Square In The Middle Of It

by hilzoy

From the NYT:

"One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager, according to two people with direct knowledge of the arrangement.

The disclosure undercuts a statement by Mr. McCain on Sunday night that the campaign manager, Rick Davis, had had no involvement with the company for the last several years.

Mr. Davis’s firm received the payments from the company, Freddie Mac, until it was taken over by the government this month along with Fannie Mae, the other big mortgage lender whose deteriorating finances helped precipitate the cascading problems on Wall Street, the people said.

They said they did not recall Mr. Davis’s doing much substantive work for the company in return for the money, other than speak to a political action committee of high-ranking employees in October 2006 on the approaching midterm Congressional elections. They said Mr. Davis’s firm, Davis & Manafort, had been kept on the payroll because of Mr. Davis’s close ties to Mr. McCain, the Republican presidential nominee, who by 2006 was widely expected to run again for the White House.

Mr. Davis took a leave from Davis & Manafortfor the presidential campaign, but as a partner and equity-holder continues to benefit from its income. No one at Davis & Manafort other than Mr. Davis was involved in efforts on Freddie Mac’s behalf, the people familiar with the arrangement said."

A couple of points: first, the article also says that Davis was hired as a "consultant", not a lobbyist. So if he says that he didn't do any "lobbying work", this is probably true, both in a technical sense (he was a consultant), and, more broadly, in that he doesn't seem to have done much work of any kind. It isn't exactly "straight talk", though. Second, Newsweek writes:

"Davis also said he "had a severed leave of absence" from his lobbying and consulting firm, and "I've taken no compensation from my firm for 18 months." (A campaign spokesman said that Davis receives no partnership distribution under his arrangement)."

I don't know enough about how partnerships work, and what it means to have equity in one, but unless all earnings are fully distributed on an ongoing basis, and Davis' arrangement means that all the money from Freddie Mac was distributed among the other partners, I'm not sure that this matters. Certainly, if Freddie Mac made some asset of mine more valuable, the fact that I did not actually convert that added value into cash and move it into my checking account would not show that I had not profited from the deal.

Third, if the NYT and Newsweek are right to say that Davis did almost no work for Freddie Mac, that (to my mind) makes the story worse, not better. What McCain spends his time railing against on the campaign trail is "the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac." Paying someone to do nothing, because of his "close ties to Mr. McCain, the Republican presidential nominee, who by 2006 was widely expected to run again for the White House", is about as clear an example of what McCain called "the Washington culture of lobbying and influence peddling" as you could ask for.

McCain is absolutely right to condemn it. He was just wrong about who was "square in the middle of it." It wasn't Barack Obama. It was his own campaign manager.

Comments

[Max Penny]

Well, time for a little outrage, isn't it?

I think John McCain should be facing a flood of populist anger right now, demanding among other things that he "reject and repudiate" his campaign manager.

Or maybe he just needs to be tarred more severely with the same brush.

I'd like to see more videos like this one that's been popping up on different sites... This is how you make clear that millionaire John McCain just does not live in the same world the rest of us do.

http://www.youtube.com/watch?v=iz4Z6L4u8E4

That's the kind of anger I'm looking for. (Funny too...)

[Clownoscopy]

Am I part of a cure or am I part of the disease?

[bryan]

See that explains everything, McCain thinks that his campaign manager must be working for Obama, considering how shoddily run the McCain campaign has been.

[Brett Bellmore]

Let's see, and this magically undoes the fact that Obama was one of the top three for raking in Freddie Mac money.

The doo-doo doesn't get this deep without bipartisan complicity, folks. The saner among you recognize that. It's the ones in Washington who aren't square in the middle who are outliers.

It is entertaining, though, watching somebody like McCain try to run as an outsider. Like an outsider would ever be permitted to get this close to being President...

[Gary Farber]

"Let's see, and this magically undoes the fact that Obama was one of the top three for raking in Freddie Mac money."

