"As for the enemies of freedom, those who are potential adversaries, they will be reminded that peace is the highest aspiration of the American people. We will negotiate for it, sacrifice for it; we will not surrender for it, now or ever." - Reagan, January 20, 1981

"In Vietnam, we tried and failed in a just cause. No More Vietnams can mean we will not try again. It should mean we will not fail again." - from No More Vietnams by Richard Nixon

Friday, September 26, 2008

Sept. 24, 2008 - Iraq parliament paves way for provincial elections

http://ap.google.com/article/ALeqM5hwK_CSpBxsNuVUEaDuOwmSSCiqGwD93DAGDG0

Iraq parliament paves way for provincial elections
By QASSIM ABDUL-ZAHRA – 2 days ago

BAGHDAD (AP) — Under intense U.S. pressure, Iraq's parliament approved a law Wednesday paving the way for the first provincial elections in four years following months of deadlock that American commanders warned could jeopardize the dramatic decline in violence.

The breakthrough came after lawmakers decided to postpone a decision on how to resolve a power-sharing dispute over the oil-rich city of Kirkuk. The Kirkuk controversy has stoked ethnic tensions in northern Iraq and stalled approval of the election bill.

U.S. officials hope the election, which must be held by Jan. 31 according to the new legislation, will give greater representation to minority Sunni Arabs. Many Sunnis and some Shiites boycotted the last provincial election, in January 2005, enabling Shiite religious parties and the Kurds to win a disproportionate share of the seats.

Empowering Sunnis through a new election may reduce support for the waning insurgency — though not among extremist groups.

In the latest bloodshed, suspected al-Qaida in Iraq militants ambushed and killed at least 22 Iraqi police commandos and U.S.-allied Sunni fighters in a village northeast of Baghdad on Wednesday. And in an audio message posted on militant Web sites, the purported leader of the al-Qaida front group the Islamic State in Iraq warned pro-government Sunnis that Shiites and U.S. forces will one day turn on them.

But the vote could also shift the balance of power among Shiite factions. Followers of anti-U.S. cleric Muqtada al-Sadr are hoping to make large gains in southern provinces, where many of the councils are dominated by rival Shiite parties in the ruling government coalition.

The 275-member Iraqi parliament had been heavily criticized for its inability to pass the law needed to establish the rules and guidelines for the vote. The election had been due as early as Oct. 1, then the date was pushed to the end of December.

U.S. officials have complained privately that Iraqi politicians have failed to take advantage of the sharp drop in violence — down 80 percent since last year, according to the U.S. military — to forge lasting power-sharing agreements.

The head of Iraq's electoral commission said the delay will make it difficult to meet the Jan. 31 deadline but that preparations were already under way.

"I think it will be very difficult to hold the elections this year, but we will try our best to ensure the elections occur before the end of January 2009," Faraj al-Haidari said.

President Bush congratulated the Iraqi parliament for passing the law and called the Sunni speaker Mahmoud al-Mashhadani and Prime Minister Nouri al-Maliki, a Shiite, to praise their leadership, his office said.

"Nothing is more central to a functioning democracy than free and fair elections," Bush said in a statement. "Today's action demonstrates the ability of Iraq's leaders to work together for the good of the Iraqi people and represents further progress on political reconciliation."

U.N. envoy Staffan di Mistura, who has shuttled relentlessly between the political blocs to pressure them to approve the law, said preparations for the vote would begin immediately.

"Today is an important day for Iraq and democracy as the parliament found a compromise over election law," he said. "This will help Iraq and Iraqis to express their opinions by voting for their candidates in the provinces."

The legislation had been bogged down in a complex dispute among Arabs, Turkomen and Kurds over Kirkuk, which Kurds seek to incorporate into their semiautonomous region.

The measure still needs to be approved by the three-member presidential panel led by President Jalal Talabani, a Kurd who vetoed an election bill passed in February after Kurdish lawmakers walked out of parliament.

But Kurdish legislators agreed to the latest proposal, making its adoption more likely. All sides accepted a U.N. compromise to put off the vote in Tamim province, which includes Kirkuk.

Instead, parliament will form a committee to review property disputes and power-sharing concerns and come up with separate legislation for elections there by March 31.

Kurdish legislator Khalid Shewani said the tipping point was an assurance that the committee would work according to the Iraqi constitution.

"Every side had fears but these fears have disappeared after the inclusion of legal guarantees," he said. "We thank God that we reached this agreement."

The new law also banned political parties from using religious authorities, mosques and government institutions as part of campaigning.

Another item specified that 25 percent of the council members must be women — the same quota constitutionally mandated for parliamentary elections, which were last held in December 2005 and drew more Sunni participation. But the thorny issue of how to ensure minorities such as Christians and Yazidis are fairly represented was to be addressed separately by the U.N. envoy.

Voters will choose councils in 14 provinces, which wield considerable power over local security forces and resources, including oil. Excluded from the legislation were the three provinces that make up the semiautonomous Kurdish region in northern Iraq since they are governed by the Kurdish parliament, as well as Tamim province, which includes Kirkuk.

Associated Press writers Sinan Salaheddin and Sameer N. Yacoub contributed to this report.

Washington Times - EXCLUSIVE: McCain, Iraq and the Surge

Thursday, August 21, 2008
McCain turns Bush on Iraq war surge
Joseph Curl (Contact)
EXCLUSIVE:

Sen. John McCain, who watched from a prison camp as America failed to deploy the overwhelming force necessary to win the Vietnam War, seized the moment after Republicans lost Congress in 2006 to push President Bush not to make the same mistake.

Mr. McCain sent a private letter to Mr. Bush on Dec. 12, 2006, that challenged the president to show the "will" to win the Iraq war by deploying 20,000 troops into Baghdad and the Sunni Triangle to beat back a growing insurgency.

The letter was the climax of a 3 1/2-year effort to persuade the president to send more troops to Iraq. The former Navy pilot, who had his arms repeatedly broken during nearly six years of captivity, couched his argument in the terms born of the Vietnam War.

"The question is one of will more than capacity," wrote the senior Republican on the Senate Armed Services Committee. "If we are not willing to provide the troops necessary for victory, however, victory itself will be impossible."

Mr. McCain, whose letter is made public here for the first time, added that "surging five additional brigades into Baghdad by March" was the answer.

Mr. Bush, who had resisted Mr. McCain's call for a troop surge for years, now praises him for persisting in his argument that expanding the war in Iraq was the way to win it.

"John recognized early on that more troops would be needed in order to achieve the security necessary for the Iraqis to make the political progress we're seeing now," the president told The Washington Times this week.

"He supported that action even though many said it would hurt his campaign [for president]. He didn't care about popularity; he cared about success for our troops and our country. And now that the surge has worked, it proves that John's judgment was correct."

Mr. McCain's push to increase troops in Iraq began five years ago this month, just after his first visit to Baghdad and three months after Mr. Bush had proclaimed the end of major combat before a banner reading "Mission Accomplished."

"We need a lot more military," the senator said during a stop in Pakistan on his way home. "We need to tell the American people, and I think they'll support it."

A week later in Washington, he delivered the same message to any senior official who would listen: Secretary of State Colin L. Powell, National Security Adviser Condoleezza Rice, Defense Secretary Donald H. Rumsfeld. In November, Mr. McCain warned about the "lessons" of his own war.

"We lost in Vietnam because we lost the will to fight, because we did not understand the nature of the war we were fighting, and because we limited the tools at our disposal."

For much of his 3 1/2-year advocacy for the surge - an attempt to persuade the president to adopt a strategy that his commanders said was unnecessary, that Democrats in Congress angrily opposed and that Mr. McCain's Republican colleagues bitterly resented - the former Navy pilot was an army of one.

But after Republicans lost control of Congress in November 2006, Mr. McCain gained leverage in his argument with a president who was soon to face an empowered majority of Democrats and a Republican panicked by the idea that the election was a mandate on Iraq.

Soon the architects of the failing strategy in Iraq - the generals and their civilian superiors - would be banished, and a dissenting general who had sought an increase in troops and a new counterinsurgency strategy would take charge of the war in Iraq.

The president, with no acknowledgement then of Mr. McCain's arguments, would adopt the senator's plan. Democrats who predicted the failure of what they mockingly called "the McCain surge" would fall silent when the 20,000-troop increase led to a dramatic reduction of violence, falling to a low of just 11 troops killed in July.

"They don't call it that anymore," Sen. Lindsey Graham said, smiling in triumph.

The South Carolina Republican, an early convert to the McCain cause who observed much of the senator's backdoor efforts, is unabashed in his praise for his longtime friend, blinking back a tear as he recalls trips he took to Iraq with his colleague.

"Without John McCain, there would never have been the surge," he said emphatically.

Mr. McCain declined to be interviewed for this account, privately telling an aide, "I won't take credit for the surge." Other top advisers said he won't talk about private conversations with the president and the military leaders serving under him. The man who refused to leave his Vietnam prison camp ahead of those captured before him is said to be determined not to take credit for success that belongs to soldiers.

Mr. McCain's views contrast sharply with those of his Democratic rival in the November election. Sen. Barack Obama, a freshman senator from Illinois, joined his party's elders to oppose the surge, even after military leaders agreed that it was necessary, and now only grudgingly acknowledges the success of the surge.

Mr. McCain's plea for change in Iraq, and how he finally accomplished it, is detailed here through scores of documents and interviews conducted by The Times during a six-month investigation.

'Mission Accomplished'

Just six weeks after the start of the war, Mr. Bush flew in a Lockheed S-3 Viking fighter-bomber to a smooth landing on the flight deck of the USS Abraham Lincoln as the aircraft carrier bobbed in the Pacific in May 2003. Its crew had just returned from combat operations in the Persian Gulf.

Mr. Bush was greeted by the crew with wild enthusiasm, posing for photographs in his flight suit with pilots and ship crewmen beneath a huge banner boasting "Mission Accomplished." The White House would later say the banner was meant in salute only to the crew of the Abraham Lincoln.

"In the battle of Iraq," the president said, "the United States and our allies have prevailed." But he warned there was still "difficult work to do in Iraq. We are bringing order to parts of that country that remain dangerous."

In the following weeks, hawks in the Senate who had pushed for war in Iraq began to feel vindicated. Their prime spokesman - a man literally born into the military and the progeny of two Navy heroes - Mr. McCain had declared a week after the war began March 19, 2003, "there's no doubt in my mind that we will prevail and there's no doubt in my mind, once these people are gone, that we will be welcomed as liberators."

