Fannie: half-tithing?
In yesterday’s post about HR 1461 (Fannie Mae archive here), I missed the significant amendment, offered by Congressman Barney Frank (D-MA-4):
Fastest (and funniest!) mouth and fastest brain in the House …
The legislation would revise the current affordable housing financing goals for Fannie Mae and Freddie Mac, and it would also require them to contribute 5 percent of their after-tax earnings to an affordable housing fund.
That’s a very nice feature in that it ring-fences social hard equity-type funding, which is among the absolute scarcest commodities among the four kinds of money. So good for you, Barney! (and for your fine staff, with whom I have the pleasure to work).
The House Financial Services Committee approved the chairman’s mark 65-5, as Fannie Mae continues making nice, with this statement:
The legislation passed by the House Financial Services Committee today, under the leadership of Chairman Oxley, Subcommittee Chair Baker, and Ranking Members Frank and Kanjorski, is a significant step forward in the process of strengthening the safety and soundness oversight of our company and the GSEs. While work remains to be done, we are committed to working cooperatively and constructively with members on both sides of the aisle as the legislation continues to progress through the House and Senate, and we are hopeful a bill will be signed into law this year.
Contrition is free, which is all the more sweet, to judge by past behavior, it is so palpably insincere:
“In the past I had always been greeted with a dismissive approach, told that the CEO was a very busy person and then had to wait a long time for anyone to call back, often not the CEO,” [House Financial Services Committee Chairman Richard] Baker said. “Now the company is very responsive. I am entering territory that I’ve never been before.”
Fannie Mae lobbyists were notorious for telling lawmakers and their aides what the company’s position was, and making it clear that they were expected to agree. Many lawmakers were particularly irritated by what they saw as the condescending attitude of Franklin D. Raines, Fannie Mae’s former chief executive.
“I’m not condescending, Tim, are you?”
“He [Raines] was inflexible, had a little bit of a tin ear and was offended if it seemed like people were being critical of him,” said Rep. Barney Frank (D-Mass.).
Fannie Mae once retained Kenneth W. Starr, the special prosecutor who investigated President Bill Clinton, to prevent lawmakers from disclosing a document that detailed the annual incomes of the company’s senior officers.
Mr. Raines made almost $20 million a year for five years ….
Starr threatened to sue Baker in 2003 to keep the report private, Frank said. Baker finally disclosed the list during a congressional hearing a year later, but only after consulting several legal experts who assured him that he wouldn’t be held personally liable.
One can see why the legislators may wish to bind while the binding is good ….