"Freddie Mac money": wanna unpack that? Because the fact that ordinary employees contribute to the extremely popular policitian doesn't mean squat, no matter how much Naked David Broder tries to sell it.

The fact that Obama gets lots of money from "the military," by the same definition, doesn't mean he's being influenced to favor what some general wants.

[just me]

Just remember it was McCain who proposed legislation that recognized the potential problem and may have helped prevent it, but the democrats voted down in committee along party lines.

[Gary Farber]

"Just remember it was McCain who proposed legislation that recognized the potential problem and may have helped prevent it, but the democrats voted down in committee along party lines."

Help us remember, with a cite to the legislation you're talking about, and the vote you're talking about.

[Warren Terra]

Just me, are we also encouraged to remember that as recently as last month McCain was celebrating the tremendous success of deregulating the banking industry, and anticipating great things from bringing the same approach to health insurance?

[FlyOnTneWall]

What I'm really interested in here is the disclosure of an arrangement that seems to have been designed to circumvent the extensive set of laws and regulations on lobbying. In other words, there's at least a prima facie case to be made that Davis and the GSEs weren't just guilty of poor judgment, but of breaking the law.

It works like this. You can hire someone, even a registered lobbyist like Davis, to work as a consultant. That's fine. But if that's what you're doing, you'd expect him to, you know, consult on things every now and then. We now have a parade offormer Freddie officials speaking to the press, alleging that Davis was not being paid for his expertise. That, in fact, he never did anything at all for his money, other than speak once to a small group.

So if Freddie wasn't paying Davis to share his expertise, why was it shoveling money his way? Well, because of his "close ties to Mr. McCain, the Republican presidential nominee, who by 2006 was widely expected to run again for the White House." Paying someone to exercise their influence over a "covered official," under the definition of the Lobbying Disclosure Act of 1995, is an activity that requires disclosure.

There are, as I read the law and applicable regulations, three key questions that would have to be answered to obtain a conviction. First, was this actually Freddie's intent in making the payments? There certainly doesn't seem to be any problem in finding witnesses to vouch for that. Second, was Davis aware of this? Tough to believe he wasn't. He was getting $15k each month, and it wasn't for his good looks. Third (and this is key), did Davis ever broach the subject of Freddie with John McCain? I have no idea.

But I don't think that needs to be established to justify an investigation. The point of the inquiry, after all, would be to establish whether or not Davis had ever had a lobbying contact. So, at a minimum, the LDA would seem to require that the Secretary of the Senate now issue a letter to Davis & Manafortfor informing them that they may be in noncompliance with the LDA. That would give them sixty days to respond before the matter gets referred to the District's US Attorney.

The LDA is small-potatoes. It allows only modest, civil fines, and has only recently been enforced with any degree of regularity. But it's the law, and it looks pretty darned clear that Davis deliberately circumvented it. Having the Secretary of the Senate issue a letter would establish an important precedent; after all, who knows how common such arrangements are in official Washington, or how many lobbyists are on the payroll for 'consulting' when they're actually being paid for their influence? Moreover, it would establish fairly clearly for the general public, which often gets confused by the hazy details of this sort of corrupt scheme, that what Davis did was not Kosher.

So I'm hopeful will see the exercise of some integrity here, but not holding my breath.

[cleek]

investigate? someone in the McCain campaign?

ask Alaska how that's going.

[hilzoy]

Fly: have you blogged that? If so, later, I might write a post linking to it.

[EarBucket]

I think McCain's going to have to fire Davis over this. From the article:

The payments that Mr. Davis received for leading the Homeownership Alliance were reported in Monday’s issue of The New York Times. On Sunday, in an interview with CNBC and The Times, Mr. McCain responded to a question about that tie between Mr. Davis and the two mortgage companies by saying that he “has had nothing to do with it since, and I’ll be glad to have his record examined by anybody who wants to look at it.”

