This is a fine mess, Ollie!

Well, the government has shown it's inability to deal with a financial crisis. Why? Well, one reason is most of the people dealing with it are lawyers - not the most savvy financial group out there. And we keep electing lawyers! And it's being run by politicians, not an impartial or non-self-motivated group of individuals.

First, my disclaimer on this piece. I'm a professed MODERATE, neither liberal nor conservative; in fact, at this point I don't believe either party represents ME. I've registered with a party only because in my state I must in order to vote in primary elections for major candidates and issues. I accept stances on both sides of the aisle and believe that with true leadership, and without porkbarrelling, an accomodation should be able to be reached on most legislation to the benefit of the general citizenry.

Anyway, now that the election is finally over and the democrats scored their points by mis-stating history by saying all this was due to failed republican policies over the past eight years, we move on. There was more than enough culpability on both sides, but voters only listen to the politicians sound bites; most don't watch or pay attention to the functioning of government, so it's an easy out for most people in an election - 'He/She said it, or implied it, so it must be true.' We're now wallowing in BS.

The housing market started this crisis, particularly the fall of Fannie Mae and Freddie Mac, with thanks to the like of Rep. Barney Frank, Rep. Maxine Waters and others. More regulation for FannieMae and FreddieMac? Nah, they're doing just fine; such talk is just fear-mongering and a witch hunt against Fannies CEO, Franklin Raines, a great upstanding guy. Well, we all know how THAT turned out.

When the Bush administration proposed much tighter regulation of the two companies in 2003, Frank was adamant that "...these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing. How could they be so thoughtless! As Barney said in a 2003 House Financial Services Committee hearing,

" ‘’These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis,’’ said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ‘’The more people exaggerate these problems, the more pressure there is on these companies, the
less we will see in terms of affordable housing.’’ "

And from that same hearing, this dialog:

"Rep. Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated? Mr. Raines?
Mr. Raines: No, sir.
Mr. Frank: Mr. Gould?
Mr. Gould: No, sir. . . .
Mr. Frank: OK. Then I am not entirely sure why we are here. . . .
Rep. Frank: I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists."
http://www.youtube.com/watch?v=t_9Jrgo5E2Y

In August of 2007, another push by regulators for more oversight of the two GSE's, was dismissed by Representative Frank, by now Chairman of the House Financial Services Committee, as "inane." My gawd, what a practical visionary is Mr. Frank!

And let's not forget Rep. Maxine Waters from California. She, too, apparently thought it was a witch hunt:

"However, I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. Housing is the economic engine of our economy, and in no community does this engine need to work more than in mine.
With last week's hurricane and the drain on the economy from the war in Iraq, we should do no harm to these GSEs. We should be enhancing regulation, not making fundamental change. Mr. Chairman, we do not have a crisis at
Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. . . . "

http://www.youtube.com/watch?v=PmcGKbvTLSM
http://www.youtube.com/watch?v=LPSDnGMzIdo

And if we remember, Mr. Frankin Raines was not the white knight he was made out to be by these fine representatives. From the OFHEO commissioned by Fannie Mae in 2004 and reported inthe New York Times,

"It found that Mr. Raines, who had served as a top official in the Clinton administration, "contributed to a culture that improperly stressed stable earnings growth."

The report also concluded that employees who held vital accounting and financial reporting jobs were "either unqualified for their positions, did not understand their roles, or failed to carry out their roles properly."
And it found that management repeatedly presented
directors with information that "generally was incomplete and, at times, misleading."

In fact, Fannie Mae had been expected to pay more than $400 million as part of a settlement to resolve claims that executives manipulated earnings in the 1990's so they could receive bigger bonuses. Don't forget, Mr. Raines was the Chief Executive of Fannie Mae at the time. As James Lockhart, OFHEO Director said,

“As a GSE, Fannie Mae has a special mandate and position of public trust. The previous management team, led by Chairman and Chief Executive Officer (CEO) Franklin Raines, violated that trust.
By encouraging rapid growth, unconstrained by proper internal controls, risk management and other systems, they did serious harm to Fannie Mae while enriching themselves through earnings manipulation.”

Raines left abruptly after the OFHEO report. Hmmmm.

Oh, and guess who was being an economic and housing advisor to president-elect Barack Obama? Yes, Franklin Raines. From the Washington Post,

"In the four years since he stepped down as Fannie Mae’s chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case’s D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters."

Just to point out before anyone makes ANY accusations, this isn't a racial issue. It's a financial issue, and economic issue and a political issue. I didn't choose the players.
Moving on. Now, with the financial crisis costing us thousands of jobs weekly and people losing homes, pensions, savings, what does the government plan to do? Well, over the past 10-15 years many companies have curtailed or recinded their pension plans to save money; much of this happend in the airline industry, but it was much wider spread, as companies began to look out for themselves at the expense of their employees. Layoffs also became rampant. We found out that company loyalty only ran one way - expected by the company but not from the company. As Peter Orszag, the head of the Congressional Budget Office said,

"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working,"

If, of course, they can now find a job.

We turn now to Rep. George Miller. In one of his recent hearings of his House Committee on Education and Labor, noted that one of the issues today is that people have become dependent upon their 401k plans as a sole funding mechanism for their retirement. Well, one of the reasons for this is because nobody could count on Social Security, which was not intended to be a retirement program either. So, many years ago the government created the 401k plan to allow workers to save for their retirement to supplement Social Security, hopefully with their pension plans. Hardship withdrawals are draining peoples 401k's because of todays economy, partly because of the lack of suitable pensions, and partly because of government mismangement of the economy AND private sector mismangement of business.

Rep. Miller indicates that one of the problems with 401k's is their fee's, which we as non-politician citizens, apparently can't understand. We lack critical information about how our accounts are being managed, yes. But that's because of the complexity of the system set up for these and the fund managers goal to make money off the management of these accounts to our detriment. This could be fixed with adequate regulation and oversight, but that's not the plan. What does Mr. Miller suggest? Well, one proposal under consideration eliminates the tax-favored treatment of contributions to 401(k) plans and individual retirement accounts that we've enjoyed; instead, a recommendation is that workers would receive a $600 tax credit that would offset contributions to a new mandatory guaranteed plan that would be managed and administered by the federal government. Oh, that makes me feel soooooo much better.

Okay, enough ranting for one time.