Judicial Watch • The Truth Behind the Financial Crisis

The Truth Behind the Financial Crisis

The Truth Behind the Financial Crisis

SEPTEMBER 26, 2008


September 26, 2008

From the Desk of Judicial Watch President Tom Fitton:

The Truth Behind the Financial Crisis

As I write this in Washington, DC, the city’s politicians deliberate just how far down the road to the perdition of socialism/communism/fascism they plan to take our country in response to the latest financial crisis. Want to know the true source of the financial meltdown in the home mortgage industry leading to the collapse of Fannie Mae and Freddie Mac and today’s attendant financial crisis? Follow the money trail back about nine years. Check out this article from the September 30, 1999 edition of the New York Times:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. [Emphasis added.]

The article goes on to predict that such a strategy might not cause problems during times of economic prosperity but that Fannie Mae could run into serious financial difficulty during an economic downturn.

And here we are with the financial markets on the verge of collapse and the federal government debating the largest government bailout in the nation’s history.

While the Clinton administration is certainly culpable for getting the ball rolling on these high-risk loans, there is plenty of blame to go around. Fannie Mae led by Clinton’s former budget director Franklin Raines and Obama campaign advisor Jim Johnson took Clinton’s risky gamble and then doubled down. The pair allegedly cooked the books at Fannie, issued countless dubious mortgages, and then took huge bonuses before leaving the company. Both men have also been accused of accepting special mortgage deals from Countrywide (a co-conspirator in this financial mess) as well.

Johnson resigned from his official position with the Obama campaign because of the scandal, though he, like Raines, may still be advising him. (To be sure, these “companies” contributed generously to Republicans and kept many a Republican on the payroll and their boards. Some will point to Rick Davis, McCain’s campaign manager, as an example.)

Politicians on Capitol Hill were no better. For example, Senate Banking Chairman Chris Dodd (D-CT), who was also nabbed in the Countrywide scandal, took more money in campaign contributions from Fannie Mae and Freddie Mac than anyone else in the U.S. Senate. (Barack Obama, with only four years in the Senate under his belt, was close behind.) When reform proposals for Fannie and Freddie were put before Dodd, he called them “ill advised.”

Despite their accounting problems and dire warnings of crisis, these “government sponsored enterprises” with the full support of liberals in Congress and their special-interest community organizing friends such as ACORN pushed for more subprime lending for their politically-correct constituencies. And calculating financial institutions (too many of which had corrupt relationships with these very same politicians) were happy to play along. Now the entire country is facing a financial disaster.

Any lessons learned? Not in this town. Fannie Mae and Freddie Mac are raring to reinvigorate the ruinous business of subprime loans to those who can’t handle them. And the latest version of the bailout would take “profits” in the bailout scheme from the taxpayer and give them to government programs designed to push yet more risky mortgage loans and related programs controlled by liberal activist groups.

Your Judicial Watch plans to investigate some of the corruption issues I’ve raised above. Both parties deserve scrutiny. (The FBI, a day late and a dollar short, is investigating, too.) Accountability will be our watchword. I’ll let you know what we find in future installments of the Update…

Documents Uncovered by Judicial Watch Shed Light on Barack and Michelle Obama’s Shady Connections

During his presidential campaign Barack Obama has attempted to cast himself as an outsider, someone who is above corruption and politics as usual. As I’ve written in this space before, Obama’s suspicious connections suggest otherwise. Our investigators were in Chicago and uncovered documents that provide some interesting details regarding the nature of these connections.

Here are just a few highlights.

  • Judicial Watch obtained documents that detail the long-term and close relationship between Barack Obama and leftist domestic terrorist William Ayers. (Obama has seriously misled the public in this regard.) According to the documents, Obama served as Chairman of the Annenberg Challenge, a school program designed by Ayers, for eight years (1995-2002). The documents include a fundraising letter signed by Obama requesting a $22,500 grant noting, “we [meaning the Annenberg Challenge] are launched.” Ayers is reported to have been the power running this group and Obama needs to better explain his contacts with him.
  • Judicial Watch uncovered documents that further establish Obama’s connection to convicted felon Antoin “Tony” Rezko. Documents show Barack Obama supported a housing development project known as Cottage View Terrace, which yielded $900,000 in developers’ fees for Rezko and Obama’s employer, lawyer Allison Davis. (The project application states, “State Senator Barack Obama has provided support.”) Rezko, who was involved in Obama’s home purchase, was recently convicted on 16 counts of fraud and money laundering, has personally donated at least $21,000 to Obama’s campaigns, and raised over two hundred thousand dollars in additional support.
  • Judicial Watch uncovered documents that raise questions about Michelle Obama and the Rezko land deal as well. One document that lists the number of community institutions involved with the Cottage View Terrace project includes The University of Chicago. In 1998, Michelle Obama was working for the University of Chicago as Associate Dean of Student Services. She was also in charge of developing the University’s Community Service Center. The University wrote three letters in which it “enthusiastically supports” the project. The university supported other Rezko projects as well.
  • Other documents we found show that another close associate of Obama, Valerie Jarrett, whom CBS News once called “the other side of Barack Obama’s brain,” is also connected to Rezko. She served on the Board of Directors for the Fund for Community Redevelopment and Revitalization, an organization that worked with Rezko and Davis, and also voiced her support for other Rezko projects.