That clearly was not true. So either McCain was lying to the reporters about Davis being paid by Freddie Mac, or Davis concealed it from McCain. They're not about to admit McCain told a bald-faced lie, so they're going to have to go with the alternative, that McCain's campaign manager has been lying to him all this time. Not much better, but a little. Hard to see how he keeps him on after this, though.

[S.G.E.W.]

Hard to see how he keeps him on after this, though.

It's obvious. He "fires" him then lets him continue to work on his campaign (a la Gramm). When the press points this out, say that the New York Times is in the tank for Obama. Or just lie.

Repeat as necessary.

[Anarch]

They're not about to admit McCain told a bald-faced lie, so they're going to have to go with the alternative, that McCain's campaign manager has been lying to him all this time.

Why can't they just keep lying?

[cleek]

Why can't they just keep lying?

exactly.

i wonder if the press remember where it left off digging into McCain's lies, when this financial maybe-crisis becomes old news.

[gwangung]

Let's see, and this magically undoes the fact that Obama was one of the top three for raking in Freddie Mac money.

From employees, not the company. I believe that's a difference, no? And I believe that's been pointed out before, no?

[KCinDC]

So Davis had one of those "no show" jobs they're always bargaining with on "The Sopranos"?

[nick]

... I don't know enough about how partnerships work, and what it means to have equity in one, but unless all earnings are fully distributed on an ongoing basis ...

I am sure that there are more knowledgeable folks than me to enlighten you on this, but ...

A few years ago I interviewed a friend of mine as part of an assignment for a management class. He is a senior partner at a prominent Florida Law Firm. His account of the firm's finances essentially jibe with your scenario above - at the end of each year, the partnership essentially stripped itself of all liquid assets except a couple of months worth of operating capital, and distributed the rest to the partners and associates by some sort of weighted distribution calculation.

I have no idea how ubiquitous this type of system is, but the person with whom I was speaking implied that this was essentially industry standard practice.

So there would be a "proper" amount of financial recusal in terms of these particular transactions if the lobbying partnerships work the same as the legal partnerships I have outlined above.

But I think you would have to argue that the partnership brand continues to grow in prestige and commensurate financial value, thus ensuring Davis' eventual remuneration for services rendered in supplying access and other social networking resources.

[felix culpa]

Neither precisely On or Off Thread, but on a broader point, from a comment I posted at Crooked Timber:
As for Wall Street [...] It is a media event. It feeds a fear that lurks under every rock in the garden; that it's all a sham, and we know it's a sham, but we have no option but to play along, and have as good a time as possible while we're doing it. 'We all know better, but I'm doing not badly, and anyway I don't have any choice, and I love my iPhone'. Spiraling towards the drain, but a dizzying ride.
Anyway, it feels scripted, Marat/Sade-like. Outrageousness, incomprehensibility, and obfuscation; smoke, mirrors, shouting in the murk, and a hell of a stink. But for all the elaborate choreography it feels like a shell game, nor do I have much reason to reason otherwise.

As someone, perhaps Robert Reich, said: It's not a crisis of liquidity, it's a crisis of trust.
Indeed.

[ral]

Just to indulge Brett, let's consider money.

The Center for Responsive Politics web site is having technical difficulties right now, so I will use Politifact's report as my source. From Politifact:

On the Freddie and Fannie question, it as McCain said: Obama is No. 2 on the list, with $126,349, right after Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, who had $165,400.

The time frame isn't specified but presumably it's for the current election cycle, so say 1 to 2 years. This represents political contributions from individual employees, not tax deductible.

Rick Davis' partnership, Davis and Manafort, on the other hand, received $1.8 million in consulting fees up to 2005 and from then on $15,000/month from Freddie Mac up to last month. This is an expense to Freddie Mac. I don't know their tax returns but normally such expenses are deductible by corporations. So last year, even at the reduced rate, Mr. Davis' partnership received in income $180,000 for Mr. Davis' services, tax deductable to Freddie Mac.

In just the last year Davis and Manafort received more money from Freddie Mac than the total of contributions to Obama from employees of Fannie Mae and Freddie Mac.

