FBI Investigating Freddie Fannie AIG Lehman

Perhaps this is why Paulson wants to hurry things along. They're covering up something or are looking for ways to keep their wealth. Something's not right and it seems like the tip of the iceberg. The leaders of these companies who kept passing along bad mortgages need to start a homeowner fund with their personal money. They need to lose everything. This situation is an outrage. I don't know how else to say it.

Sept. 24 (Bloomberg) -- The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and American International Group Inc. in its probe of the collapse of the subprime-mortgage market, according to a senior law-enforcement official.

Those companies are among 26 being reviewed by the Federal Bureau of Investigation for possible accounting misstatements, said the official, who asked to remain unidentified. The investigations are preliminary, the official said late yesterday.

The FBI has come under pressure to hold companies responsible as the loan crisis rocked Wall Street and led to the biggest housing slump since the Depression. Financial companies worldwide have reported more than $500 billion in losses and writedowns stemming from the subprime collapse.

Housing lenders Freddie Mac and Fannie Mae, as well as insurer AIG, were all taken over by the government earlier this month. Lehman filed for bankruptcy. The crisis has led the Bush administration to ask Congress to approve a $700 billion bailout for the financial industry.

CNN has a timeline.

McCain Adviser: Off With Their Heads!

McCain leadership style: Blame and finger pointing. McCain is just getting a little bit of his own medicine.

On a conference call with reporters just now, McCain campaign senior advisor Steve Schmidt absolutely lit in to the New York Times. Schmidt made his remarks after Rick Davis answered a question from CNN's Dana Bash about today's story in the Times regarding his former work for the Homeownership Alliance, an advocacy group of 19 member organizations which include Fannie Mae and Freddie Mac.

Schmidt said: Read what he said.

The story McCain is hot under the collar about:

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

Mr. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation as they began buying riskier mortgages with implicit federal backing. He and his Democratic rival, Senator Barack Obama, have donors and advisers who are tied to the companies.

But last week the McCain campaign stepped up a running battle of guilt by association when it began broadcasting commercials trying to link Mr. Obama directly to the government bailout of the mortgage giants this month by charging that he takes advice from Fannie Mae’s former chief executive, Franklin Raines, an assertion both Mr. Raines and the Obama campaign dispute.

Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain’s campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance, formed in the summer of 2000. Some who came forward were Democrats, but Republicans, speaking on the condition of anonymity, confirmed their descriptions.

“The value that he brought to the relationship was the closeness to Senator McCain and the possibility that Senator McCain was going to run for president again,” said Robert McCarson, a former spokesman for Fannie Mae, who said that while he worked there from 2000 to 2002, Fannie Mae and Freddie Mac together paid Mr. Davis’s firm $35,000 a month. Mr. Davis “didn’t really do anything,” Mr. McCarson, a Democrat, said.

Black Sunday On Wall Street

An Q&A with Dealbreaker newspaper, a trade paper for Wall Street. Not to get all scary on you but the industry isn't letting on how bad it really is. Neither is John McCain cause he doesn't know anything. Obama knows.

These headlines are very scary. How bad is this really? Are we looking at soup kitchens? Should we put what little money we have under the pillow?

We're already calling it Black Sunday. It's very, very, bad, and things may deteriorate further. This is as bad as anyone alive has ever seen it. Wall Street is broken, the independent investment banks that have existed since the Great Depression are passing from the scene and we may never see their kind again. Your money is safe if it's in an FDIC insured account [one day readers, we will figure out what that is], although even there it is threatened by inflation. There aren't many places to hide. I'm sorry that's so negative but these are dark times. You might want to read all of it.

Obama on Freddie and Fannie

Here's Obama's letter to Henry Paulson, which expresses his stance on Freddie Mac and Fannie Mae.

September 9, 2008

The Honorable Henry Paulson
Secretary

U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220


The Honorable James B. Lockhart
Director
Federal Housing Finance Agency
1700 G Street NW, 4th Floor
Washington, D.C. 20552

Dear Secretary Paulson and Director Lockhart,

News reports indicate that the chief executives of Fannie Mae and Freddie Mac will stand to reap millions of dollars in severance payments when they are removed from their posts. Under no circumstances should the executives of these institutions earn a windfall at a time when the U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources. I urge you immediately to clarify that the agreement with Fannie Mae and Freddie Mac voids any such inappropriate windfall payments to outgoing CEOs and senior management.

When Congress granted the Department of the Treasury the authority to step in and rescue Fannie and Freddie, we explicitly included a provision that gave the new regulator the authority to block "any" payments made to CEOs that were "contingent on the termination" of their affiliation with the organization. It would be a gross violation of the public trust to fail to use this authority now, while American taxpayers and American homeowners, already struggling in a weak economy, are being asked to accept an historic intervention to rescue these institutions.

I recognize that intervention is necessary to maintain liquidity for the housing market so that homeowners can continue to get affordable mortgages and homes can be bought and sold in neighborhoods across the country. Yet one of the central requirements that I have consistently set in evaluating any intervention under this new legislation is that such action protect taxpayers and not bail out senior management from Fannie Mae and Freddie Mac. Multi-million dollar severance payments for the executives who helped steer these institutions into the current crisis situation would violate the spirit of the authority granted by Congress to the Treasury Department and would violate the public's trust.

I understand that details of the agreement are still being worked out. Please let me know right away what steps are being taken to ensure that the agreement is responsible and that Fannie and Freddie can continue to fulfill their important missions without wasting taxpayer dollars or rewarding poor leadership. The American people are watching and have put their trust in us to look out for their interests.

Sincerely,

Barack Obama
United States Senator

More on today's latest bank closing and McCain's worldview that the economy is strong:

NYT: Updated: GRAND JUNCTION, Colo. – Hours after Senator John McCain said “the fundamentals of our economy are strong,” Senator Barack Obama seized upon the remark on Monday and offered a blistering critique of the Republican Party’s stewardship of the economy as the Wall Street turmoil created fresh ripples in the presidential campaign.

“We just woke up to news of financial disaster and this morning and he said that the fundamentals of the economy are still strong?” Mr. Obama told voters at an afternoon rally here. “Senator McCain, what economy are you talking about?”

In Case You Missed Palin's First Blunder

This needs to be hammered home. Ms. Mooseburger hasn't a clue.