Where oh Where Were the Regulators?

Mortgage Mess Part 9 

Who was in charge of being the watchdog for Fannie Mae and Freddie Mac. Who was protecting our interests and money as taxpayers? Until the Treasury's takeover of Fannie and Freddie this September it was OFHEO or the Office of Federal Housing Enterprise Oversight, which was an arm of the Department of Housing and Urban Development or HUD.

According to Terry Jones writing for the Investor's Business Daily on September 25^th, "OFHEO was unique among federal regulators in that it had to go back each year to Congress for its budget. This assured total dependence on Congress-a less than ideal situation for a regulator."

As a former accountant you never want an auditor to receive their budget from the company being audited. That's a recipe for "book cooking" like never seen before. That makes for a very weak and impotent regulator. You could say that OFHEO was asleep at the wheel, but they did not have a wheel in front of them or even a car to drive, because of Congress who kept them on a short lease budget-wise. 

Terry Jones goes on to say in this article, "Over the next decade or so, Fannie and Freddie made sure that OFHEO stayed off their backs, funneling $200 million to various political causes and community activists while donating to 354 political candidates of both parties."

How did that help you ask? Since OFHEO had to ask for money each year from Congress to regulate Fannie and Freddie who were donating millions to Congressmen and women and to their special interests, it was very difficult for OFHEO to get the needed money to regulate Fannie and Freddie. Money talks!

So, let's follow the money. Who were the top recipients of money from Fannie and Freddie? Which party received the most money?

According to OpenSecrets.com from 1989 thru 2008 Fannie and Freddie gave a total of $4.8 million to 354 political candidates. These contributions include money from their PAC's and their employees. 57% of the $4.8 million was given to Democratic candidates.

The top 3 recipients are Senator Chris Dodd who heads the Senate Banking Committee with over $165k received, Senator Obama with $126k collected in just 3 years, and Senator John Kerry who has collected $111k. Two Republicans, Senator Robert Bennett and Congressman Spencer Bachus have each received over $100k.

I wonder how much of the $200 million from above ended up in the hands of politicians after the initial funding by Fannie or Freddie to another group?

It's amazing what money can do to people.