Three weeks after the president's speech, Mr. McCain took to the chamber's floor to proclaim an American triumph of arms. "We won a massive victory in a few weeks, and we did so with very limited loss of American and allied lives," he declared.

The senator felt the same way a month later, when Fox News' Neil Cavuto stated flatly that "many argue the conflict isn't over."

"Well, then," replied the senator, "why was there a banner that said 'Mission Accomplished' on the aircraft carrier? The major conflict is over."

But this view changed after he went to Iraq in August 2003 and met a blunt-spoken British commander in Basra, where a disintegrating situation was turning to chaos.

The British colonel

Unlike most of his Senate colleagues, Mr. McCain did not take a vacation or junket during the lengthy summer recess in 2003. Instead, along with Mr. Graham, he went with a congressional delegation to Iraq. With his trademark curiosity and adherence to Ronald Reagan's famous caution to "trust but verify," the senator wanted to see for himself the victory that America had won so quickly.

Once on the ground, the senators were taken into Basra, a Shi'ite city in southeastern Iraq controlled by British troops. "I never will forget it," Mr. Graham recalled. "He gets up and starts speaking, looks at Senator McCain and says, 'You know, I'm a British citizen, I don't pay taxes in America and I will never vote for you and I will probably never see you again, but here's what I think: We don't have it right - we don't have enough people, I don't have the right kind of people. If we do not get ahead of this, it is going to be a very big problem.'"

"That British colonel opened our eyes beyond anything else. You can be briefed in Washington, they can show you charts, but when you get on the ground and actually talk to the people it's a completely different story," Mr. Graham said.

The two senators quickly concluded that conditions inside Iraq were clearly worse than American commanders were reporting to the White House. While Mr. McCain and the others were in Iraq, 17 people, including the top U.N. envoy who was a key figure in the political transformation of Iraq, were slain in an attack on an installation of the United Nations. The attack occurred as the senators were meeting with U.S. Ambassador L. Paul Bremer and Lt. Gen. Ricardo Sanchez, then the commander of U.S. troops.

Mr. McCain, characteristically blunt, looked the ambassador and the general "right in the eye," Mr. Graham recalled, "and said, 'You're going to have to start shooting some of these looters.' It was his belief that the looting and the other signs of the growing insurgency had to be dealt with and he asked point-blank, 'Do you have enough troops?' Everybody said 'Yes.'"

An about-face

Mr. McCain's opinion changed on that first trip. The campaign to oust Saddam Hussein and neutralize Iraq's military had been won, but the peace was at risk because of an insurgency that, fueled in part by Iran and Syria, had quickly materialized. The insurgents were gaining.

"I think there's a danger that unless we do what's necessary quickly, that we could find ourselves in an extremely - and I emphasize extremely - difficult situation," he said Aug. 29 in an interview on National Public Radio. "We need more troops."

The senator said on "Meet the Press" that another division of troops - 20,000 soldiers - was needed to secure Iraq, and repeated the call for two months.

His rhetoric crystallized in November 2003 in a speech to the Council on Foreign Relations in Washington. With inside-the-Beltway punditocracy beginning to call Iraq a "quagmire" - the term that came to define the Vietnam War - the senator repeatedly insisted that "Iraq is no Vietnam."

But he again called for more troops and a strengthened will to win the war. "The simple truth is that we do not have sufficient forces in Iraq to meet our military objectives," he said. "Simply put, there does not appear to be a strategy behind our current force levels in Iraq, other than to preserve the illusion that we have sufficient forces in place to meet our objectives."

As evidence, he cited Gen. Sanchez's acknowledgement from the ground in Iraq that his forces could not handle new battles. "If a militia or an internal conflict of some nature were to erupt," the senator quoted the general, "that would be a challenge out there that I do not have sufficient forces for."

In this speech, he said another division should be deployed to Baghdad and the Sunni Triangle, which stretches from Baghdad west to Ramadi and north to Tikrit. In what would become a frequent refrain, he lashed Mr. Rumsfeld, who just three days earlier had repeated his emphatic assertion that no more troops were needed.

"I hope that Secretary Rumsfeld would recognize that - the realities on the ground. And the realities on the ground are that things are not getting better. ... However you do it, I think we need more people there."

The day after that, the defense secretary called to invite Mr. McCain to breakfast. The meeting the next morning was chilly; Mr. Rumsfeld opened by saying: "I read your speech." (Mr. McCain later joked that "that must have been an enjoyable experience for him.")

The defense secretary, who had made his own visit to Iraq in September, was perplexed by Mr. McCain's assessment of the conditions on the ground, said a senior McCain adviser who asked not to be named because the meeting was private. But the senator spelled out what he thought was needed.

"He told Secretary Rumsfeld there was danger that the peace was being lost and asked that they ramp up both the troop strength and the civilian assistance programs," the senior adviser said.

The senator "made a very passionate case that we need to look at adding more troops," said Mr. Graham, who talked with Mr. McCain soon after the meeting with the defense secretary concluded.

"In that first visit [to Iraq] in August, it was very subtle as to what was going on, and it wasn't obvious to everybody that the country was going into chaos, but John could see that the dynamics were all wrong," Mr. Graham said.

As the senior member of the Senate Armed Services Committee, which has oversight of military operations and considerable authority in shaping the Defense Department's budget, Mr. McCain offered blunt advice.

"McCain believed the Pentagon was spending too much time on search and destroy missions that were ineffective, when in fact the troops needed to focus on the growing threats to civilians targeted by the insurgency, creating a chaos that could destabilize the entire country," the McCain adviser said.

The secretary was not persuaded.

"Rumsfeld responded by assuring Senator McCain that the commanders had told him they had all the assets they needed on the ground," the adviser said.

An aide to the secretary said Mr. McCain's account is incorrect.

"In November 2003, Secretary Rumsfeld and Senator McCain had one of a number of conversations that ended with the two in agreement on the need to win in Iraq," Keith Urbahn said. "Senator McCain may prefer to characterize their meeting as a Showdown at the OK Corral, but that's not straight talk. It's a fairy tale."

Mr. Rumsfeld wrote a two-sentence summary shortly after his meeting, according to his office. "I had breakfast with Senator McCain. He said, 'The answer may not be more troops in Iraq, but the answer is not the status quo.' I agree with him."

Mr. McCain nevertheless left the breakfast table convinced that the Pentagon was out of touch with reality, a conclusion that eventually would drive him to become one of Mr. Rumsfeld's harshest critics. He made several additional private attempts to persuade the Pentagon and the White House to make changes in both strategy and tactics, and when those efforts failed, he decided to use his influence as a senator and a war hero to push the Pentagon to send more troops.

The Bully-pulpit years

The next three years would set David against Goliath, the 5-foot-7-inch, 165-pound senator from Arizona against the heavyweights in the White House and the Pentagon, the very men and women who had shaped the strategy that was failing. He got little help from his Senate colleagues.

"Republicans embraced the idea, 'Well, this violence is basically manufactured by the media; it's not as bad as it looks,'" Mr. Graham recalled. "Democrats were so over the top - 'This is hopeless and we can't win' - so John's voice, which was consistent, was drowned in the raucous clamor of partisan politics."

In November 2003, Mr. McCain took his frustrations public. Unless the United States immediately dispatched at least 15,000 additional troops to Iraq, he said, the United States risked "the most serious American defeat on the global stage since Vietnam."

He continued even in the midst of the 2004 presidential election campaign. Risking alienating the president, whom he joined on the campaign trail, Mr. McCain rebuked Mr. Rumsfeld for refusing to challenge his military commanders.

"It's not up to the commanders on the ground. It's up to the leadership of the country to make these decisions," Mr. McCain said. "That's why we elect them and have civilian supremacy. We're now facing a terrible insurgency."

Despite his increasingly sharp criticism of the conduct of the war, he met frequently with Mr. Bush, sometimes in the Oval Office and occasionally aboard Air Force One, en route to campaign stops together. Their relationship had grown cordial, the bitter battle of the 2000 Republican primary battle forgotten and forgiven.

Then, just two weeks before the November presidential election, Mr. McCain publicly disputed Mr. Bush's assertion that sufficient troops were on the ground in Iraq. "I think that we need more troops in Iraq," he said. "I've thought that for a long time, election or no election."

By the end of the year, Mr. McCain was contemptuous of Mr. Rumsfeld, declaring that he had "no confidence" in the Pentagon chief. "I have strenuously argued for larger troop numbers in Iraq, including the right kind of troops - linguists, special forces, civil affairs and so forth," he said. He kept up the pressure as the war stretched into the new year. "We've got stay and expand."

Path to election defeat

Conditions in Iraq continued to spiral downward. Casualties increased. The players on the yellow sofa in the Oval Office - Vice President Dick Cheney, Miss Rice, Mr. Rumsfeld, members of the Joint Chiefs of Staff - dug in their heels. No one was ready to depart from the strategy they designed, and each thought that a few tweaks of tactics would lead to triumph. Democrats, meanwhile, continued to relentlessly attack Republicans for "staying the course of failure."

By November 2005, Mr. McCain's frustration became bitter resignation. "It will take time, probably years, and mean more American casualties to win in Iraq," he said.

The White House would soon raise expectations of withdrawing troops; Mr. Bush, with midterm congressional elections coming in November, himself asserted in early 2006 that the United States could soon begin to bring some troops home, provided Iraqis began to take responsibility for saving themselves.

The declarations further exasperated Mr. McCain, who was reduced to repeating himself. "You know, I've always said that we needed more troops over there. I have said that for years," he said in 2006.

Across the partisan aisle, a new power center was emerging in the Democratic Party. Mr. Obama, a fit young freshman senator with a golden tongue, was putting together an upstart presidential campaign built on grass-roots dissatisfaction with the Iraq war. With Mr. McCain moving to the front of the Republican field for 2008, the man from Illinois sought to draw differences between them, emphasizing his oft-stated opposition to the war, and in particular his belief that sending more troops to Iraq would accelerate the rush to failure.

"Given the deteriorating situation, it is clear at this point that we cannot, through putting in more troops or maintaining the presence that we have, expect that somehow the situation is going to improve, and we have to do something significant to break the pattern that we've been in right now," Mr. Obama told audiences as the midterms approached.

The president continued to defer to his commanders on the ground, including Gen. George W. Casey Jr., the man in charge in Iraq. "General Casey will make the decision as to how many troops we have there," the president said. "I've told him this. I said, 'You decide, general.'"

