Fannie & Freddie's Problems are Obama's Problems

Franklin Raines and Jim Johnson are up to their elbows in the mortgage debacle that is plaguing our economy. Both are former CEO's of Fannie and Freddie Mac, Raines having taken over the reigns from Johnson. Raines earned over $90 million during his five years at the helm as CEO. Talk about exorbitant salaries. Today, Raines and Johnson are the number one and number two economic advisers...for Barack Obama.

Disturbing? Well, considering the fiasco on Wall Street, how comfortable are you with these two guys crafting what they hope will be the economic plan for your next four to eight years? The troubling associations of Mr. Obama just seem to continue to keep coming. And it's equally troubling that in his limited time in the Senate, Obama was the second top recipient of political donations from Fannie and Freddie PACs raking in a whopping $123,000 according to a recent CNN report.

John McCain, according to the same report scored a mere $20,000...over 10 years.

I'll let that sink in for a moment.

Obama has been hammering McCain for employing former lobbyists for the mortgage firms. But lobbyists try to influence politicians while CEO's are responsible for the way the company operates. Obama has two as his economic advisors.

In order to see whether McCain succumbed to lobbyist influence, one has to look at whether they succeeded. These former lobbyists worked for Fannie-Freddie through 2004. But in 2005, John McCain is on public record co-sponsoring Senate legislation to impose regulation of Fannie and Freddie. In the Federal Housing Enterprise Regulatory Reform Act, McCain wrote:

"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."

Fairly prescient. Why was this happening? Because according to the NY Times, the Bush Administration as early as 2003 foresaw the problem and initiated what the Times called the most "significant overhaul in the housing finance industry since the Savings and Loan crisis a decade ago". It was proposed by Bush Treasury Secretary John Snow.

They wanted to do something about it! Why didn't it work? Because Massachusetts Democrat Barney Frank, Financial Services Committee Chairman said, "Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we see in terms of affordable housing."

And that's just it. Fannie Mae and Freddie Mac were designed under the Clinton Administration to push housing loans to low income high risk clients. The very voters that make up the base of the Democratic Party.

Think Obama will reform that? Not on your life.