As I’ve noted in this space before, John McCain and Barack Obama both have questionable ties and ethical skeletons in their closets. (I, for one, am not as quick as some to “forgive and forget” when it comes Sen. McCain’s involvement in the Keating Five scandal.) No matter who is elected in November there are two certainties: Government corruption will continue to be a problem. And Judicial Watch will remain ever vigilant in holding corrupt politicians accountable.

Palin’s Email Hacked, No Indictment Yet for Hacker

Republican vice presidential candidate and Alaska Governor Sarah Palin’s personal email account was hacked last week, allegedly by the son of a Democratic operative in Tennessee.

David Kernell, a 20-year-old student at the University of Tennessee, allegedly gained access to personal messages and photographs from Governor Palin’s Yahoo account and then released them to an Internet site that publishes leaked documents, a shocking and criminal invasion of privacy.

To make matters worse, there are disturbing signs the hacker may not be held accountable to the full extent of the law. This according to The Associated Press:

A federal grand jury ended its session Tuesday without indicting a Democratic state lawmaker’s son in an investigation of someone hacking Republican vice presidential candidate Sarah Palin’s personal e-mail…Investigators last week searched 20-year-old David Kernell’s apartment in Knoxville, where he is a student at the University of Tennessee, but no charges have been filed. Kernell’s father is Democratic state Rep. Michael Kernell of Memphis.

Hopefully the government is still building its case and charges are forthcoming. The hacker needs to be held accountable.

Judicial Watch to Texas Attorney General: Texas State Legislature Has Authority to Stop Illegal Alien Sanctuary Policies

On the illegal immigration front (an issue that has received little attention by the press and the candidates during this presidential election season), Judicial Watch sent a letter to Texas Attorney General Greg Abbott with the following message: The Texas State Legislature has the authority to prohibit local government agencies from implementing sanctuary policies that benefit illegal aliens.

Judicial Watch sent the letter, dated September 18, 2008, in conjunction with two organizations, Texans for Immigration Reform and Immigration Reform Coalition of Texas, both of which were invited by Attorney General Abbott to submit their views on the matter.

Members of the Texas State Legislature have sought the opinion of Attorney General Abbott as they consider legislation that would invalidate illegal alien sanctuary policies and support the use of local law enforcement agencies in enforcing federal immigration laws. (Much of the letter is applicable to other states considering reigning in local sanctuary policies.)

Here’s a key excerpt from Judicial Watch’s letter:

Question

Does the [Texas State] Legislature have the authority to prohibit local governmental entities from serving as “sanctuaries” for undocumented persons?

Answer

Yes, the [Texas State] Legislature may prohibit local governmental entities from serving as “sanctuaries” for undocumented persons to the extent that a local government adopts any restriction or limitation on communication between local police or officials and federal immigration authorities regarding a person’s immigration status. Any such enactment by the Legislature would be entirely consistent with federal law and would help remove any doubt as to the authority of local governments to adopt such policies.

As we’ve seen with recent high profile murders committed by illegal aliens in San Francisco and Los Angeles, sanctuary policies are dangerous as well as illegal. It is our view, of course, that sanctuary policies for illegal aliens must be abolished not only in Texas but in every single state in the country. Visit our new Internet site, www.sanctuarybusters.org, for more information on Judicial Watch’s nationwide campaign against illegal immigration sanctuary policies. (I plan to send you a special email next week regarding this issue.)

Until next week…


Tom Fitton
President

Judicial Watch is a non-partisan, educational foundation organized under Section 501(c)(3) of the Internal Revenue code. Judicial Watch is dedicated to fighting government and judicial corruption and promoting a return to ethics and morality in our nation’s public life. To make a tax-deductible contribution in support of our efforts, click here.



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