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Sunday, September 28, 2008

Senator Obama-Do You Know These Fat Cats?


"Meow. It's time for my bailout."


As this financial mess continues to unfold, two government-sponsored companies, Fannie Mae and Freddie Mac have stood out as examples of fixed books and huge executive payouts-even as the companies go under. Barack Obama has repeatedly said that any bailout deal should not benefit "fatcat CEOs" who were largely responsible for creating the scandal in the first place.

I have no problem with that. First and foremost, we can begin with figures like Franklin Raines and James Johnson, both of whom are former CEOs of Fannie Mae-men who ran the company into the ground while walking away with millions in huge bonuses. Surely, Senator Obama must have been thinking about these two characters whenever he spoke out about those "fatcats".

Franklin Raines, described as a "poor kid from Seattle", was formerly an associate director for economics and government in the Office of Management and Budget(OMB)in the Carter Administration. He served as vice-chairman of Fannie Mae from 1991-1996. Subsequently, he became Director of the Office of Management and Budget in the Clinton Administration (1996-1998).

Raines served as CEO of Fannie Mae from 1999-2004, when he took early retirement in the midst of an investigation by the Securities and Exchange Commission (SEC). During his tenure, in 1999, Raines instituted a program to issue bank loans to lower to moderate income persons.

Raines was accused by the Office of Federal Housing Enterprise Oversight (OFHEO)of being involved in widespread accounting errors-including the shifting of losses in order that CEOs (such as himself) could qualify for huge bonuses. Raines reportedly earned some 50 million dollars and was sued by OFHEO for taking money based on inflated earnings. (See article by Charles Whitaker, "Franklin Raines-First Black Head of a Fortune 500 Corporation-Fannie Mae, Ebony Magazine, April 2001).

In 2003, Raines reportedly made over 20 million dollars. He subsequently entered into a settlement by which he kept most of his "earnings".

Fat cat? You make the call.

Then there is Jim Johnson, also a former CEO at Fannie Mae (he left in 1998.) The year that Johnson left, Fannie Mae's profits were allegedly fixed in order to justify top bonus payouts to CEOs (Johnson reportedly got 1.9 million dollars). In his final year at Fannie Mae, Johnson reportedly made 21 million dollars (Report of the Special Examination of Fannie Mae, May 2006).

According to an investigation conducted by OFHEO in 2004, it was during Johnson's tenure as CEO of Fannie Mae that the company improperly deferred $200 million in expenses in 1998 that enabled huge CEO bonuses to be paid out. (See article entitled: "High Pay at Fannie Mae for the Well Connected" by Albert Crenshaw in Washington Post dated 23 December 2004).

Fat cat? You make the call.

So surely, these two guys must be Barack Obama's poster boys when he talks about corporate greed and the need to not reward CEOs who misused their companies, right?

Well, not exactly. You see, Barack Obama does, indeed, have connections to these "fat cats". In fact, Barack Obama is the second-largest recipient in Congress of contributions from Fannie Mae and Freddie Mac to the tune of $126,349. (Center for Responsive Politics).

First, let's go back to Mr Raines. The Washington Post has reported on more than one occasion that Raines has taken calls from the Obama campaign on economic questions, which the Obama campaign denies. The McCain campaign has recently repeated the charge.

As for Mr Johnson, there is no denying the association. Until recently, Johnson was part of the group helping Obama find a running mate. He resigned that position in the wake of reports that he had received personal loans from Angelo Mozilo, CEO of Countrywide Mortgage (involved in the sub-prime lending mess).

Aside from that, Johnson also reportedly served as a "bundler" in the Obama campaign, raking in $200,000-500,000 for the campaign.(Center for Responsive Progress, Sept. 2008.

At any rate, there is an easy way to clarify the relationships between Obama, Raines, Johnson, Fannie Mae, and Freddie Mac. That would be for our mainstream news media folks and/or debate moderators to ask Obama directly the following questions:

Senator, what is your relationship with James Johnson and Franklin Raines?

Did anyone from your campaign make contact at any time with Raines seeking economic advice?

You have reportedly received over $126,000 in contributions from Fannie Mae and Freddie Mac, which makes you the 2nd largest recipient in Congress. How can you criticize "fat cat" CEOs who have ruined their companies in the face of these contributions?

How can you make these criticisms if you, in fact, are associated with Mr Raines and/or Mr Johnson?

And finally this:

Senator Obama, are you yourself a "fat cat"?

So, having given my famous guidance to the media, I will sit back, take the rest of the week off, and wait for our msm to dig into these questions and pose them directly to Mr. Obama. (It certainly shouldn't take long, should it?)

12 comments:

Anonymous said...

I didn't read through this whole post, but there are no doubt connections between Obama and big business. However, are you just going to overlook the same kind of connections that McCain has? He's been making the same kind of populist statements that Obama has.

Gary Fouse said...