On the eve of the 2006 elections that would rout Republicans everywhere, Mr. Bush pledged to stand by the deeply unpopular Mr. Rumsfeld. He could stay as defense secretary for the length of his term as president, Mr. Bush declared.

Then the voters spoke, handing Mr. Bush the most damaging loss of his presidency and opening his eyes to change.

'A new idea'

The Republican losses would lead inexorably to the surge. Mr. Rumsfeld resigned, and key men in uniform, like Gen. Casey, who for years had assured the administration he had enough troops at hand, were pushed aside.

"The irony of ironies, in my opinion, is that if the Republicans had not lost in 2006, the House and the Senate," Mr. Graham said. "I doubt Secretary Rumsfeld would have ever been replaced, and when he left it gave an opening to a new idea."

As the long run-up to the 2008 presidential campaign approached, Mr. McCain redoubled his support for the surge. This time, he would have the president's undivided attention after the midterm defeat that Mr. Bush himself called "a thumpin'."

Mr. McCain planned his fourth trip to Iraq in December 2006, and spent the early part of the month persuading Mr. Bush to accept the necessity of sending more troops. He met the president at the White House on Dec. 6, the day that the bipartisan Iraq Study Group, a distinguished panel of politicians and diplomats led by James A. Baker III, secretary of state during the administration of Mr. Bush's father, and Lee H. Hamilton, the widely respected former Democratic congressman from Indiana, delivered a report urging Mr. Bush to begin withdrawing U.S. combat forces from Iraq by the beginning of 2008. The alternative was "a slide into chaos."

Republicans were stunned. Many panicked. Sen. John W. Warner of Virginia, who had been an early and strong supporter of the war effort, joined Democratic critics to explore the idea of mandating a withdrawal from Iraq.

"They thought Iraq was the death blow to the Republican Party," Mr. Graham recalled. "So you had a group of different Republicans coming up with different plans that had the same result. We would begin to end combat operations and pull out."

Mr. McCain saw retreat as defeat. He turned to two of his closest friends, Mr. Graham and Sen. Joe Lieberman, to devise a strategy to push aside Pentagon critics of the surge, to convince the president that the surge was the right strategy and finally to thwart efforts to force a congressional vote on a troop withdrawal, which Democrats might win.

"I think John's finest moment, and in many ways mine and Senator Lieberman's, was to stop the stampede of Republicans who wanted to find ways out of Iraq," Mr. Graham said.

Mr. McCain, leading in the early Republican presidential polls for the 2008 nomination, used his celebrity in front of the camera to make a case for the new strategy and to buck up demoralized Republicans. Blocking a Senate vote on withdrawal was crucial.

The conservative American Enterprise Institute sent a draft report to Mr. McCain from its own panel, dubbed the Iraq Planning Group. Unlike the Baker-Hamilton group, the AEI plan mirrored Mr. McCain's, calling for more troops in Iraq.

Mr. Graham assumed dual roles. He acted first as a floor whip in the Senate, collecting and coddling the 41 votes needed to prevent a vote to withdraw troops on a specific timetable.

Further behind the scenes, he worked with Gen. David H. Petraeus, who was poised to take over management of the Iraq war in 2007. The two discussed a specific counterinsurgency plan that would focus on restoring security in the streets of Iraq's most dangerous cities.

Gen. Petraeus was a counterinsurgency expert and a strong advocate of increasing troop levels.

"There were a lot of late-night phone calls where General Petraeus and I talked," Mr. Graham recalled. "And then I'd be relaying everything to John, who was on the campaign trail." Armed with the AEI panel's conclusions and Gen. Petraeus' thinking on how to implement a surge, Mr. McCain set out to change the president's mind.

Letter to the president

He made his case in a blunt three-page letter to Mr. Bush. "While there's no doubt that a number of changes in policy are necessary, I believe that none will be successful without an increase in the number of U.S. forces there," Mr. McCain wrote.

He detailed a plan distilled from Gen. Petraeus' thinking for a surge of 20,000 fresh troops. "Only the presence of additional coalition forces will give the Iraqi government the opportunity to restore its authority and install the government," he wrote. "Surging five additional brigades into Baghdad by March, tasking them with traditional counterinsurgency activity, including protection of the population and intensive reconstruction, would give the coalition, in concert with Iraqi security forces, a real chance to succeed in its mission. The surge shouldn't be limited by an artificial timeline."

The document was notable not only for its detailed analysis, but for its pep talk to Mr. Bush, which including a whiff of a lecture.

The hero of an unpopular war ultimately lost in Vietnam, Mr. McCain argued that the primary obstacle to winning in Iraq was the government's inability to make a tough decision, commit more troops and stick with the plan.

"The question is one of will more than capacity," he wrote Mr. Bush. "I believe success in Iraq is still possible, and that, by finally bringing security to Baghdad, and by reducing the violence plaguing other areas, we can give Iraqis the best possible opportunity to construct a stable and self-governing state. Our national security compels us to try, and to try immediately."

Back to Iraq, then decision

Mr. McCain set off at once for Baghdad again, to hear firsthand from commanders on the ground. On this, his fourth trip to Iraq, conditions had again clearly grown worse.

When he returned to Washington, he met with Gen. Peter Pace, chairman of the Joint Chiefs of Staff, to spell out "where he thought things needed to go," the top McCain adviser said.

Several days later, on Dec. 18, Robert M. Gates - who had been president of Texas A&M University and a member of the Iraq Study Group that recommended withdrawal from Iraq - succeeded Mr. Rumsfeld as defense secretary. The next day, Mr. Gates, too, slipped off to Iraq to see the war for himself. "I do expect to give a report to the president on what I've learned and my perceptions," he said on his last day in Baghdad.

The secretary delivered his findings at the president's Prairie Chapel Ranch shortly after Christmas, joining the generals and senior Bush aides. But the president gave a hint of a change in his thinking while Mr. Gates was still in Baghdad.

At a year-end press conference, the president dispensed with his usual pledge to heed ground commanders in Iraq, saying he would listen but not necessarily defer to the generals. The same day, Gen. John Abizaid, a Rumsfeld favorite and one of the holdouts against changing strategy in Iraq, retired as commander of U.S. Central Command.

Gen. Casey, another of the old guard and the commander in Iraq, would exile himself from the core group just before New Year's Day. Expressing doubt about the wisdom of a surge, he told the New York Times on Dec. 28 that "It's always been my view that a heavy and sustained American military presence was not going to solve the problems in Iraq."

The Bush administration, from the president down, was now poised to move to the new strategy. When the president returned from Texas to Washington in early 2007, a letter from Mr. Lieberman and Mr. Graham awaited him.

"Now is the time for bold and decisive leadership to chart a new course forward in Iraq," the senators wrote in their Jan. 8, letter, echoing the calls of Mr. McCain. "Some of the necessary changes, including new leadership in both the civilian and military leadership, have already been made. We also strongly encourage you to send additional American troops to Iraq to improve the security situation on the ground. For far too long we have not had enough troops in Iraq to provide security. It is time to correct this mistake."

Two days later, on Jan. 10, the commander in chief addressed the nation in prime time to announce he would do just that.

"It is clear that we need to change our strategy in Iraq," a grim Mr. Bush said. "Our past efforts to secure Baghdad failed for two principal reasons: There were not enough Iraqi and American troops to secure neighborhoods that had been cleared of terrorists and insurgents. And there were too many restrictions on the troops we did have."

Even though Mr. McCain and his colleagues had prevailed, the trio of senators who had pushed for the surge restrained the natural urge to celebrate. "It was also the day you realized you just helped to expand this war," Mr. Graham said. "That wasn't lost on John, me or Joe Lieberman."

The 41st vote

The next nine months would be dark and solemn days for Mr. McCain. With his reputation on the line, his bid for the presidency was tied tightly to the success of the strategy he had persuaded Mr. Bush to embrace.

Throughout the winter and spring of 2007, the senator, along with the help of a few colleagues and Mr. Lieberman, would struggle to keep Democrats in Congress from cutting troops or funds for Iraq.

Partisan bickering broke out almost immediately. The last of the surge troops Mr. Bush ordered would not arrive in Iraq until June, but less than a week after the president's announcement on Jan. 10, the top Senate Democrats, joined by a leading dissident Republican, introduced a resolution opposing the surge.

The resolution fell just a few votes short of getting to the floor for debate.

Over the following months, the Republicans, along with one or two straying Democrats and always Mr. Lieberman, withstood more than a dozen attempts to reduce funding for the war in Iraq or to set a timetable for troop withdrawal.

A steady drumbeat of Democratic voices called the surge a failure even before all the fresh troops were in place. Senate Majority Leader Harry Reid exploited a succession of car bombings in Iraq that killed more than 200 Iraqis in April 2007 to declare the surge a failure.

"I believe ... that this war is lost, and this surge is not accomplishing anything," he said.

Mr. McCain, campaigning in Mr. Reid's home state of Nevada, hotly disputed the Senate leader. "It seems to me Senator Reid has lost all sense of priority."

But on vote after vote the McCain alliance held, preventing a congressional mandate for withdrawal. Mr. Lieberman was the key to the achievement. The senator from Connecticut, an early and consistent supporter of the war, became an outcast in his own party, taking relentless criticism from the powerful antiwar flank, much of it coming from MoveOn.org.

In the 2006 Democratic primaries, Mr. Lieberman even lost his party's nomination. Undeterred, he changed his party affiliation to independent and won decisively in the general election, sealing the victory that separated him from the Democratic powers. In 2007, though continuing as a member of the Democratic caucus in the Senate, he became Mr. McCain's 41st vote, a reliable ally of the 40 other senators whom Mr. McCain and Mr. Graham had assembled to prevent votes on withdrawal.

"We couldn't have done it without Joe," Mr. Graham said. "He replaced a [lost] Republican vote. He gave us the vote that we needed on many occasions to avoid pulling the plug on Iraq."

The dark days

But as Mr. McCain was winning the battle to preserve prospects for victory in Iraq, the wheels of his "Straight Talk Express" campaign bus came hurtling off.

His campaign had become badly bloated and was bleeding money. His standing was plummeting in the polls as violence spiked in Iraq and public faith in the wisdom of the surge declined. The senator slashed his staff and reporters abandoned the candidate, the story moving on to the lively presidential campaigns of former New York Mayor Rudolph W. Giuliani and former Massachusetts Gov. Mitt Romney.

