The White House Warned Congress About Fannie Mae Freddie Mac 17 Times In 2008, Alone

The White House attempts to set the record straight:

(I’m copying this post from the White House webpage in it’s entirety because I want people to read the whole thing).

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.  Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.


April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”


May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac.  (OMB Prompt Letter to OFHEO, 5/29/02)


January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.”  As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.  (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03).

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.”  To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.”  (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03).


February: The President’s FY05 Budget againhighlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator:  “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.”  (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.”  Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.”  (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04).

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system.  Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs:  Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.”  (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04).


April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.”  (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05).


July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions.  Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.”  (President George W. Bush, Press Conference, The White House, 8/9/07).

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years.  Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission.  The GSE reform bill passed by the House earlier this year is a good start.  But the Senate has not acted.  And the United States Senate needs to pass this legislation soon.”  (President George W. Bush, Discusses Housing, The White House, 12/6/07).


January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.”  (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08).

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.”  (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08).

April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.”  (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08).

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

  • “Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.”   (President George W. Bush, Radio Address, 5/3/08).
  • “[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.”  (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08).
  • “Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.”  (President George W. Bush, Radio Address, 5/31/08).

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.”  (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08).

July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

Can Bill O’Reilly get off of Bush’s case now, please, and put the blame squarely where it belongs, on the Dems in congress, (with the help of a few RINOs) who blocked every effort from the Bush administration, at reform?

Maybe Mark Levin can help with that.

MORE from The Astute Bloggers:


Hat tip: Gateway Pundit

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59 thoughts on “The White House Warned Congress About Fannie Mae Freddie Mac 17 Times In 2008, Alone

  1. Pingback: White House Warned Congress About Fannie Mae Freddie Mac 17 Times In 2008, Alone « Cao2’s Weblog

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  6. does anybody know what the former President GW Bush website is? he does have one right? Bill Clinton had one up and running before he left office… and had links to it from but, i never saw any links on GWB’s whitehouse website. i (and others in the loop) were watching the website closely on 20 Jan, and it switched over almost immediately after the inauguration – as had been planned for the past year by the cooperative effort of the former and new administrations.

    yet curiously, we cannot find any new GWB website.

    fyi: George and Laura officially moved into their new home on Daria at Meaders here in Dallas. (i used to live about a mile from there) nothing but cheers and smiles from the locals and lots and lots of “Welcome Home George and Laure” signs all around town. lots of class and admiration here for a first-class couple IMHO.

    PS: i still think he deserves a medal for grounding all air traffic on 9/11 – and directly thwarting at least three (that we know of) more hijackings on the west coast. anybody can quote u the death toll of lives lost that day, but nobody knows the untold thousands of Americans whose lives were actually saved that day by the direct command from our leader and one of the greatest wartime presidents our country has ever had. again, just IMHO apparently.


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  8. More deflection and hand-washing from the Right. Wow, what a surprise. And imagine the Right attacking a Gay senator, another shocker!
    This is a page right out of the Bush playbook – deny and deflect at any expense – integrity be damned.


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  15. Nicedeb you wouldn’t be able to recognise a fact if it bit you on the backside. Any damn fool with a couple of units of economics under their belt can see that the crisis your country is in is chiefly the result of Bush/Cheney’s eight years of administration – but not you and your fear-mongering cronies. You are a much bigger buffoon than Bill could ever be.


  16. Any damn fool with a couple of units of economics under their belt can see that the crisis your country is in is chiefly the result of Bush/Cheney’s eight years of administration

    Go ahead and explain it to us, malky. That should be very exciting. I look forward to another of your presentations of made-up ‘facts’ and misinterpretations. Since you couldn’t make a single correct statement about Michelle Malkin without our help, I can’t imagine how badly you’ll butcher this topic.

    On the other hand, if you’re just going to continue to drop snarky, empty-headed comments like any other amoral liberal troll, then I’d guess you’re only a couple comments away from being banned.


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  18. DearMalky;
    You forgot that both the house and senate were all Democrats for the last two years of those 8 years. As I heard a Demcratic congress person on TV last night state “The house is the ones that spends the goverment money”. Please tell us the exact bills that President Bush signed that did this to the economy. All I hear from the Democrats is the exact words you just stated, “The last eight years”without any explaination of what exactly he did to cause this. I believe this was caused by both political parties and we the people living on borrowed cash and time. We are all resposible for this and instead of pointing fingers at someone else. How do we fix this? And please don’t tell me that we need another usless stimulias bill. The only one that seems to believe that is working is “say it ain’t so Joe” VP.
    Have a good day. Be the answer not the critic.


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  26. You people are full of shit. The President makes a speech somewhere and it becomes a call on Congress to act? A few times he did warn about Fannie & Freddie but certainly not the 17 times in this blog. Typical Teabagging bullshit, even before the Teabaggers existed.


  27. What is most amusing is that anyone would automatically believe something posted at a political website, regardless of the party involved. But perhaps it just depends on if you’re predisposed to believe it because it suits your views. I’d like to see the context of those ‘warnings’ before I started crowing, but there’s enough fault from Reagan-HWB-Clinton-GWB-and now Obama to go around, so nobody looks real shiny. Obama didn’t cause it, but he sure didn’t put the right people in to clean it up. People have to be better watchdogs of all our elected officials. Apathy is our greatest danger.


  28. You can go back and check the public record. There was a hearing for instance, where Dems steadfastly refused to deal with Fannie Mae and Freddie Mac.


  29. Even the most Bush-deranged liberal should realize that the head of Fannie Mae, Franklin Raines, was fired for his gross incompetence in 2006. At that point, shouldn’t congress (all Dems, BTW) have ordered an investigation and an audit? Sidenote: Raines got another job – as Obama’s economic advisor. So you really think Bush is to blame for the 2.5 years this country has been at a near depression?


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  36. A Youtube video covers this in great detail.It’s called “Burning Down The House: What Caused Our Economic Crisis? It is very thorough and uses independently verifiable facts that are a matter of public record including on camera congressional sessions to document Democrats complicity in the Fannie Mae/Freddie Mac debacle. Denying the documented historical reality is fundamentally dishonest.


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  40. All this seems like a wonderful ready-made debate topic for the Newt to stick up Obama’s (or Hillary’s) behind in the upcoming Presidential debates. Give them dates, comments, facts, figures, and tie it to them.


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  48. Bill O’Reilly is a big libtard anyway. Glenn Beck needs to back off Pres Bush as well. Let’s face it, FOX has really jumped the shark but for a very few conservatives left on there. These people need to brought to trial.


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