This leaves aside the question of just what Mr. Davis was doing to be worth all that money. We know what the contributions to Obama were for.

The disclosure undercuts a statement by Mr. McCain on Sunday night that the campaign manager, Rick Davis, had had no involvement with the company for the last several years.

I know my lawyer would say that receiving payment for services from a client constitutes "involvement." "Undercuts" is a very circumspect word choice.

Will this matter? I'm with Anarch.

[wonkie]

A bit off subject but here's how they take care of greedy selfish CEO's in other places:

CEO murdered by mob of sacked Indian workers »

Corporate India is in shock after a mob of sacked workers bludgeoned to death the chief executive who had dismissed them from a factory in a suburb of Delhi. Lalit Kishore Choudhary, 47, the head of the Indian operations of Graziano Transmissioni, an Italian-headquartered manufacturer of car parts, died of severe head wounds on Monday afternoon after being attacked by scores of laid-off employees, police said. The incident, in Greater Noida, just outside the Indian capital, followed a long-running dispute between the factory's management and workers who had demanded better pay and permanent contracts.

The article goes on to say that a riot broke out during a meeting between the CEO's and the workers. The workers out numbered and out fought the employers' security people.

I suppose that, as a sort of Bhuddist, I should be saddened by this story but I am not.

[felix culpa]

On t’other hand, if this Crisis is scripted (and I don’t yet see persuasive reason to believe differently) that would suggest it is timed as well; so if such is so, it would fall to someone possessed of a suitably Machiavellian mind to tease out the consequential point of the timing.

It’s clearly a job for ConspiracyMan (if it’s a job worth doing). On the face of it it’s too absurd to bother with; but considering the players, their means and methods, and loose threads every which way, it’s not wholly implausible. After all, when Paulson was appointed it was observed that he was placed in the position for good reason; to protect his friends and interests in the financial industry. He was brought to the kingdom for such a time as this, but by infernal rather than divine mandate.

So if anyone finds it an interesting tack and has the skill to pursue it...

[J. Michael Neal]

"Just remember it was McCain who proposed legislation that recognized the potential problem and may have helped prevent it, but the democrats voted down in committee along party lines."

Help us remember, with a cite to the legislation you're talking about, and the vote you're talking about.

He's talking about the Federal Housing Enterprise Regulatory Reform Act of 2005, S.190. His statement is true, but misleading. Yes, McCain was a sponsor of the bill, though not the primary one. It's the history of what happened that makes this not worth much. Here's a rough chronological outline:

1) S.190 is introduced in January, 2005.
2) HR 1461, the House counterpart, was introduced in April.
3) After hearings, both bills were voted out of their respective committees in July.
4) After that, S.190 vanishes. I can't find any record of it ever being discussed on the Senate floor.
5) HR 1461 is passed in the House in October. It secures about 330 votes, but that's with almost all of the Republican votes, and about half of the Democrats.
6) HR 1461 is received in the Senate, and referred to the Banking committee.
7) HR 1461 is never heard from again. No committee meetings were ever held.

So, yes, it is true that Democrats voted against S.190 in committee. However, the implication that they were responsible for defeating it is incorrect. As near as I can tell, the Seante leadership, which was Republican in 2005, killed the bill through parliamentary neglect. The GOP gets zero credit on this one.

[FlyOnTneWall]

hilzoy:

I gave up blogging on my own during the primary, when I noticed that it was gradually consuming my life. Now I just lurk on a handful of the more intelligent blogs. You're welcome to do whatever you wish with the comment.

nick:

That's a great summary, but there are two uniquely troubling aspects to Davis' continued stake in the firm. The first is that he was the only one there ever engaged in any way by Freddie, and yet the payments continued even after he had formally taken leave from the firm. That's astonishing. If Davis wasn't participating in the firm's affairs, and if he didn't stand to profit now or in the future, why on earth was Freddie forking over $15k every month?! Can anyone at the McCain campaign explain that?

