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XP: Rick Davis letter to Gov't Agency re: housing
This a letter from Rick Davis to Mr. Seiler at the Office of Federal Housing Enterprise Oversight dated 2001. In the letter, Davis argues against those who say Freddie/Fannie create systemic risks.
link: http://www.ofheo.gov/Media/Archive/docs/sysrisk/homeowner.pdf
My favorite parts:
A strong secondary market protects homeowners and buyers from economic shocks such as global credit crunches and local recessions.
As America moves into the 21st century, minority families should be given the chance to reap the benefits ofhomeownership as well. The continuation of a strong secondary market ?anchored by Fannie Mae and Freddie Mac ? is the best way to help them achieve that dream while minimizing risks. For the sake of these families, we should do nothing to harm what has made America?s housing finance system the envy of the world.
Sincerely, [signed: Richard H. Davis] Richard H. Davis President The Homeownership Alliance, Inc.
Re: XP: Rick Davis letter to Gov't Agency re: housing
In the late 1990s Janet Reno threatened banks with action by the Justice Department . (For banks did who not adjust lending standards to minorities and low income people seeking mortgages. )
Davis' letter supports the CRA and later Bush's expansion of home ownership to all proposal.
Alternative loan products for those with sound finances is one thing, alternative loan products for those with weak or poor financial situations is quite another.
Another thought - is it the loan product (ARMS - now readusting) that is causing the problem with not being able to afford them ---OR is it that people have too much debt in general (cc, cars, student loans etc) that make any increase (which was in the original agreement) difficult to absorb??
Oh please. Jim Johnson would never have been fired if his shady loans hadn't been exposed. He wasn't let go b/c of his Freddie/Fannie connections. Why should Rick Davis?
Rick Davis should go only if Barney Frank and Chris Dodd et al get thrown under the bus by Democrats.
His letter is trying to discredit those who think that there are systemic risks with Fannie and Freddie. People from both sides of the aisle have been saying that "people ignored the signs" in terms of the demise of Freddie/Fannie. Davis was one of those who was trying to get the government to ignore the signs.
I get why this was bad advice. He sounds just like Barney Frank and Chris Dodd. It's terrible, and expected b/c he used to work with Freddie/Fannie.
McCain did not agree with Rick Davis then or now (if indeed Davis still thinks that is the case, which I doubt). McCain has a record of fighting to reform the GSEs. So having an adviser like Davis doesn't taint McCain's record on this issue. In fact, it enhances it b/c he showed good judgement even with advisors possibly giving him bad advice. Obama cannot claim the same.
It does taint his record. He keeps screaming it is the Democrats fault because they fought against regulation but his own campaign manager also fought against regulation.
Bush began to call for tighter restrictions on Freddie/Fannie in 2003; McCain wrote his Housing Regulatory Act in 2005. ..problem is Davis beat them to the punch and wrote the goverment in 2001 telling them that there are going to be those who come along and try to speak of the systemic risks of Freddie and Fannie but there are no systemic risks. In other words, he got ahead of the storm and tried to discredit what might be coming down the pipeline
The McCain camp has used this same tactic this election cycle. Monday last week McCain came out blasting NY Times saying there were in the tank for Obama (which seemed a little odd because the McCain camp has sourced the NYT in many of their attack ads). . .2 days later the NY Times runs the story about Davis collecting $15,000 until last month from Freddie/Fannie. McCain got out ahead of the storm and tried to discredit the Times and anything that might be in their pipeline
Palin sent out a fundraiser piece saying that the "Obama/Biden Democrats" are attacking her family. When pressed MCP could not provide any examples. A few days later the National Enquirer released the stroy about her alleged affair. Palin got out ahead of the storm to try and discredit any new things that might arise.
I know you may be thinking-The National Enquirer but the McCain camp had already threatened to sue NE and despite their horrible record, they were right about John Edwards and some people are not so quick to right that "paper" off. It could sway the low information voter.
Rick Davis is not running for President. McCain is. McCain's record on reforming the GSE is crystal clear. He was on the right side of this issue. Rick Davis obviously wasn't. So what? When Rick Davis runs for office you can use that letter against him. You could argue McCain shouldn't have Davis on staff, but that doesn't get you very far since Obama also has questionable advisers, even on this same issue. They're equal in the way of bad advisers. They're not equal when it comes to their individual records. Obama never supported Freddie/Fannie reform. McCain did. That's why Davis' record is irrelevant to McCain's.
