McCain Was Right on Fannie and Freddie… Since 2005

A good blog entry from the California Students for McCain blog, posted by Alan, that I believe hits the current economic babble by Obama on the nose (of course it's McCain's fault like Obama says... even though he attempted to warn the rest of Washington about it three years ago):

Democrats and the Obama campaign have tried to blame John McCain for the recent financial crisis. But, John McCain saw this coming three years ago, and tried to stop it then. As a principal sponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005 (which was not passed), McCain said:

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.