Housing Doom is happy to present yet another lightly edited extract from our friend Bill Maloni. His original post also contains some non-housing-related name-dropping — names so familiar even I recognized one of them 
Doom may agree with almost nothing Bill says, but his political opinions are always sharp and insightful. Not to mention re-energized, now that the Democratic Party is set to move into the White House!
There was supposed to be a hearing before the Henry Waxman (D-Cal.) Investigations Committee November 20th, featuring former GSE CEOs — Fannie’s Frank Raines and Dan Mudd, and Freddie’s Leland Brendsel and Dick Syron. It’s been postponed until December 9th so that the Committee Republicans can bring some witnesses of their own. (Congrats to Waxman who toppled “Old Bull” John Dingell in the contest for Chairmanship of the House Commerce Committee. I wonder if that success came from Dingell’s life long support for the auto industry at a time when those Detroiters don’t look very good?)
Rep. Waxman and his staff have run a super set of hearings soliciting informative and revealing testimony from major players in the economic and mortgage meltdowns that have laid our economy so low.
But what else could the GOP be trying regarding Fannie and Freddie with its new witnesses? On the Committee’s first day of hearings—with the then McCain campaign in full bloom—the GOP brought forth a “minority report,” filled with errors and distortions, which tried to blame the entire economic collapse on Fannie Mae and Freddie Mac, as well as the subprime mortgage fiasco which came courtesy of Wall Street and lax or non-existent GOP federal regulation.
That didn’t stop the R’s—and Tom Davis of all people who supped so deeply at the Freddie trough—from trying to blame the local companies for everything (including the “heartbreak of psoriasis”). Those allegations now largely have been swatted away by a variety of media and businesses sources not connected with the former government sponsored enterprises. Which shows the mistakes they made, but equally makes clear that Fannie and Freddie were not the root cause of much beyond their own demise (which itself may have been premature and politically dictated).
So, now that the McCain camp (which tried to use this same “Fannie/Freddie did it” fairy tale in its anti-Obama campaign) is history, as is most of Fannie and Freddie–what are the Republicans going to dredge up to in an effort to sanitize their regulatory shortcomings and, once again, blame Fannie Mae and Freddie Mac?
Most observers point to the seminal actions by Mudd and Syron, respectively, to purchase large amounts of toxic Alt-A and private label subprime securities (PLS) in 2006 and 2007, as the major red ink causes.
But almost as important is the fact that, following the May 2006 consent agreements both companies signed, virtually every aspect of the two mortgage companies’ business was presided over and blessed by their former regulator the Office of Housing Enterprise Oversight (OFHEO). From that point on, the regulatory agency had their own employees in both companies every business day of the week reviewing all transactions and decisions.
If the former GSE managements made bad business calls, what’s that say about the OFHEO staff who shared in their meetings and machinations?
This next Waxman hearing should be fun to watch as the Committee GOP has to perforce blame other Republicans for mortgage misfeasance or malfeasance!
UPDATE (Bill’s comment in original post): A reader just informed me that while the "consent agreements" between OFHEO and the companies were struck in 2006, OFHEO had already amassed investigative staff at the company premises in the summer of 2004. This, to me, makes the regulatory agency partially responsible for even more corporate business decisions.
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“(Congrats to Waxman who toppled “Old Bull” John Dingell in the contest for Chairmanship of the House Commerce Committee. I wonder if that success came from Dingell’s life long support for the auto industry at a time when those Detroiters don’t look very good?)’
Dingell had the audacity to refer to the BATF as “jack-booted thugs” when they burned down the Branch Davidians’ church, killing most of those inside. Dingell may have been an impediment to BO’s plans of killing off the Second Amendment, so he had to go.