His organization nearly broke, Mr. McCain began traveling on scheduled commercial flights, often squeezing into a seat in economy, instead of the comfortable chartered private jets that are the mark of successful campaigns. Sometimes aides drove him through the night to campaign events. "He went through the airport carrying his own bags," Mr. Graham recalled. "We were fifth in a four-person race."

Mr. McCain nevertheless kept a stiff upper lip, joking in New Hampshire that "in the words of Chairman Mao, it's always darkest before it's totally black."

With Americans about to embark on a long weekend of backyard barbecues, cold beer and fireworks to celebrate the Fourth of July of 2007, several candidates declared a timeout. Not Mr. McCain. He set off for Iraq, again.

A renewed faith

He accepted an invitation from Gen. Petraeus to spend America's birthday with the troops and to attend a re-enlistment ceremony. Nearly 600 men and women packed themselves into the Al Faw Palace, once used as a duck-hunting retreat by Saddam Hussein.

The ceremony at the palace, rechristened by the Americans as Camp Victory, included the naturalization of 166 soldiers as American citizens. Gen. Petraeus administered the oath of enlistment. When the senator stepped up to speak, he could see troops hanging off balconies and crowding staircases to get a glimpse of a man they credited for sending them reinforcements.

Two pairs of empty boots stood upright in a chair near the senator, a melancholy reminder of two soldiers killed before they could take their scheduled oaths as Americans.

"I know it's not possible for even the most grateful nation to compensate you in kind for the measure of devotion that you have with great personal sacrifice given our country," Mr. McCain told the dogface soldiers. "We have incurred a debt to you that we can never repay in full. We can offer you only the small tribute of our humility.

"As you know, the war in which you have fought has divided the American people. But it has divided no Americans in their admiration for you. We all honor you.

"I have lived a long, eventful and blessed life," he said. "I have had the good fortune of knowing personally a great many brave and selfless patriots who sacrificed and shed blood to defend their country. But I've known none braver nor better than you. You are my inspiration, and your country's."

Mr. McCain arrived in Baghdad weary and discouraged. He left Iraq energized and eager to continue his own struggle, which he knew paled in comparison with those of the men and women he had just met - and he met every one, staying for hours.

"It was just John and myself in the plane, with a few staff folks," Mr. Graham recalled of the flight home. "I never will forget, as we took off he looked over at me and said, 'If these kids can do this, we can get our campaign back going.' It rededicated him to winning the primary."

A campaign shift

Mr. McCain arrived home and hit the ground running. He trimmed fat out of his campaign bureaucracy and would run it on a shoestring budget of $1 million a month. "This campaign is going to be won on the ground, vote by vote," he wrote to his supporters in a fundraising e-mail appeal, "and I'm convinced that if every voter learns of my unparalleled experience, we will win." He made his resolve to win in Iraq the centerpiece of his campaign, embarking on what staffers dubbed "The No Surrender Tour."

The tour started in Veterans of Foreign Wars huts and American Legion posts, aimed first at the millions of veterans across the nation. He took several men who had shared prison cells with him, along with veterans of the fighting in Iraq. They distributed stickers vowing "No Surrender."

His bus zigzagged across Iowa, over to New Hampshire and down to South Carolina, and at nearly every stop he displayed the full-page advertisement in the New York Times, posted by MoveOn.org mocking Gen. Petraeus as "General Betray Us."

"It's disgraceful," Mr. McCain told voters in Iowa, displaying his anger, and challenged his Democratic opponents to denounce the message.

The badgering questions from reporters, asking whether and when he would drop out of the race, began to recede as he stayed stubbornly on message: The surge will work, given time.

That message would soon be delivered loud and clear by the very general in charge of making the surge work. Mr. McCain's future in politics was clearly at stake.

The hearing

The buildup was dramatic: Gen. Petraeus and Ryan C. Crocker, the U.S. ambassador to Iraq, testified before the House and the Senate beginning Sept. 11, 2007, six years to the day after the terrorist attacks on New York and Washington.

The White House had deflected the verdict on the success of the surge until the general and ambassador could testify, and now, against a media backdrop of speculation that the administration would be forced to re-evaluate the war, Democratic critics in Congress waited to pounce.

But Gen. Petraeus, in full dress khaki with dozens of television lights playing on the four stars on his shoulders and a lavish array of medals and service ribbons on his chest, sat unbowed and unmoved through six hours of grueling questions. "As a bottom line upfront," he said, "the military objectives of the surge are, in large measure, being met. In recent months, in the face of tough enemies in the brutal summer heat of Iraq, coalition and Iraqi security forces have achieved progress in the security arena.

"The level of security incidents has decreased significantly since the start of the surge of offensive operations in mid-June."

The general took the bat out of Democrats' hands. "Based on all this, and on the further progress we believe we can achieve over the next few months, I believe that we will be able to reduce our forces to the pre-surge level of brigade combat teams by next summer without jeopardizing the security gains that we have fought so hard to achieve."

When he appeared the next day to answer more questions from senators, Mr. Obama was ready. "I think the surge has had some impact, as I suggested, " he said, his "just one question" prefaced by a seven-minute speech. But he added: "I would argue that the impact has been relatively modest given the investment."

Mr. McCain was briefer. "Gen. Petraeus, it's astonishing the number of things that people come up with, but one of the latest statements is that the surge had nothing to do with Anbar province and the rather stunning success we've had there. How do you respond to that?"

"Well," the general replied, "the success in Anbar province is a political success but it is a political success that has been enabled very much by our forces, who have been enabled by having additional forces."

Mr. McCain cut in with the question to emphasize a point: "Would it have happened without the surge?"

Gen. Petraeus replied: "It would not have happened as quickly without the surge and I don't know whether we could have capitalized on it the way that we have without the surge."

Mr. Graham sums up the effect of the exchange succinctly: "Petraeus comes back, Crocker comes back in September, and they knock it out of the park. We're in the ballgame now."

'Mac is back'

McCain aides - and especially the candidate himself - thought they now knew how to proceed with the presidential campaign: The senator had survived by being himself, being true to long-held beliefs, and they decided he should continue with that strategy.

Mr. McCain surrounded himself with a tight group of longtime friends and aides and set his sights on New Hampshire. "After we had the meltdown and went from a national campaign of 30 states down to two or three, that put a lot more emphasis on New Hampshire," said Steve Duprey, a former Republican chairman in New Hampshire who now is a top aide for Mr. McCain.

The senator later joked that he had spent so much time in the small state that some residents thought he lived there. Continuing as if he were continuing the quest of eight years earlier, he held more than 100 town-hall meetings, telling his unfunny jokes at every stop and shaking every hand offered along the way.

As the surge and the new counterinsurgency strategy began to reduce violence in Iraq, the moribund campaign quickened, and soon was back on the front pages and on the nightly television newscasts.

Mr. McCain began to enjoy a little winner's luck. The front-running Mr. Giuliani skipped the Iowa caucuses and Mr. Romney was overtaken by an unlikely upstart, Mike Huckabee, a former Arkansas governor. Mr. McCain followed Iowa with a solid win in New Hampshire, delivering a rousing victory speech to supporters waving "Mac is Back" placards. Like American prospects in Iraq, his campaign was reborn.

Over the following weeks, Mr. Romney won his native state of Michigan, and a second McCain victory in South Carolina blunted the Giuliani strategy of focusing on Florida. By the time the campaign got to there in late January, the McCain momentum was permanent, and he was en route to clinching the nomination.

Since then, Mr. McCain has painted his unwavering support for the surge as evidence of his ability to be commander in chief. He cites Mr. Obama's yearlong denial of American success in Iraq as evidence that Mr. Obama lacks the steadiness, foresight and judgment to make an effective commander in chief.

This summer, the Republican and his allies sharpened their attacks on Mr. Obama, questioning why he took just a single trip to Iraq before opposing the surge. "If the only time you had been to Iraq was in January 2006 and you're thinking about running for president as a Democrat, you heard what you wanted to hear," Mr. Graham said, echoing a now-common attack on Mr. Obama. "He saw what he wanted to see, he came back, and declared the war lost."

An exchange between Mr. Obama and Katie Couric of CBS News, conducted in Amman, Jordan, in the midst of his extensive overseas trip to the Middle East and Europe in July, illustrates the presumptive Democratic nominee's difficulty in addressing the surge now that it has worked.

"You raised a lot of eyebrows on this trip, saying, even knowing what you know now, you still would not have supported the surge," Mrs. Couric told him. "People may be scratching their heads and saying, 'Why?'"

When Mr. Obama deflected the question, she broke in: "But didn't the surge - "

"Let me finish, Katie," he said.

She did, but later broke in again, trying to pin down a direct answer.

"Katie, as ... you've asked me three different times, and I have said repeatedly that there is no doubt that our troops helped to reduce violence. There's no doubt."

Mrs. Couric persisted. "But yet you're saying, given what you know now, you still wouldn't support it, so I'm just trying to understand this. ... I really don't mean to belabor this, senator, because I'm really, I'm trying to figure out your position. Do you think the level of security in Iraq ... would exist today without the surge?"

His impatience showing, Mr. Obama replied: "Katie, I have no idea what would have happened had we applied my approach, which was to put more pressure on the Iraqis to arrive at a political reconciliation. So this is all hypotheticals. What I can say is that there's no doubt that our U.S. troops have contributed to a reduction of violence in Iraq."

Minutes later, Mr. McCain sat for an interview with the CBS anchor, blasting his presidential opponent and setting out what is at stake in the November election.

"Senator Obama has indicated by his failure to acknowledge the success of the surge that he would rather lose a war than lose a campaign," he said. "Senator Obama does not understand the challenges we face and he did not understand the need for the surge, and the fact that he did not understand that and still denies that it has succeeded, I think the American people will make a judgement."


Researcher John Sopko contributed to this story.

Sunday, September 21, 2008

WSJ: Treasury’s Financial-Bailout Proposal to Congress AND Obama's friends who helped make it necessary





http://blogs.wsj.com/economics/2008/09/20/treasurys-financial-bailout-proposal-to-congress/

September 20, 2008, 1:05 pm
Treasury’s Financial-Bailout Proposal to Congress
The following is the legislative proposal from Treasury Department for authority to buy mortgage-related assets:

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.–The term “Secretary” means the Secretary of the Treasury.

(3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.



SUBPRIME LENDING WAS A "GOOD IDEA" B/C IT "DIVIDED UP AND >>>>>SPREAD<<<<< THE RISK" ???!!!!