The other problem here is that we're not talking about a law or accounting partnership, in which services are being rendered in exchange for cash. We're talking about a lobbying firm - what's being purchased, at the end of the day, are people and the influence they wield as individuals. So any effort to suggest that there's some meaningful distinction between Davis and his firm is really laughable.

In fact, while I'm on the subject, let me make an open appeal to other commenters for aid in constructing a timeline. If I have this right, it goes something like this:

2000-2005: Davis receives $30-35k as president of the Homeownership Alliance, a Fannie/Freddie front group. Does little to nothing to earn this money.

Late 2005: The GSEs disband the group. Davis is off the gravy train.

Immediately thereafter: Davis approaches McLoughlin, demands that Freddie continue to make its share of the payments ($15k). Freddie agrees.

2006: Davis briefs Freddie's PAC on one occasion, has a breakfast or two with McLoughlin. Receives $180k for his trouble.

End of 2006: McCain campaign claims this is the point at which Davis severs his ties with his namesake firm.

Jan-Jul 2007: McCain campaign makes payments to Davis Manafort, presumably for Davis' services.

August 2008: Freddie goes belly-up; payments stop

September 2008: The whole thing goes public

What am I missing here?

[spongeworthy]

J. Michael Neal:

You're talking about S. 190, the Senate version of HR 1461. It was sponsored by Hagel and co-sponsored by McCain, Sununu and Dole.

It was killed in committee by a party-line vote, all Democrats opposed. Even though Republicans were the majority, it did not make it out of committee because the GOP did not have the 2/3rds required to break a Democratic filibuster in the Senate.

The Democrats get to wear this badge of shame, though there are a few more to be passed out yet.

[J. Michael Neal]

It was killed in committee by a party-line vote, all Democrats opposed. Even though Republicans were the majority, it did not make it out of committee because the GOP did not have the 2/3rds required to break a Democratic filibuster in the Senate.

No. It got out of committee; you can't filibuster something in committee. No one who has brought this up as an issue with me has yet provided any evidence that it was ever brought up on the Senate floor. In order for there to be a filibuster, the item must be brought up on the floor, and there is no requirement that the majority leader do so just because something passes in committee. If you go to the Thomas history of S.190, you will find no mention of any floor action. If you go to the record of Senate roll call votes in 2005, you will not find any record of a cloture motion, or anything else, on S.190.

It's possible that McConnell counted noses, and never brought it up because he knew it wouldn't get cloture. However, given the lack of evidence in the actual Senate records, the burden of proof is on those who want to convince me that the Democrats killed this, rather than it dying of neglect.

[Ben]

"If Davis wasn't participating in the firm's affairs, and if he didn't stand to profit now or in the future, why on earth was Freddie forking over $15k every month?! Can anyone at the McCain campaign explain that?"

I can explain that. Perhaps Freddie Mac is a really badly run company that wastes a lot of money?

Oh wait, that's exactly what they are, thus this crisis.

[frankg]

Gary Farber,
One site that references McCain's support for more oversight/regulation is govtrack.us. You could do a search of s.190 in the congressional record, May 25, 2006, Federal Housing Regulatory Reform act of 2005. The last words are telling...Status: Dead. Preliminary reports are all Democrats voted against more regulation and oversight. Similar responses by democrats in 1999, 2003, 2005, and in 2006, to encourage growth of these programs melting down now (NYT, September 30, 1999 Fannie Mae Eases Credit To Aid Mortgage Lending) even when Greenspan issued warnings.
I search the net for info, I see Obama's major reciept of money from these firms, former ceos of these firms on his campaign staff, Dodd, Barney Frank on the record of voting against republican efforts to reign this in, Bush and McCain trying to do something to stop this, time and time again. This info is easy to find.

When World com and Enron blew up and republicans went down, no problem. Wherever the money trail goes. Now when its democrats, its...Look the other way!

[Gary Farber]

"I search the net for info"

Search this thread.

