Follow the Money

Posted on October 17, 2008. Filed under: Articles |

This is the column that appeared on on Tuesday, October 14. Once again, I would like to thank for giving me a new weekly forum. Please visit their site,, read their other great articles and support their advertisers. Please give them the support to help keep their STL Politics section alive after the election.

Many believe that the current economic turmoil equates to an automatic Obama victory. Obama often states that market deregulation that McCain supported is responsible for the dismal state of the financial markets. It is supposed to be inherently understood that market deregulation is attributed to the Republicans, especially George Bush and John McCain. However, the roots of the economic problems are not how Obama describes them. Rather, the economic problems were delivered to the American taxpayers through the subprime mortgage industry and one party’s resistance of any effort to limit taxpayer exposure to the high-risk, subprime mortgage market through the government sponsored entities (GSE’s,) Fannie Mae and Freddie Mac. This was an issue the Bush Administration and other Republicans had attempted to reform. Even though the writing was on the wall, all efforts to reduce the subprime exposure were met with full resistance by members of Congress who have now showed that they never should have been placed in any authoritative role over the GSE’s. As the world scrambles to recover from the current credit crisis, those who played the largest roles in creating the problems are allowed to remain in their elected offices and even demand a leading role in fixing their own mess.

John McCain’s chief of his Senate staff is a former lobbyist from Freddie Mac. Mark Buse had a record of working well with McCain. In 2003, Freddie worried about McCain’s efforts to address executive pay of the GSE’s and they hired Buse to lobby McCain, which he did during 2003 and 2004. Since his lobbyist experience, Buse has headed McCain’s Washington office and has earned the nickname “the ferret” for his ability to help McCain sniff out all pork spending in bills brought before the senator. It is obvious that Buse is not considered a friend of special interests. Also, McCain’s campaign manager, Rick Davis, was president of a firm that did advocacy work for Fannie and Freddie. It is estimated that the firm received around $2 million for the work. Davis disassociated from the firm 18 months before beginning work for McCain and has not been involved with the GSE’s for at least 3 years. Over the past 20 years, McCain has averaged about $1,000 a year in campaign contributions from GSE’s for a total of around $20,000 over two decades. These relationships are the reason why Obama supporters claim that McCain is corrupted by GSE money.

However, in 2005, John McCain took to the Senate Floor and made these comments, “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.” The text of a letter written in 2006 has also surfaced where McCain, along with 18 other Republican senators reiterated McCain’s 2005 statements. No Democrat supported the 2005 effort of reform nor did they sign onto the 2006 letter. What happened to the bill McCain spoke about on the Senate Floor? It never made it out of the Senate Banking Committee because it was buried by the committee chair, and never brought to a vote.

Obama is pointing fingers at Bush and McCain for allowing subprime lenders to continue their predatory lending practices on unsuspecting, low-income borrowers. However, as pointed out by Gerald McEntee on the Huffington Post last March, Obama received more money from the subprime lending industry than any other presidential campaign. As of March, Obama had taken $1.8 million from the subprime lenders, such as Countrywide Financial. He now claims that these lenders pushed unfair loans on unwitting families out of pure corporate greed. While campaigning last March, Obama gave a campaign speech about reforming the subprime lending industry only to leave and immediately proceed to a fundraiser at Credit Suisse, one of the largest subprime lenders. These actions perfectly represent the Democrat’s past actions toward the GSE’s.

The largest recipient of GSE campaign contributions from 1989 to the present is the chair of the Senate Banking Committee, Democrat Chris Dodd. Dodd’s committee is where the 2005 GSE reform effort was effectively killed before coming to a vote. Last June, it was also discovered that Dodd had received favorable mortgage terms from Countrywide Financial through a little-known VIP lending program for “prominent individuals,” saving Dodd over $58,000. Dodd has been on the Banking Committee for 26 years and received GSE contributions for decades. Obama entered the Senate in 2005 and since then has become the second-largest benefactor of GSE money. In less than three years, Obama received over $105,000. Obama also had two ex Fannie Mae CEO’s as advisors. Jim Johnson, headed up Obama’s VP Selection Committee, the other CEO, Franklin Raines, has advised the Obama campaign on mortgage and housing policy. Johnson and Raines contributed greatly to Fannie’s failure and they’re also significant bundlers of Obama campaign contributions.  

While McCain has a former Freddie Mac lobbyist heading up his Washington office and a campaign manager that was once affiliated with the GSE’s, McCain actually worked to stand up for the taxpayers. McCain’s 2005 speech also shows that he had the foresight to recognize the problems the US would face if the subprime market wasn’t addressed. Across the aisle, Obama strictly toed the Democrat party line instead of advancing the interests of the US taxpayers. While Obama was collecting record contributions from Fannie, Freddie, and subprime lenders, he was also receiving advice from two of the CEO’s that drove Fannie to the ground. Obama proves he has horrible judgment towards the subprime lending market and no matter how many times he states otherwise, he only spoke up about the issue when he thought he could blame the Republicans.








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    Is this really a new type of politician? Or is the Obama machine just using politics as usual in their campaign?


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