OBAMA'S FRIENDS FROM GOP.com's "Barackbook" and "Covering His Fannie"





http://www.barackbook.com/Profiles/PennyPritzker.htm

"[P]enny Pritzker, A Chicago Philanthropist, Serves As Mr. Obama's National Finance Chairman…" (Jodi Kantor, "In Democratic Families, Politics Makes For Estranged Bedfellows," The New York Times, 2/4/08)

"Indeed, From The Start, Obama's Inner Circle Included Valerie Jarrett And Penny Pritzker, Powerful And Well-Connected Chicago Businesswomen." (Carrie Budoff Brown, "Obama Campaign Adds Women To Top Ranks," The Politico, 6/20/08)

The Pritzker Family Co-Owned Superior Bank FSB. (Steven R. Strahler, "Penny Pritzker," Chicago Crain’s Business, 5/7/07)

Superior Bank Was A "Subprime LenderThat Made Risky Mortgage And Auto Loans To People With Poor Credit Histories." (Kathy Bergen, "MillionsFor Pritzkers In Settlement," Chicago Tribune, 12/28/04)

Federal Regulators Closed Superior Bank Due To "Poor Oversight By Its Board" Among Others Reasons. (Melissa Allison, "Blame Flies Over Demise Of Superior," Chicago Tribune, 7/31/01)

http://www.barackbook.com/Profiles/JimJohnson.htm



Jim JohnsonWho Am I?


"From 1991 To 1998, Mr. Johnson Served As CEO Of The Federal National Mortgage Association, Also Known As Fannie Mae…" (Josh Gerstein, "Top Talent Scout For Obama Tied To Subprime Lender," The New York Sun, 6/9/08)

In 1998, Fannie Mae’s Earnings Were Manipulated, Which Resulted In "Maximum Payouts" To Executives Including Johnson, Who Earned $1.9 Million When He Otherwise Would Not Have Earned A Bonus. (Jonathan Weisman and David S. Hilzenrath, "Obama’s Choice Of Insider Draws Fire," The Washington Post, 6/11/08)

Johnson Received Special Loans From Countrywide Financial CEO Angelo Mozilo. (Glenn R. Simpson and James R. Hagerty, "Countrywide Friends Got Good Loans," The Wall Street Journal, 6/7/08)

"Property Records Show Mr. Johnson Has Received More Than $7 Million In Loans From Countrywide Since 1998, The First Coming In The Waning Days Of His Fannie Mae Tenure." (Glenn R. Simpson and James R. Hagerty, "Countrywide Friends Got Good Loans," The Wall Street Journal, 6/7/08)
Johnson Also Received Fees And Compensation From Fannie Mae Worth $3.3 Million Between 2001 And 2006. (Jonathan Weisman and David S. Hilzenrath, "Obama’s Choice Of Insider Draws Fire," The Washington Post, 6/11/08)
Facts About Me and Barack
Johnson Was A Top Adviser To Obama’s Campaign Who Was Chosen To Vet Potential Vice Presidential Nominees. (Glenn R. Simpson and James R. Hagerty, "Countrywide Friends Got Good Loans," The Wall Street Journal, 6/7/08)

"[Johnson] Resigned Abruptly Wednesday After Questions About His Home Mortgage Deals Became A Distraction For A Candidate Who Argues He's Not Influenced By Special Interests." (Nedra Pickler, "Johnson Resigns From Obama's Veep Vetting Team," The Associated Press, 6/11/08)
My Donations and Bundling for Barack
Johnson Is A Bundler For Obama’s Presidential Campaign And Has Committed To Raising Over $200,000. (Obama For America Website, www.barackobama.com, Accessed 7/10/08)



http://www.gop.com/News/NewsRead.aspx?Guid=6434a60e-4e45-4865-afa2-70ac7f6b03c9


Thursday, September 18, 2008
Covering His Fannie

OBAMA A TOP RECIPIENT IN CONTRIBITIONS FROM FANNIE MAE, FREDDIE MAC AND LEHMAN BROTHERS

Obama Ranks Second Among Donations From Fannie Mae And Freddie Mac Among All Members Of Congress Since 1989:

In Just Four Years, Obama Has Received More Money From Fannie Mae And Freddie Mac Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Senate Banking Committee Chairman Sen. Chris Dodd. (Lindsay Renick Mayer, "Fannie Mae And Freddie Mac Invest In Lawmakers," Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/11/08)

Dodd Has Served In Federal Office Since 1975. (The Washington Post Website, www.washingtonpost.com, Accessed 9/15/08)

Obama Has Served In Federal Office Since 2005. (The Washington Post Website, www.washingtonpost.com, Accessed 9/15/08)
Obama Ranks Second Among Donations From Lehman Brothers Among All Members Of Congress Since 1989:

In Just Four Years, Obama Has Received More Money From Lehman Brothers Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Sen. Hillary Clinton. (Lindsay Renick Mayer, "Brothers Grim: Is Lehman Next?" Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/12/08)

Top Executives At Lehman Brothers Are Obama Bundlers:

Ted Janulis, Head Of Mortgage Capital At Lehman Brothers Until His Retirement In September 2008, Is A Bundler For Obama's Presidential Campaign Committed To Raising $50,000 To $100,000. (Obama For America Website, www.barackobama.com, Accessed 5/19/08)

John Rhea, A Managing Director And Co-Head Of Global Consumer And Retail Investment Banking For Lehman Brothers, Is A Bundler For Obama's Presidential Campaign Committed To Raising $50,000 To $100,000. (Obama For America Website, www.barackobama.com, Accessed 5/15/08)

"[N]adja Fidelia, Who Is Also A Managing Director At Lehman Brothers, Has Raised At Least $50,000 For Mr. Obama..." (Timothy Williams, "Obama Takes His Campaign to Harlem," New York Times, 11/30/07)

OBAMA ADVISOR JIM JOHNSON FORMER FANNIE MAE AND LEHMAN BROTHERS EXECUTIVES EXPANDED LOBBYING ACTIVITIES AND RECEIVED MILLIONS IN COMPENSATION

Former CEO Of Fannie Mae And Former Obama Advisor Jim Johnson Resigned Under Criticism:

Jim Johnson Is The Former CEO Of Fannie Mae. (David A. Vise, "Fannie Mae Lobbies Hard To Protect Its Tax Break," The Washington Post, 1/16/95)

"Jim Johnson, The Former Chairman Of Fannie Mae Who Was One Of Three Advisors Tapped By Democrat Barack Obama To Vet Vice Presidential Candidates, Resigned Today After Questions Were Raised About Favoritism He May Have Received From Countrywide Financial Corp." (Johanna Neuman, "Barack Obama Advisor Jim Johnson Quits Under Fire," Los Angeles Times, 6/12/08)

Johnson Remains A Bundler For Obama's Presidential Campaign And Has Committed To Raising $100,000 To $200,000. (Obama For America Website, www.barackobama.com, Accessed 5/19/08)

Johnson Earned Large Bonuses At Fannie Mae Due To An Accounting Manipulation:

In 1998, Fannie Mae's Earnings Were Manipulated, Which Resulted In "Maximum Payouts" To Executives Including CEO Jim Johnson. "As CEO of Fannie Mae, Johnson, a former chief of staff to Vice President Walter F. Mondale and chairman of the board of the Kennedy Center, was the beneficiary of accounting in which Fannie Mae's earnings were manipulated so that executives could earn larger bonuses. The accounting manipulation for 1998 resulted in the maximum payouts to Fannie Mae's senior executives -- $1.9 million in Johnson's case -- when the company's performance that year would have otherwise resulted in no bonuses at all, according to reports in 2004 and 2006 by the Office of Federal Housing Enterprise Oversight." (Jonathan Weisman and David S. Hilzenrath, "Obama 's Choice Of Insider Draws Fire," The Washington Post, 6/11/08)

The Manipulation Resulted In Johnson Receiving A Bonus Of Over $1.9 Million When He Otherwise Would Not Have Earned A Bonus. "An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have been paid, the report said. Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing and community development, $493,750." (Albert B. Crenshaw, "High Pay At Fannie Mae For The Well-Connected," The Washington Post, 12/23/04)
Johnson Also Received Fees And Compensation From Fannie Mae Worth $3.3 Million Between 2001 And 2006. "Johnson left the company before it was swept up in an accounting scandal that tarred its reputation, but even during the years of scandal, Johnson was reaping hundreds of thousands of dollars in consulting fees and other compensation, $3.3 million in all between 2001 and 2006." (Jonathan Weisman and David S. Hilzenrath, "Obama's Choice Of Insider Draws Fire," The Washington Post, 6/11/08)

Fannie Mae Incorrectly Reported Losses That Allowed Johnson To Receive A Large Bonus For The Year:

In 1998, Fannie Mae Improperly Deferred $200 Million Dollars In Expenses, Which Allowed Johnson To Receive Nearly $2 Million In Bonuses; Johnson Would Not Have Received A Bonus If The Money Had Been Properly Expensed. "An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have been paid, the report said. Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing an d community development, $493,750." (Albert B. Crenshaw, "High Pay At Fannie Mae For The Well-Connected," The Washington Post, 12/23/04)

Johnson Engineered An Effort To Lobby Politicians So That Fannie Mae Would Not Have To Pay Local Taxes To Washington, D.C.:

While Johnson Was CEO, Fannie Mae Did Not Have To Pay Washington D.C. Taxes Which Cost The City Hundreds Of Millions Per Year. "While Wall Street benefits from Fannie Mae's prosperity, the District government does not. Fannie Mae, the biggest, most profitable company in Washington, is exempt from local income taxes. That exemption costs the cash-strapped D.C. government hundreds of millions of dollars a year." (David A. Vise, "The Financial Giant That's In Our Midst," The Washington Post, 1/15/95)