McCain also has connections. His campaign manager was a lobbyist for Fannie Mae or Freddie Mac (I forget which). McCain also was compromised in the Keating Five scandal, though much less than the other 4.

Let's face it-they are all millionaires and dependent on campaign contributions. The whole thing sucks.

My point is that Obama cannot portray himself as a fresh and pure outsider when he has this history behind him. He also has a hard time talking about not bailout out corporate fat cats when he has these connections.

I also made the point at the end that we should not hold our breath waiting for the mainstream media to dig into this.

Anonymous said...

Gary, I actually agree with you pretty much 100% for once.

I am probably going to be voting for Nader. I don't agree with him on everything, but it will mainly just be a protest vote against the ridiculous two-party system we have in this country. Not that it will make much difference here in our non-swing state (thank you, electoral college). But I'll be voting for local stuff and the state propositions, so I might as well do a protest vote for Nader while I'm there.

Ingrid said...

Gary, I knew a guy who committed murder, does that make me one too?
I'd rather be governed by a man who owns only one house and is a millionaire by having worked hard, than by someone who doesn't even know how many houses he has and married into money. Neither he nor his wife ever really worked a day in their lives, and have no clue how average people live. I am disgusted by the phoniness of McCains relationship with his wife and family, by Palin's coldness and indifference toward her own family, and I was disgusted by McCains behaviour during the debate. What an arrogant ugly little man he is. Just what do you see in him?

Gary Fouse said...

Bryan,

I am always glad to see liberals vote for Nader since it takes votes away from Dems.

As for the two party system, sure it has flaws, which we especially see now, but it has served us pretty well well you compare the options. How about a 1 party system?

I often think a viable 3rd party would be a good idea. Yet, having lived 5 years in Italy with all their coalition governements that last for a few months, I am wary of a multi-party system as well.

Gary Fouse said...

Ingrid,

Point well taken, but "Guilt by association" has legitimate meaning when you see a pattern of bad relationships. (Wright, Pfleger, Ayres, Johnson, etc.)

There is also an expression, "you are known by the friends you keep".

I know you are turned off by McCain. If you read some of my old posts, you will see that I too had a lot of criticisms of him. He was not my preferred candidate.

As for his life's experiences, they go far beyond marrying into wealth. (Nothing Barack Obama has done in his life compares to McCain's military service and pow years.) And what's wrong with his family relationship? He has several children, one of whom is serving in Iraq, I believe and an adopted daughter from Sri Lanka.

Ugly little man? So was Winston Churchill when he grew older. Actually, if you look at McCain's military photos, he was a pretty good-looking guy, but as we know, that is all superficial stuff-same with Obama.

Anonymous said...

As for the two party system, sure it has flaws, which we especially see now, but it has served us pretty well well you compare the options. How about a 1 party system?

I often think a viable 3rd party would be a good idea. Yet, having lived 5 years in Italy with all their coalition governements that last for a few months, I am wary of a multi-party system as well.


Well of course it's better than an official 1 party system, but it's practically a de facto 1 party system anyways. That is, the country is run by a single ruling party: the business party.

Before we can have a vibrant multi-party system in this country, we are in serious need of some electoral reform. Instant runoff voting and proportional representation are two big ones that we could use for sure. McCain has even come out in support of instant runoff voting in the past, although I'm not sure if the new Rovian McCain still supports it. Check out Fairvote's website for some info about electoral reforms, if you're interested. They're a non-partisan group.

www.fairvote.org

Gary Fouse said...

Bryan,

Are you saying that the Dems are pro-business? I know they take money from them too, but why are they always criticizing big business and calling for more regs and cuts in tax breaks?

Look at what the Dems are doing to businesses here in Calif. Why do you think so many businesses are leaving? Too many taxes and too many regs.

Ingrid said...

Gary, I was in Bremen for a few days and couldn't respond. You are not comparing McCain to Churchill, are you? I am not talking about physical ugliness, McCain is bitter and arrogant, that makes him ugly. No, I don't like him and I think he needs to retire and spend some quality time with his family. When does he have time for them? His wife was a drug addict (I am not judging her for that, with this husband I don't blame her) but he didn't even know? He didn't know she took flying lessons. What else doesn't he know about the people closest to him. His daughter wrote some ridiculous book about her loving father. More about our great American hero. There were thousands who gave more than he did. Give me a break.

Gary Fouse said...

Ingrid,

Does that mean you are not going to vote for McCain? Or was I just reading something into your comments?

Ingrid said...

Gary, my absentee ballot is in the mail. Call in the Marines.

Gary Fouse said...

Ingrid,

Rest assured I will not do what Gore's campaign did to absentee ballots in Floria sent in by soldiers overseas in 2000. During the recount, Gore campaign lawyers challenged every one and managed to get hundreds thrown out for technicalities. Witnesses saw a group of them high-fiving over getting a bunch thrown out.

Of course, this is conveniently forgotton when people talk about Bush "stealing" the election in Florida.