years worth of data) only collected $549,584.00. In other words, Barack is receiving $273,582.25 (and 2008 is not over) per year while McCain raised a paltry $30,532.44.
Want another shocker? Barack Obama has received more from one source–Goldman Sachs $542,252.00–than McCain has from all of the companies combined. Who the hell is more beholden to lobbyists? And why does a junior Senator from Illinois rate this kind of dough?
Why are these firms and their employees showering Barack with their cash? Although the conventional wisdom wants to pin the Wall Street debacle on Republican greed, the reality is that the real estate market and the big players on Wall Street have been a Democratic game. McCain’s hands are clean when it comes to this mess. That is not spin, that is a fact. He proposed legislation back in 2006 to start addressing the abuses of Fannie Mae and Freddie Mac but the Democrats would have none of it.
Why? Here’s the explanation.
To understand you must first appreciate that the largest debt market in the United States is the mortgage market. One of the major players in the market, at least until this month, is Fannie Mae. Fannie Mae was initially established in 1938 in order to provide a secondary mortgage market. What does this mean? It would buy mortgages from one lender and sell mortgages to another. It played the role of a broker who helped make the market work.
Fannie Mae because a private company in 1968 and continued to fund mortgages by issuing mortgage backed securities (i.e., MBS). When Fannie Mae issues the MBS she is guaranteeing the investors a return on their investment and, at the same time, providing a source of funds to supply additional mortgages.
Fannie Mae was not standing on a corner selling mortgages out of a hot dog stand on the corner. She needed help on Wall Street. So, who helped her market the securities and raise the case? The “good” folks at Goldman Sachs, Lehman Brothers, and AIG, just to name the more prominent ones.
So who was in charge of Fannie Mae for 16 of the last 18 years? Let’s start with James A. Johnson (no relation). Remember him? Barack initially tabbed him to head up the Vice Presidential search team. He was Walter Mondale’s campaign manager in the 1984 fiasco and chaired the search committee for John Kerry. But he started as Vice Chairman of Fannie Mae in 1990, quickly moved up to be the CEO, and left Fannie in 1999 as Chairman of the Executive Committee.
And guess where he went? Fishing? Nope. He became one of the outside directors of
Corporate Finance for Lehman Brothers.
The roles of Goldman Sachs and Lehman Brothers are important to understand if you are to make sense of Fannie Mae’s collapse. When Johnson moved to Goldman Sachs, the main man at Fannie was Franklin D. Raines. Late in 2005 Raines resigned from Fannie Mae, accused of being in charge when the books were cooked. The scheme is fairly simple. Raines and other top executives made bonuses if they hit specific earnings targets for the securities sold by Fannie Mae. They regularly hit those targets until it was discovered by the (SEC) Securities & Exchange Commission’s top accountant Fannie misstated earnings for 3 1/2 years, leading to an estimated $9 billion restatement that will wipe out 40% of profits from 2001 to mid-2004.
Go to the link and finish off the story, but it only gets worse.
And yet, as Johnson says, we hear nothing about this from the media!