"If Fannie Mae Were Required To Pay Taxes, It Would Wipe Out The District's Budget Deficit." (David A. Vise, "The Financial Giant That's In Our Midst," The Washington Post, 1/15/95)
Johnson Said That Fannie Mae Was "The Most Powerful Financial Firm In America" And He Urged Employees To Oppose Any New Taxes On The Company. "There is no reason they shouldn't be subject to the tax," said former House District Committee chairman Pete Stark. "It is not fair. They make huge profits," the California Democrat said. The tax break is one of numerous congressionally conferred advantages that Fannie Mae officials preserve through a polished political operation directed by Jim Johnson, the company's chairman and chief executive. In a talk with employees, Johnson described Fannie Mae as 'the most powerful financial firm in America.' He wants Fannie Mae employees to oppose forcefully any ne w effort to tax the company." (David A. Vise, "The Financial Giant That's In Our Midst," The Washington Post, 1/15/95)
Johnson Devised A Strategy To Lobby D.C. Politicians So That Fannie Mae Would Not Have To Pay Local Taxes. "Last summer, D.C. Councilman Bill Lightfoot discovered a simple solution to the District's financial crisis: eliminate a $ 300-million-a-year tax break for the city's most profitable company, Fannie Mae. 'I believe Fannie Mae ought to pay local taxes,' Lightfoot said. 'It practically solves the city's financial crisis in one year. There is no public policy reason to exempt them. It is not fair.' Inside Fannie Mae's sprawling Wisconsin Avenue headquarters, Lightfoot's proposal set off alarms. A team of executives led by chief executive Jim Johnson and Vice Chairman Frank Raines gathered around the firm's 34-foot-long boardroom table to dec ide how to respond. They devised a bold strategy: Use the company's considerable resources and political clout to prevent Lightfoot's proposal from being voted on or publicly debated by council members, whom they feared would support the tax if it got on the agenda. 'The task was to keep it from ever seeing the light of day,' said Frederick D. Cooke Jr., one of the highly regarded lobbyists Fannie Mae hired to quash the proposal. 'What we didn't want to do was have a big public debate about this.'" (David A. Vise, "Fannie Mae Lobbies Hard To Protect Its Tax Break," The Washington Post, 1/16/95)

"In Addition To Enlisting The Lobbying Help Of The Local Charitable Groups It Supported, Fannie Mae Hired A Team Of Top Lobbyists To Persuade D.C. Politicians To Drop The Tax Proposal Without A Vote." (David A. Vise, "Fannie Mae Lobbies Hard To Protect Its Tax Break," The Washington Post, 1/16/95)
In 1998, Johnson Opened A Lobbying Office For Fannie Mae In Oklahoma:

In 1998, Johnson, Then-CEO Of Fannie Mae, Hosted The Opening Ceremony Of A Lobbying Office In Oklahoma. "The concern is whether such efforts were made to bolster Fannie's business more than to advance philanthropic goals. Critics say the foundation helped to reinforce ties with various congressional groups forged by Fannie's in-house lobbyists. At times the two seemed indistinguishable: They often sponsored events in tandem. Both were big donors to the CBCF's annual awards gala in 2003 and a similar black-tie event for the Congressional Hispanic Caucus Institute in 2002. In 1998, then-CEO Jim Johnson hosted the opening ceremony of a lobbying and public relations office in Oklahoma, an event attended by former Oklahoma Governor Frank Keating and then-Senator Don Nickles (R-Okla.). But wearing his other hat as the foundation's chairman, Johnson al so took the opportunity to announce $125,000 worth of grants to local charities." (Dawn Kopecki, "Philanthropy, Fannie Mae Style," Business Week, 4/2/07)

Johnson Recruited Current Obama Economic Policy Advisor Former Commerce Secretary William Daley As A Lobbyist For Fannie Mae:

Former Commerce Secretary William Daley Serves As An Obama Advisor For Economic Policy. "At his stop in New Mexico, Obama sought to keep the focus almost exclusively on the economy, appearing with a panel of experts that included William Daley, brother of Chicago Mayor Richard Daley and a former U.S. commerce secretary." (John McCormick and Jill Zuckman, "Rivals Spend Day As Frequent Fliers," Chicago Tribune, 2/2/08)

Former Fannie Mae CEO Jim Johnson Recruited Former Sec. Daley As A Lobbyist For Fannie Mae. "Fannie's government relations operations dramatically expanded in the mid-1990s, when then-CEO Johnson recruited Washington A-listers Robert Zoellick, who served in the Reagan and Bush administrations; Lawrence M. Small, former secretary of the Smithsonian Institution; and William M. Daley, commerce secretary in the Clinton administration." (Lisa Lerer, "Fannie, Freddie Spent $200M To Buy Influence," The Politico, 7/16/08)

From 2002 Through 2005, Daley Was A Registered Lobbyist For Fannie Mae. (U.S. Senate Office Of Public Records Website, soprweb.senate.gov, Accessed 7/27/08)

Before Heading Fannie Mae, Johnson Was A Registered Foreign Agent For Lehman Brothers:

In The 1980s, Johnson Worked For Shearson Lehman Brothers. "In the early 1980s Johnson had already started his own Washington consulting company, Public Strategies, with his Carter administration colleague Richard Holbrooke. And now he followed Holbrooke to Wall Street as an investment banker at Shearson Lehman Brothers." (Lloyd Grove, "The Big Chair," The Washington Post, 3/27/98)



OBAMA ADVISOR FRANK RAINES: FORMER FANNIE MAE CEO INVOLVED IN ACCOUNTING SCANDAL

Obama Has Solicited Advice From Former Fannie Mae CEO Franklin Raines Who Was "Under The Shadow Of A $6.3 Billion Accounting Scandal":

The Obama Campaign Has Solicited Franklin Raines, Who "Stepped Down As Fannie Mae's Chief Executive Under The Shadow Of A $6.3 Billion Accounting Scandal," For Advice On Mortgage And Housing Policy. "In the four years since he stepped down as Fannie Mae's chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters." (Anita Huslin, "On The Outside Now, Watching Fannie Falter," The Washington Post, 7/16/08)

Like Jim Johnson, Raines Received Low-Rate Home Loans From Countrywide, A Major Seller To Fannie Mae. "Fannie Mae's former CEO, Jim Johnson, resigned Wednesday as the leader of likely Democratic presidential nominee Barack Obama's search for a running mate after The Wall Street Journal reported that he and another former CEO, Franklin Raines, received low-rate home loans from troubled mortgage lender Countrywide Financial Corp. a major seller of home loans to Fannie Mae." (Alan Zibel, "Fannie Mae CEO Says Ethics Policy Bans Discounts," The Associated Press, 6/12/08)

Former Fannie Mae Chairman Frank Raines Was Accused Of Manipulating The Company's Earnings. "Former Fannie Mae chairman and chief executive Franklin D. Raines, accused of manipulating the housing finance company's earnings, is challenging regulators to make their case against him beginning Feb. 16 instead of waiting until the end of the year." (David S. Hilzenrath, "Fannie Mae's Former Chief Wants Earlier Hearing Date," The Washington Post, 2/6/07)

Raines Was Forced Out As Fannie Mae's CEO In December 2004. "Former chief executive Franklin D. Raines and chief financial officer J. Timothy Howard were forced out Tuesday night after accounting mistakes that could cost Fannie $9 billion in reported profit." (David S. Hilzenrath, "Fannie Mae Exit Packages Face Review," The Washington Post, 12/23/04)

Under Raines' Leadership, Fannie Mae Committed "Extensive Financial Fraud" And Was Forced To Pay A $400 Million Civil Penalty. "In a May report, the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight found that Fannie Mae under Raines perpetrated 'extensive financial fraud' so that executives could collect big bonuses. There have been no criminal charges, but the conduct of Raines and other senior Fannie executives 'was inconsistent with the values of responsibility, accountability, and integrity,' the agencies said. Fannie paid a $400 million civil penalty this year to the SEC and OFHEO." (Jay Hancock, Op-Ed, "Raines Claiming Accountability Isn't Enough," The [Baltimore] Sun, 12/10/06)

OBAMA DEMOCRATS BLOCKED REFORM OF FANNIE MAE AND FREDDIE MAC

Sen. John McCain Urged Action Years Ago To Reform Fannie Mae And Freddie Mac:

John McCain Urged Action More Than 2 Years Ago, Co-Sponsoring Legislation To Reform Fannie Mae And Freddie Mac Warning: "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." McCain: "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." (Office Of U.S. Senator John McCain, "McCain Statement On Co-Sponsorship Of The Federal Housing Enterprise Regulatory Reform Act Of 2005," Press Release, 5/26/06)

For Years, Obama Supporters In Congressional Oversight Committees Rep. Barney Frank (D-MA) And Sens. Chris Dodd (D-CT) And Chuck Schumer (D-NY) Blocked Efforts To Reform Fannie Mae And Freddie Mac:

"The Powerhouse Democratic Overseers Of The Banking Committees -- Rep. Barney Frank, Sen. Christopher Dodd And Sen. Chuck Schumer -- Protected Fannie And Freddie." (Robert Novak, Op-Ed, "Crony Image Dogs Paulson's Rescue Effort," Chicago Sun-Times, 7/17/08)

Frank Blocked Multiple Attempts At Reform Spanning Back To 1992:

"[Frank's] Record Is Close To Perfect As A Stalwart Opponent Of Reforming The Two Companies, Going Back More Than A Decade. The First Concerted Push To Rein In Fan And Fred In Congress Came As Far Back As 1992, And Mr. Frank Was Right There, Standing Athwart. But Things Really Picked Up This Decade, And Barney Was There At Every Turn." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"In 2000, Then-Rep. Richard Baker Proposed A Bill To Reform Fannie And Freddie's Oversight. Mr. Frank Dismissed The Idea, Saying Concerns About The Two Were 'Overblown' And That There Was 'No Federal Liability There Whatsoever.'" (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"Two Years Later, Mr. Frank Was At It Again. 'I Do Not Regard Fannie Mae And Freddie Mac As Problems,' He Said In Response To Another Reform Push. And Then: 'I Regard Them As Great Assets.'" (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"Again In June 2003, The Favorite Of The Beltway Press Corps Assured The Public That 'There Is No Federal Guarantee' Of Fan And Fred Obligations." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"A Month Later, Freddie Mac's Multibillion-Dollar Accounting Scandal Broke Into The Open. But Mr. Frank Was Sanguine. 'I Do Not Think We Are Facing Any Kind Of A Crisis,' He Said At The Time." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"Three Months Later He Repeated The Claim That Fannie And Freddie Posed No 'Threat To The Treasury.' Even Suggesting That Heresy, He Added, Could Become 'A Self-Fulfilling Prophecy.'" (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"In April 2004, Fannie Announced A Multibillion-Dollar Financial 'Misstatement' Of Its Own. Mr. Frank Was Back For The Defense. Fannie And Freddie Posed No Risk To Taxpayers, He Said, Adding That 'I Think Wall Street Will Get Over It' If The Two Collapsed." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