With that logic anything Ayers, Wright, Raines or Johnson say or do is irrelevant because they are not running for President.
McCain has not always been for regulation. . .
His attempt to write and pass legislation in 2005 (which he often credits as one example of his attempts to "reign in" Freddie and Fannie) also called for deregulation of some requirements for the Federal Home Loan Banks. He wanted to give FHLB exemptions to parts of the Securities Exchange Act of 1934. SEA of 1934 was enacted to prevent manipulations in the marketplace.
If he wants to claim part of the bill he needs to claim all of it. . including the parts that called for deregulation.
Their associations are only relevant to the candidate if their advice was taken/approved of by the candidate. If the candidate was not influenced by their bad advice, or in fact made it matter of record that they opposed the bad advice (as is the case with McCain vs Rick Davis) then it's a non-issue. You could say bad associations show poor judgment in picking advisers, and that's true, but considering all candidates do this that's not going to get anyone very far, unless you want to keep a running tally of bad advisers for each candidate.
I've read all about McCain's move to deregulate the market and I agree with him. I'm a conservative. Deregulation isn't a scary word to me. Regulation is. McCain should not be always pro-regulation. He should be for appropriate reforms, which might be regulation or deregulation depending on the circumstance.
So do you agree that Ayers, Wright, Raines and Johnson are off limits? If not, can you provide evidence where Obama took advice from them?
Obama made Wright his "spiritual advisor," attended his church for 20 some years and donated a percentage of his salary to the church. One of Obama's books came from a sermon of Wright's. So he obviously believes in Wright's spiritual advice. The theology of that church is socialist in nature, and so are some of Obama's policies. At the very least they are compatible. I don't think Obama believes in some of Wright's crazy kook gov't theories though.
As far as Ayers goes, he and Obama worked together, ostensibly pursuing the same goals for their organization/fund. I don't think obama wants to blow up the pentagon or anything. This connection isn't a big deal to me, although I would appreciate some investigation into it. The reason this is bad is that the rest of the public does NOT feel like I feel about personal connections. You know as well as I do that Obama having connections to an unrepentant terrorist looks horrible to the general public.
Re: Raines/Johnson. I've seen no evidence Obama ever pushed for GSE reform. Actually I don't know of any democrats that did. Obama was the #1 recipient of GSE individual contributions and that's when decades of contributions are added up. He's only been in office since 2005. Obama toed the party line with respect to Freddie/Fannie, and that party line coincided with Raines'/Johnson's opinions. Obama's work with Acorn is an illustration that he believes the gov't has a legitimate role in propping up homeowners from low-income markets. Nothing about his stances indicates he feels differently about the GSEs than his advisors. This is in complete contradistinction to McCain who was vocally opposed to the ideas Davis espoused in that letter.
In terms of spiritual advisors, I think they are off limits because Obama has Wright and McCain has Hagee.
Despite what McCain says his Regulatory Act of 2005 would have greatly benefited ACORN the way the bill was written. Therefore acknowledging that "gov't has a legitmate role in propping up homeowners from low income markets."
If his bill did not contain the part that would have benefitted groups, like ACORN, then I would agree with you in terms of Davis and McCain having opposing ideas.
Here is the what I am talking about: (sorry for the weird font-I c&p'ed from where I originally wrote it)
In regards to ACORN, the Federal Housing Enterprise Regulatory Reform Act of 2005, which was cosponsored by McCain, would have benefited ACORN because it deregulated certain requirements for the Federal Home Loan Banks.
some information on the Federal Home Loan Banks and its programs:
Affordable Housing Program and Community Investment Program (AHP)
The affordable housing and economic development programs of the twelve FHLBanks consist of grants and low-interest loans to member financial institutions to use to provide financing for economic development and housing activities.
FHLBank grants and low-interest loans are catalysts for the construction and revitalization of housing targeted to people with low- and moderate-incomes. AHP- funded projects serve a wide range of neighborhood needs; many are designed for seniors, the disabled, homeless families, first-time homeowners and others with limited resources.
http://www.fhlbanks.com/One of the programs under FHLB has the following eligibility:
AHP Eligibility
ACORN is one of those community sponsor organizations. Two examples of ACORN benefiting from the program are below:
Arizona ACORN (located in Phoenix) was the sponsor organization that got a subsidy of $300,000 for 30 ownership units (pg.14 of source)
ACORN Housing Corp. of Illinois (Chicago) was the sponsor organization that received 2 subsidies of $150,000 for 15 ownership units each (pg 18 of source)
source: http://www.fhfb.gov/GetFile.aspx?FileID=6773
To add, his bill took Fannie and Freddie from having federal oversight to be overseen by and independent agency.
SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING ENTERPRISE REGULATORY AGENCY.
`(a) ESTABLISHMENT- There is established the Federal Housing Enterprise Regulatory Agency, which shall be an independent agency of the Federal Government. `(b) GENERAL SUPERVISORY AND REGULATORY AUTHORITY-
`(1) IN GENERAL- Each regulated entity shall, to the extent provided in this title, be subject to the supervision and regulation of the Agency. `(2) AUTHORITY OVER FANNIE MAE AND FREDDIE MAC, THE FEDERAL HOME LOAN BANKS, AND THE FEDERAL HOME LOAN BANK FINANCE CORPORATION- The Director shall have general regulatory authority over each regulated entity and the Federal Home Loan Bank Finance Corporation, and shall exercise such general regulatory authority, including such duties and authorities set forth under section 1313 of this Act, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out. Here is the language about exempting the Federal Home Loan Banks. SEC. 205. EXCLUSION FROM CERTAIN SECURITIES REPORTING REQUIREMENTS.
(a) IN GENERAL- The Federal Home Loan Banks shall be exempt from compliance with--
(1) sections 13(e), 14(a), 14(c), and 17A of the Securities Exchange Act of 1934, and related Commission regulations; and (2) section 15 of the Securities Exchange Act of 1934, and related Commission regulations, with respect to transactions in the capital stock of a Federal Home Loan Bank. source: http://www.govtrack.us/congress/billtext.xpd?bill=s109-190
2005-wanted NO Federal oversight of Freddie/Fannie and looser regulations for the Federal Home Loan Banks and the programs they run.
2008- wants more Federal oversight of Freddie and Fannie
He has not always had the same message
I just did a quick read of the bill McCain sponsored and the only part of it that relates to "affordable housing" is at the very end. Here's the text:
"The Inspector General of the Federal Housing Enterprise Regulatory Agency shall conduct an annual audit of the affordable housing activities of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, programs, and partnerships to ensure that such activities, programs, and partnerships support the affordable housing mission of those enterprises."
So McCain's bill called for more oversight to ensure taxpayer money wasn't being flushed down the toilet as a kickback to special interests groups, and instead being used for their expressed purpose. What's wrong with that? The place to fight the actual funding for those programs is in spending bills. This bill was about reform - changing the way oversight is conducted. So it's appropriate that this bill only dealt with the oversight of the spending, not the spending itself.
Maybe there's another part I missed that you were referring to.
We cross-posted. Your summary is a mischaracterization. McCain proposed different regulations/oversight for the banks, not "no" oversight. The agency proposed was an independent federal agency whose job would be to oversee the secondary mortgage market. The GSEs were also included (see sect 1311, b2). It's the same message for the entire industry and it makes perfect sense considering the epic failure that was HUD's oversight.
I did not say he wanted no regulation for the banks. In the quote above, I said he wanted less regulation for the banks.
I am not talking about the spending. What I am saying is that his bill would have allowed the Federal Home Loan Banks to be exempt from certain things, including, but not limited to the regulation and registration of brokers and dealers. This is deregulation. A major part of the Federal Home Loan Banks are programs that deal will mortgages for those with less than prime credit and/or minimal income. What people have been saying is that the subprime mortgages and the deregulation that occured have been part of the problem not part of the solution.. .. He was pushing for deregulation a group (FHLB) that deals with a very fragile part of the housing industry.
But the FHLBs are nothing like Freddie/Fannie. They?are a glittering jewel of solvency and sound management among the GSEs. They never spent hundreds of millions on lobbying and ridiculous exec compensation and they have safe assets. So it makes sense why legislation could be made in their favor but not Freddie/Fannie. Deregulation is not my enemy - especially related to brokers/dealers (I fail to see how that relates to this current crisis). It's the total disregard for mismanagement and corruption from gov't departments charged with overseeing them. Why not deregulate the FHLBs, which are sound, and then continue to oversee them and if it is determined later that they fell into the Freddie/Fannie death spiral then slap them with regulations? Makes perfect sense to me. Actually, I wish this legislation would have fully privatized the GSEs (no more gov't backup) and broken them up into smaller orgs for competition. That would be a real solution. But this bill from McCain is a fine alternative in the short-run.?
I understand they are different from each other. I think we are going to just agree to disagree on this one.
Thanks for the debate today. Have a good night