[Mike]

Hilzoy:
Um, you're aware that the McCain is calling this NYTimes article a pack of lies, aren't you? I'm not exactly in a position to know "the truth," but the McCain camp seems very definitive about this. They're not exactly using weasel words....

[DWPittelli]

J. Michael Neal: "It's possible that McConnell counted noses, and never brought it up because he knew it wouldn't get cloture. However, given the lack of evidence in the actual Senate records, the burden of proof is on those who want to convince me that the Democrats killed this, rather than it dying of neglect."

It's more than possible and your "burden of proof" is asinine. All the Democrats on the committee voted against it. Which means close to all the Democrats in the Senate would vote against it. There would be no point bringing it to the floor -- where 60 votes (3/5 not 2/3) are needed to get a vote on anything, unless it was for PR or grandstanding. (No doubt, if the Republicans were smart and saw a significant chance that this crisis would come to a head during the next Presidential campaign, they would have done so.)

Note also that McCain went out on the Senate floor in 2006 and called FNMA -- a very popular firm which had most of our Congress in its pockets -- out for the scam it was:

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

[hilzoy]

Mike: "Um, you're aware that the McCain is calling this NYTimes article a pack of lies, aren't you? I'm not exactly in a position to know "the truth," but the McCain camp seems very definitive about this."

So they say. But if you mean Michael Goldfarb's response, it's really disingenuous. Sam Stein has a good rundown of the problems, but it's pretty obvious, if you've read the NYT story. E.g., Goldfarb begins: "The New York Times charges that McCain-Palin 2008 campaign manager Rick Davis was paid by Freddie Mac until last month, contrary to previous reporting, as well as statements by this campaign and by Mr. Davis himself."

The NYT: "One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager".

Saying Freddie paid Goldfarb's firm is not the same as saying they paid Goldfarb. If the McCain campaign has denied that they paid his firm, I haven't seen it. They're denying a claim the NYT did not make, and that they were pretty careful to explain. And that's just the first mistake they make.

[Kenneth Almquist]

"All the Democrats on the committee voted against it. Which means close to all the Democrats in the Senate would vote against it."

But HR 1461 passed by a margin of 331 - 90 in the House. Democrats in the House voted for HR 1461 by more than a 3/5ths margin (122 - 74). It seems a stretch to posit that the views of Senators are so vastly different from the views of Representatives that HR 1461 could pass in the House by that large a margin but couldn't pass in the Senate.

HR 1461 included an affordable housing provision, which may have made a difference to Democrats. Perhaps the omission of this provision is why S 109 didn't garner Democratic votes in committee. But once HR 1461 was sent to the Senate, it seems improbable that it would have failed to pass if it had been scheduled for a vote.

It's equally improbable that passing HR 1461 would have prevented the current crisis. S 109 and HR 1461 were proposed in response to the discovery that accounting fraud was occurring at both Freddie Mac and Fannie Mae. Perhaps it would have been a good idea for Congress to pass one of these bills based on the information available at the time, but with the benefit of hindsight we can see that, even though Congress failed to act, the problem of accounting fraud has not recurred.

The sponsors of S 109 and HR 1461 were fighting the last war. They were worried about accounting fraud when the real problem that needed to be addressed was what would happen when the housing bubble popped.

[Old Bull]

Some of you guys need to brush up on your Senate rules. A proposed bill that is voted down in committee never gets to the floor of the Senate, so the united Democrats in the banking committee killed S 109 and get to own the consequences.

[cleek]

And that's just the first mistake they make

mistake? har.har.

[cleek]

You could do a search of s.190 in the congressional record, May 25, 2006, Federal Housing Regulatory Reform act of 2005. The last words are telling...Status: Dead. Preliminary reports are all Democrats voted against more regulation and oversight.

IIRC, the Dems weren't in the majority in May 2006 - not even close.

