Your Government...My View 10/16/08

By Ernie Padgett
I Am Ready To "Go To War"

When is the United States going to declare war on financial terrorists and pirates? Collectively, a group of low life individuals has almost brought our country to its knees financially. Not too many years ago, we were treated with Enron’s Ken Lay and Bernie Ebbers being arrested for cooking the books of their companies and looting funds which belonged to share holders and employees.
Interestingly though, we have not witnessed the CEO’s of Fannie Mae and Freddie Mac even testifying before Congress, much less being held to account for cooking the books of their former government supported enterprises (GSE’s). They enriched themselves with bonuses due to improper financial accounting.
The practices of these GSE’s in promoting sub-prime lending and then securitizing these mortgages in investment packages has led to the loss of hundreds of billions of taxpayers dollars. We have to wonder why none of these responsible parties is being held to account for committing what can be best described as financial terrorism upon our nation.
This reluctance just may be the result of the fact that Fannie and Freddie were undertaking policies as directed by Congress. Not only did Congress direct them to increase sub-prime mortgage lending but authorized them to bundle these sub-prime loans in giant packages with prime loans. These packages were then sold to other investors as safe because they were government-sponsored by Fannie Mae and Freddie Mac.
A topic for a future article may be a list of all members of Congress that accepted campaign contributions from Fannie and Freddie. I feel certain the list will be made up of Republicans and Democrats.
In the aftermath of the downfall of Enron, WorldCom and other companies looted by their CEO’s, Congress enacted the Sarbanes-Oxley Act, which held CEO’s accountable for the accuracy and correctness of their companies’ financial reporting, imposing significant penalties on those CEO’s whose companies cooked the books. Strangely, however, Fannie Mae and Freddie Mac were exempted from the provisions of the Sarbanes-Oxley Act. One must wonder if this was an oversight or a deliberate attempt to insulate Fannie and Freddie from the repercussions of improper financial reporting.
The "toxic" sub-prime loans held in the securities sold by Fannie and Freddie have contributed inexorably to the financial meltdown not only in this country, but overseas, as foreign investors also bought the investment packages they sold. In fact, it is these toxic sub-prime mortgages which are to be bought by the federal government as part of its $700 billion bailout plan. It is quite unsettling to look to the U.S. Congress for legislation to repair a problem of its own making. It is also disturbing to see the former CEO’s of Fannie and Freddie whose actions contributed to our financial crisis not held to account.
If we do not acknowledge the cause of our current turmoil, how then will such financial debacles be prevented in the future?
It has been said that if you want to know why a policy is made (state or federal), just follow the bouncing dollar (campaign contributions).
It is time our government declares war on financial terrorists. Our future depends on it!