Dodd Led Efforts To Block Reform Of Fannie Mae And Freddie Mac:

Obama Joined Sen. Dodd, Sen. Kerry, And Sen. Clinton - All Top Recipients Of Fannie And Freddie Contributions In Actively Opposing Reform Measures And Weakening Existing Regulations. "During this period, Sen. Richard Shelby led a small group of legislators favoring reform, including fellow Republican Sens. John Sununu, Chuck Hagel and Elizabeth Dole. Meanwhile, Dodd -- who along with Democratic Sens. John Kerry, Barack Obama and Hillary Clinton were the top four recipients of Fannie and Freddie campaign contributions from 1988 to 2008 -- actively opposed such measures and further weakened existing regulation." (Al Hubbard and Noam Neusner, Op-Ed, "Where Was Sen. Dodd?" The Washington Post, 9/12/08)

Sen. Dodd Called The President's Suggestions For Regulations "Inane" And Recommended The President "Immediately Reconsider His Ill-Advised" Proposals. "As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to 'immediately reconsider his ill-advised' reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president's suggestion for a strong, independent regulator of Fannie and Freddie was 'inane.'" (Al Hubbard and Noam Neusner, Op-Ed, "Where Was Sen. Dodd?" The Washington Post, 9/12/08)

Dodd Called On The Regulator For Fannie Mae And Freddie Mac To Lift Portfolio Caps. "Both Schumer and Christopher J. Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee, have called on Fannie Mae and Freddie Mac's regulator to lift the portfolio caps. They argue that allowing the two firms to buy more mortgages, at least temporarily, would inject much needed liquidity into the market and calm the financial markets." (Michael R. Crittenden, "Schumer Will Seek To Lift Cap On Mortgage Portfolios Of Fannie Mae, Freddie Mac," Congressional Quarterly Today, 8/16/07)

NOTE: Dodd Was The Top Recipient Of Contributions From Fannie Mae And Freddie Mac:

Since 1989, Dodd Has Received At Least $165,400 From Fannie Mae And Freddie Mac: $48,500 From PACs And $116,900 From Individuals, Receiving More Than Any Other Politician. (Lindsay Renick Mayer, "Fannie Mae And Freddie Mac Invest In Lawmakers," Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/11/08)

Schumer Led Efforts To Block Reform Of Fannie Mae And Freddie Mac:

Schumer Called On The Regulator For Fannie Mae And Freddie Mac To Lift Portfolio Caps. "Both Schumer and Christopher J. Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee, have called on Fannie Mae and Freddie Mac's regulator to lift the portfolio caps. They argue that allowing the two firms to buy more mortgages, at least temporarily, would inject much needed liquidity into the market and calm the financial markets." (Michael R. Crittenden, "Schumer Will Seek To Lift Cap On Mortgage Portfolios Of Fannie Mae, Freddie Mac," Congressional Quarterly Today, 8/16/07)

Rep. Frank And Sens. Schumer And Dodd Protected Fannie Mae And Freddie Mac. "The powerhouse Democratic overseers of the banking committees -- Rep. Barney Frank, Sen. Christopher Dodd and Sen. Chuck Schumer -- protected Fannie and Freddie." (Robert Novak, Op-Ed, "Crony Image Dogs Paulson's Rescue Effort," Chicago Sun-Times, 7/17/08)

After The Subprime Housing Crisis Began, Schumer Advocated Raising The Cap On What Fannie Mae And Freddie Mac Could Lend. "Even last September, as the subprime housing crisis began to metastasize and the market was expressing concerns about the pair, Sen. Charles Schumer (D-N.Y.), the powerful chair of the Senate banking subcommittee on housing, had the very bad (and ultimately rejected) idea of raising the cap on what Fannie and Freddie could lend by 10 percent. Since then the companies have reported losses of $11 billion, and there's uncertainty about just how much more damage there will be from future defaults." (Editorial, "We Can't Say No, But We Can Regulate Them," [New York] Newsday, 7/20/08)

Despite Reports Of Fraudulent Accounting, Schumer Opposed Creating A Strong Regulator For Fannie Mae And Freddie Mac In 2004. "Even after Freddie Mac was shown to have manipulated earnings, Congress remained deadlocked over legislation to create a stronger regulator. Opposing one such bill in 2004, Sen. Charles E. Schumer (D-N.Y.) argued that a hostile regulator could use the proposed powers to choke the companies." (David S. Hilzenrath, "Fannie, Freddie Deflected Risk Warnings," The Washington Post, 7/14/08)


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Friday, September 19, 2008
Covering His Fannie II

Obama Meets With Economic Advisors Including Former Fannie Mae Board Member William Daley:

The Politico Reports Former Commerce Secretary William Daley Will Attend Obama's Economic Meeting To Advise Him On The Financial Crisis. ("Obama's Banking Brain Trust," The Politico, 9/19/08)

Daley Serves As An Obama Advisor For Economic Policy. "At his stop in New Mexico, Obama sought to keep the focus almost exclusively on the economy, appearing with a panel of experts that included William Daley, brother of Chicago Mayor Richard Daley and a former U.S. commerce secretary." (John McCormick and Jill Zuckman, "Rivals Spend Day As Frequent Fliers," Chicago Tribune, 2/2/08)
Daley Served On The Fannie Mae Board And Received Hundreds Of Thousands In Stock Options And Director Fees. "After Clinton passed over Daley for a Cabinet post in his first term, he appointed him to the Fannie Mae board. Daley reported collecting $ 24,814 in director's fees in 1996 from the firm. He also listed deferred compensation and stock options from Fannie Mae worth between $ 215,000 and $ 500,000." (Charles R. Babcock and Barbara J. Saffir, "In Wealth, Clinton Team Doesn't Look Like America," The Washington Post, 6/24/97)

Former Fannie Mae CEO Jim Johnson Recruited Daley For Fannie Mae. "Fannie's government relations operations dramatically expanded in the mid-1990s, when then-CEO Johnson recruited Washington A-listers Robert Zoellick, who served in the Reagan and Bush administrations; Lawrence M. Small, former secretary of the Smithsonian Institution; and William M. Daley, commerce secretary in the Clinton administration." (Lisa Lerer, "Fannie, Freddie Spent $200M To Buy Influence," The Politico, 7/16/08)

NOTE: From 2002 Through 2005, Daley's Son Was A Registered Lobbyist For Fannie Mae. (U.S. Senate Office Of Public Records Website, soprweb.senate.gov, Accessed 7/27/08)

As Sen. John McCain Advocated Reforming Fannie Mae And Freddie Mac, Obama "Was Notably Silent," And His Supporters Blocked Reform:

The Washington Post: "In 2006, [McCain] Pushed For Stronger Regulation Of Fannie Mae And Freddie Mac -- While Mr. Obama Was Notably Silent." (Editorial, "'Always for Less Regulation?'" The Washington Post, 9/19/08)

McCain In 2006: "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." McCain: "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." (Office Of U.S. Senator John McCain, "McCain Statement On Co-Sponsorship Of The Federal Housing Enterprise Regul atory Reform Act Of 2005," Press Release, 5/26/06)

"The Powerhouse Democratic Overseers Of The Banking Committees -- Rep. Barney Frank, Sen. Christopher Dodd And Sen. Chuck Schumer -- Protected Fannie And Freddie." (Robert Novak, Op-Ed, "Crony Image Dogs Paulson's Rescue Effort," Chicago Sun-Times, 7/17/08)

Obama Ranks Second Among Donations From Fannie Mae And Freddie Mac Among All Members Of Congress Since 1989:

In Just Four Years, Obama Has Received More Money From Fannie Mae And Freddie Mac Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Senate Banking Committee Chairman Sen. Chris Dodd. (Lindsay Renick Mayer, "Fannie Mae And Freddie Mac Invest In Lawmakers," Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/11/08)

Dodd Has Served In Federal Office Since 1975. (The Washington Post Website, www.washingtonpost.com, Accessed 9/15/08)

Obama Has Served In Federal Office Since 2005. (The Washington Post Website, www.washingtonpost.com, Accessed 9/15/08)
Former CEO Of Fannie Mae And Former Obama Advisor Jim Johnson Resigned Under Criticism:

Jim Johnson Is The Former CEO Of Fannie Mae. (David A. Vise, "Fannie Mae Lobbies Hard To Protect Its Tax Break," The Washington Post, 1/16/95)

"Jim Johnson, The Former Chairman Of Fannie Mae Who Was One Of Three Advisors Tapped By Democrat Barack Obama To Vet Vice Presidential Candidates, Resigned Today After Questions Were Raised About Favoritism He May Have Received From Countrywide Financial Corp." (Johanna Neuman, "Barack Obama Advisor Jim Johnson Quits Under Fire," Los Angeles Times, 6/12/08)

Johnson Remains A Bundler For Obama's Presidential Campaign And Has Committed To Raising $100,000 To $200,000. (Obama For America Website, www.barackobama.com, Accessed 5/19/08)

In 1998, Fannie Mae's Earnings Were Manipulated, Which Resulted In "Maximum Payouts" To Executives Including CEO Jim Johnson. "As CEO of Fannie Mae, Johnson, a former chief of staff to Vice President Walter F. Mondale and chairman of the board of the Kennedy Center, was the beneficiary of accounting in which Fannie Mae's earnings were manipulated so that executives could earn larger bonuses. The accounting manipulation for 1998 resulted in the maximum payouts to Fannie Mae's senior executives -- $1.9 million in Johnson's case -- when the company's performance that year would have otherwise resulted in no bonuses at all, according to reports in 2004 and 2006 by the Office of Federal Housing Enterprise Oversight." (Jonathan Weisman and David S. Hilzenrath, "Obama's Choice Of Insider Draws Fire," The Washington Post, 6/11/08)

The Manipulation Resulted In Johnson Receiving A Bonus Of Over $1.9 Million When He Otherwise Would Not Have Earned A Bonus. "An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have been paid, the report said. Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing and community development, $493,750." (Albert B. Crenshaw, "High Pay At Fannie Mae For The Well-Connected," The Washington Post, 12/23/04)
Johnson Also Received Fees And Compensation From Fannie Mae Worth $3.3 Million Between 2001 And 2006. "Johnson left the company before it was swept up in an accounting scandal that tarred its reputation, but even during the years of scandal, Johnson was reaping hundreds of thousands of dollars in consulting fees and other compensation, $3.3 million in all between 2001 and 2006." (Jonathan Weisman and David S. Hilzenrath, "Obama's Choice Of Insider Draws Fire," The Washington Post, 6/11/08)