[inmypajamas]

Like Old Bull said, if a bill dies in committee, it doesn't get to the floor period, regardless if it could have passed unanimously. Law Making 101. The Dems killed the bill and top Dems Barney Frank and Chris Dodd were up to their collective asses in obstructing reform and collecting dollars, while in positions directly related to the finance industry. The Dems were in no way honest, innocent reformers who stood by as the Republicans ruined our economy. Give me a break. Only a true partisan hack would so steadfastly refuse to look at the whole story. There is plenty of blame to go around but any intellectually honest person would recognize the efforts that did get made to avoid this crisis.

And trying to base how a vote would go in the Senate based on what happens in the House denies history. The Senate Dems tend to vote to the left of the House Dems; the House in general tends to vote closer to the center and is more generally reflective of the voting public's views.

[john miller]

immypajamas, your klast statement reflects the fault in the thinking here.

Since the left is all in favor of regulation (they are all socialists you know) then why would they be against the bill so vehemently, particulalry since there were also many conservative Dems. Plus, the bill did pass out of committee, so your first statement is wrong.

TRhe bill in the Senate would have been different than the one in the house. I don't have the time right now but I am sure that the Senate Bill had some stuff in it that the Dems objected to. To say that the Dems held up reform or were against reform is the same as saying that Bush, Cheney and McCain were against funding the troops when the all opposed a bill to do that because it had a timetable attached.

Just talking about the name of a bill and something it might have is irrelevant without the whole bill being examined.

[cleek]

The Dems killed the bill a

what was the vote in the committee ? (including party breakdown, please)

[DWPittelli]

Old Bull, inmypajamas,

No, the bill did not die in the committee. It passed by a party-line vote. But like everything else in the Senate, it could not come to a floor vote without significant Democratic support, as 60 votes are needed for cloture.

[DWPittelli]

Kenneth Almquist: "It seems a stretch to posit that the views of Senators are so vastly different from the views of Representatives that HR 1461 could pass in the House by that large a margin but couldn't pass in the Senate."

As big a stretch as believing the Senate Republicans, who voted unanimously for the bill in committee, were secretly against it, while the Senate Democrats, who voted unanimously against the bill in committee, were actually in favor of something similar?

"It's equally improbable that passing HR 1461 would have prevented the current crisis.... The sponsors of S 109 and HR 1461 were fighting the last war. They were worried about accounting fraud when the real problem that needed to be addressed was what would happen when the housing bubble popped."

You are misinformed. Try reading the text of S. 109, or even its summary. The bill would have moved regulatory authority away from HUD (Housing and Urban Development), since HUD has an institutional bias toward always more housing.

The bill would also set or limit (from the summary) "(3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes..."

From the bill's text: "The Director shall, by regulation, establish risk-based capital requirements for each of the regulated entities to ensure that the regulated entities operate in a safe and sound manner, with sufficient capital and reserves to support the risks that arise in the operations and management of each regulated entity."

[liberal japonicus]

I think that this might bear on this discussion, but I can't get the pdfs to download.

[cleek]

But like everything else in the Senate, it could not come to a floor vote without significant Democratic support, as 60 votes are needed for cloture.

significant, in this case means 5, since the Senate was 55/44/1, at the time.

[ral]

Probably this is overshadowed by the rush to save the planet.

Newsweek reports that Rick Davis, as of the April, 2008 filing with the state of Virginia, was still a corporate officer (Treasurer!) of Davis Manafort Partners. There are two officers: Rick Davis and Paul Manafort.

Maybe someone will notice later. For now, Davis Manafort does not return phone calls.

[Laura]

It is interesting how quickly people believe what they want to believe. It's too bad that you can't listen to what someone says, then look it up for yourself instead of believing in mind-numbing nonsense.

Taken from the words of John McCain himself:

FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005 -- (Senate - May 25, 2006)

[Page: S5217] GPO's PDF
--- Mr. McCAIN. Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were ``illusions deliberately and systematically created'' by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

-- from May of 2006. How telling! He predicted this would happen TWO YEARS AGO! Wake up and get your own brain. Start looking up things for yourself because JOURNALISM NO LONER EXISTS!!!!