Tuesday, July 27, 2010

What the Democrats really fear

Byron York notes how Democrats like Al Franken are trying to excite their netroots by raising the specter of how Republican control of the House would lead to investigations of the Obama administration. They particularly fear Darrell Issa who would become the head of the House Committee on Oversight and Governmental Reform.

Well, here is the sort of Darrell Issa investigation that should make Democrats squirm. He's looking into how Angelo Mozilo of Countrywide Financial Corporation gave out special VIP mortgages to anyone who had anything to do with making sure that Fannie and Freddie bought up subprime mortgages.

And surprise, surprise nothing in Christopher Dodd's much touted financial reform package does nothing about Fannie and Freddie. Remember that Dodd was one of the Friends of Angelo, as those special low-rate VIP mortgages were called.
Democrats claim their sweeping financial-sector reforms will guard against the kind of problems that triggered the recent economic meltdown. But if they really wanted to do that, they would've focused on how so many US officials were simply . . . bought. Fat chance.

Nonetheless, Rep. Darrell Issa (R-Calif.), ranking member of the House Committee on Oversight and Governmental Reform, is demanding just such a review -- and, for the sake of the nation, he should get one.

Last week, Issa wrote to Alfred Pollard, general counsel to the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, asking for a probe of "VIP" mortgage loans given to Fannie and Freddie executives by Countrywide Financial Corporation. He also disclosed that Senate staffers got 30 low-rate mortgages under the program.

.... "Friends of Angelo" loans went to Sen. Chris Dodd (D-Conn.), the Senate Banking Committee chairman; Sen. Kent Conrad (D-N.D.), Budget Committee chairman and a Finance Committee member; Secretary of Housing and Urban Development Alphonso Jackson; Jim Johnson, a former Fannie CEO and adviser to candidate Barack Obama; Clinton Jones III, senior counsel to the House Financial Services Subcommittee on Housing, and Franklin Raines, since-disgraced Fannie CEO.

But the more than 44,000 documents subpoenaed by Issa showed that the corruption in the system ran even deeper. They show that a staggering 153 VIP loans were extended to the quasi-governmental employees who decided what loans Fannie would buy with the taxpayers' money. Another 20 VIP loans were made to Freddie Mac executives.

Mozilo's seemingly systematic efforts to sway lawmakers, a cabinet member, White House staff and the executives at Fannie and Freddie appear to have paid off. In 2007, Countrywide alone originated 23 percent of a massive volume of Fannie and Freddie's mortgage purchases. In that year alone, Mozilo made more than $140 million. VIP borrower and Fannie CEO Jim Johnson signed a strategic agreement with Countrywide granting Fannie exclusive access to Countrywide's junk loans. Mozilo, in effect, had managed to make the United States and Countrywide joint venturers in the most prodigious -- and dangerous -- subprime-mortgage operation in our country's history.
But of course, Chris Dodd and Barney Frank didn't want to have any reform of Freddie and Fannie since they were two of the leaders in supporting the two federally-backed entities in their funding subprime mortgages.
Mozilo also seems to have stifled numerous bills in Congress aimed at reform -- despite warnings by Republicans that a failure to rein in Fannie and Freddie posed grave dangers to taxpayers. When Sen. Richard Shelby (R-Ala.) pushed for a comprehensive fix, Dodd successfully threatened a filibuster.

Meanwhile, despite ethical codes governing Congress, the Executive Branch and Fannie and Freddie, which ban the acceptance of gifts or discounts, influential "Friends of Angelo" accepted their discounted loans.

If House Leader Nancy Pelosi really were interested in reform and in "draining the swamp," she'd have launched a probe long ago. She didn't. Even worse, two-time VIP loan recipient Dodd served as sponsor of the financial-reform law, which makes no effort to deal with Fannie and Freddie, even though to date they've received $145 billion in taxpayer bailouts -- with no end in sight.

President Obama and his fellow Democrats singled out Wall Street in their massive reform package. They should have looked in the mirror first.
This is why the Democrats' hypocrisy over their supposed efforts at financial reform is so glaring.

And of course the Democrats don't want Darrell Issa to get the chairmanship of the House committee that would look into this particular swamp.