In 2003 this was happening at the GSEs...
January Freddie Mac announces it has to restate financial results for the previous three years.
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.
October: Fannie Mae discloses $1.2 billion accounting error.
2004 the Bush administration called for a third party regulator...
February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.”
This was the Democrats response....
The Honorable George W. Bush
President of the United States
The White House
Washington, DC 20050
Dear Mr. President:
June 28, 2004
" We urge you to reconsider your Administration's criticisms of the housing-related government sponsored enterprises (the "GSEs'') and instead work with Congress to strengthen the mission and oversight of the GSEs. We write as members of the House of Representatives who continually press the GSEs to do more in affordable housing. Until recently, we have been disappointed that the Administration has not been more supportive of our efforts to press the GSEs to do more.
We have been concerned that the Administration's legislative proposal regarding the GSEs would weaken affordable housing performance by the GSEs, by emphasizing only safety and soundness. While the GSEs' affordable housing mission is not in any way incompatible with their safety and soundness, an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing."
We have been led to conclude that the Administration does not appreciate the importance of the GSE's affordable housing mission, as. evidenced by its refusal to work with the House and Senate on this important legislation."
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