AP IMPACT: Mortgage firm arranged stealth campaign

[babsbunny]

http://ap.google.com/article/ALeqM5j-G-fDVnv0WN1pXdMWjXX43CjyeAD93TM5QO0

By PETE YOST – 7 hours ago

WASHINGTON (AP) — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

[karynnj]

1. Interesting

This is the bill that John McCain signed on to sponsor - 10 months after it passed the Banking committee and wasn't taken to the floor of the Senate (He signed on as a sponsor only in May 2006.

The fact though is that this bill (or the bipartisan bill that passed the House with 331 votes and had the Senate Democrats support in the Banking committee) would NOT have done much to help this problem. 83% of the bad loans were consolidated by the private sector, not Freddie or Fannie.

In reality, two things could have helped:
1) regulation of the loans themselves - and this article shows how in favor of deregulation the Republicans were. The Democratic platform had a plank on controlling mortgage abuses - and called for prohibiting most balloon loans. http://query.nytimes.com/gst/fullpage.html?res=980DEFDF113EF934A1575BC0A9629C8B63&&scp=5&sq=business%20subprime%20Kerry&st=cse

2) regulation of the Securities created from mortgages using derivatives - Greenspan wanted no regulation of derivatives and swaps. This was something the Republicans wanted.

The reason regulating Freddie and Fannie are mentioned is because McCain is trying to use that bill to say he was prescient. In fact, if they really wanted regulation - they could have backed the bi-partisan bill. The big difference was that S190 would heve forced teh FMs to sell some assets and become smaller relative to the less regulated private segment - oddly this could have made the problem worse.