In 1998, Fannie Mae Improperly Deferred $200 Million Dollars In Expenses, Which Allowed Johnson To Receive Nearly $2 Million In Bonuses; Johnson Would Not Have Received A Bonus If The Money Had Been Properly Expensed. "An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have been paid, the report said. Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing an d community development, $493,750." (Albert B. Crenshaw, "High Pay At Fannie Mae For The Well-Connected," The Washington Post, 12/23/04)

In 1998, Johnson, Then-CEO Of Fannie Mae, Hosted The Opening Ceremony Of A Lobbying Office In Oklahoma. "The concern is whether such efforts were made to bolster Fannie's business more than to advance philanthropic goals. Critics say the foundation helped to reinforce ties with various congressional groups forged by Fannie's in-house lobbyists. At times the two seemed indistinguishable: They often sponsored events in tandem. Both were big donors to the CBCF's annual awards gala in 2003 and a similar black-tie event for the Congressional Hispanic Caucus Institute in 2002. In 1998, then-CEO Jim Johnson hosted the opening ceremony of a lobbying and public relations office in Oklahoma, an event attended by former Oklahoma Governor Frank Keating and then-Senator Don Nickles (R-Okla.). But wearing his other hat as the foundation's chairman, Johnson al so took the opportunity to announce $125,000 worth of grants to local charities." (Dawn Kopecki, "Philanthropy, Fannie Mae Style," Business Week, 4/2/07)

Obama Solicits Advice From Former Fannie Mae CEO Franklin Raines Who Was "Under The Shadow Of A $6.3 Billion Accounting Scandal":

The Obama Campaign Has Solicited Franklin Raines, Who "Stepped Down As Fannie Mae's Chief Executive Under The Shadow Of A $6.3 Billion Accounting Scandal," For Advice On Mortgage And Housing Policy. "In the four years since he stepped down as Fannie Mae's chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters." (Anita Huslin, "On The Outside Now, Watching Fannie Falter," The Washington Post, 7/16/08)

Like Jim Johnson, Raines Received Low-Rate Home Loans From Countrywide, A Major Seller To Fannie Mae. "Fannie Mae's former CEO, Jim Johnson, resigned Wednesday as the leader of likely Democratic presidential nominee Barack Obama's search for a running mate after The Wall Street Journal reported that he and another former CEO, Franklin Raines, received low-rate home loans from troubled mortgage lender Countrywide Financial Corp. a major seller of home loans to Fannie Mae." (Alan Zibel, "Fannie Mae CEO Says Ethics Policy Bans Discounts," The Associated Press, 6/12/08)

Former Fannie Mae Chairman Frank Raines Was Accused Of Manipulating The Company's Earnings. "Former Fannie Mae chairman and chief executive Franklin D. Raines, accused of manipulating the housing finance company's earnings, is challenging regulators to make their case against him beginning Feb. 16 instead of waiting until the end of the year." (David S. Hilzenrath, "Fannie Mae's Former Chief Wants Earlier Hearing Date," The Washington Post, 2/6/07)

Raines Was Forced Out As Fannie Mae's CEO In December 2004. "Former chief executive Franklin D. Raines and chief financial officer J. Timothy Howard were forced out Tuesday night after accounting mistakes that could cost Fannie $9 billion in reported profit." (David S. Hilzenrath, "Fannie Mae Exit Packages Face Review," The Washington Post, 12/23/04)

Under Raines' Leadership, Fannie Mae Committed "Extensive Financial Fraud" And Was Forced To Pay A $400 Million Civil Penalty. "In a May report, the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight found that Fannie Mae under Raines perpetrated 'extensive financial fraud' so that executives could collect big bonuses. There have been no criminal charges, but the conduct of Raines and other senior Fannie executives 'was inconsistent with the values of responsibility, accountability, and integrity,' the agencies said. Fannie paid a $400 million civil penalty this year to the SEC and OFHEO." (Jay Hancock, Op-Ed, "Raines Claiming Accountability Isn't Enough," The [Baltimore] Sun, 12/10/06)



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Tuesday, September 30, 2008
Covering Their Fannies


McCAIN PUSHED FOR FANNIE AND FREDDIE REFORM

John McCain Was Pushing For Reform Of Fannie Mae And Freddie Mac While "Obama Was Notably Silent":

"In 2006, [McCain] Called For Tighter Regulation Of Fannie Mae And Freddie Mac, The Two Federally Chartered, Privately Run Mortgage Giants That The Government Now Has Taken Over." (Steve Thomma, "Out Of Bounds! Obama Misstates McCain's Position On Regulation," McClatchy Newspapers, 9/20/08)

The Washington Post: McCain Pushed For Fannie And Freddie Regulation While "Obama Was Notably Silent." "In 2006, he pushed for stronger regulation of Fannie Mae and Freddie Mac -- while Mr. Obama was notably silent. '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,' Mr. McCain warned at the time." (Editorial, "'Always For Less Regulation'?" The Washington Post, 9/19/08)

NOTE: In Just Four Years, Barack Obama Has Received More Money From Fannie Mae And Freddie Mac Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Senate Banking Committee Chairman Sen. Chris Dodd. (Lindsay Renick Mayer, "Fannie Mae And Freddie Mac Invest In Lawmakers," Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/11/08)

EVEN BILL CLINTON ACKNOWLEDGES DEMOCRATS BLOCKED FANNIE AND FREDDIE REFORM

Former President Bill Clinton Acknowledges Democrats Resisted Fannie Mae And Freddie Mac Reform:

Former President Clinton: "I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac." (ABC's "Good Morning America," 9/25/08)



For Years, Obama Supporters In Congressional Oversight Committees Blocked Efforts To Reform Fannie Mae And Freddie Mac:

"The Powerhouse Democratic Overseers Of The Banking Committees -- Rep. Barney Frank, Sen. Christopher Dodd And Sen. Chuck Schumer -- Protected Fannie And Freddie." (Robert Novak, Op-Ed, "Crony Image Dogs Paulson's Rescue Effort," Chicago Sun-Times, 7/17/08)

Obama Ally Rep. Barney Frank (D-MA) Blocked Multiple Attempts At Reforming Fannie Mae And Freddie Mac Spanning Back To 1992:

Frank Has Fought GSE Reform Since 1992. "[Frank's] record is close to perfect as a stalwart opponent of reforming the two companies, going back more than a decade. The first concerted push to rein in Fan and Fred in congress came as far back as 1992, and Mr. Frank was right there, standing athwart. But things really picked up this decade, and Barney was there at every turn." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

In 2000, Frank Opposed Rep. Richard Baker's GSE Reform Legislation. "In 2000, then-Rep. Richard Baker proposed a bill to reform Fannie and Freddie's oversight. Mr. Frank dismissed the idea, saying concerns about the two were 'overblown' and that there was 'no federal liability there whatsoever.'" (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

In 2002, Frank Said The GSEs Were Not "Problems." "Two years later [in 2002], Mr. Frank was at it again. 'I do not regard Fannie Mae and Freddie Mac as problems,' he said in response to another reform push. And then: 'I regard them as great assets.'" (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

In 2003, Frank Reassured The Public About Fannie And Freddie. "Again in June 2003, the favorite of the beltway press corps [Rep. Frank] assured the public that 'there is no federal guarantee' of Fan and Fred obligations." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

"A Month Later, Freddie Mac's Multibillion-Dollar Accounting Scandal Broke Into The Open. But Mr. Frank Was Sanguine. 'I Do Not Think We Are Facing Any Kind Of A Crisis,' He Said At The Time." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)
"Three Months Later He Repeated The Claim That Fannie And Freddie Posed No 'Threat To The Treasury.' Even Suggesting That Heresy, He Added, Could Become 'A Self-Fulfilling Prophecy.'" (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)
"In April 2004, Fannie Announced A Multibillion-Dollar Financial 'Misstatement' Of Its Own. Mr. Frank Was Back For The Defense. Fannie And Freddie Posed No Risk To Taxpayers, He Said, Adding That 'I Think Wall Street Will Get Over It' If The Two Collapsed." (Editorial, "Fannie Mae's Patron Saint," The Wall Street Journal, 9/10/08)

Obama Ally Sen. Chris Dodd (D-CT) Led Efforts To Block Reform Of Fannie Mae And Freddie Mac:

Dodd Actively Opposed GSE Reform Measures And Weakened Existing Regulations. "During this period, Sen. Richard Shelby led a small group of legislators favoring reform, including fellow Republican Sens. John Sununu, Chuck Hagel and Elizabeth Dole. Meanwhile, Dodd -- who along with Democratic Sens. John Kerry, Barack Obama and Hillary Clinton were the top four recipients of Fannie and Freddie campaign contributions from 1988 to 2008 -- actively opposed such measures and further weakened existing regulation." (Al Hubbard and Noam Neusner, Op-Ed, "Where Was Sen. Dodd?" The Washington Post, 9/12/08)

Dodd Called The President's Suggestions For Regulations "Inane" And Recommended The President "Immediately Reconsider His Ill-Advised" Proposals. "As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to 'immediately reconsider his ill-advised' reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president's suggestion for a strong, independent regulator of Fannie and Freddie was 'inane.'" (Al Hubbard and Noam Neusner, Op-Ed, "Where Was Sen. Dodd?" The Washington Post, 9/12/08)

Dodd Called On The Regulator For Fannie Mae And Freddie Mac To Lift Portfolio Caps. "Both Schumer and Christopher J. Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee, have called on Fannie Mae and Freddie Mac's regulator to lift the portfolio caps. They argue that allowing the two firms to buy more mortgages, at least temporarily, would inject much needed liquidity into the market and calm the financial markets." (Michael R. Crittenden, "Schumer Will Seek To Lift Cap On Mortgage Portfolios Of Fannie Mae, Freddie Mac," Congressional Quarterly Today, 8/16/07)

NOTE: Since 1989, Dodd Has Received At Least $165,400 From Fannie Mae And Freddie Mac: $48,500 From PACs And $116,900 From Individuals, Receiving More Than Any Other Politician. (Lindsay Renick Mayer, "Fannie Mae And Freddie Mac Invest In Lawmakers," Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/11/08)

Obama Ally Sen. Chuck Schumer (D-NY) Has Been A "Leading Voice For [Financial] Deregulation," And Led Efforts To Block Reform Of Fannie And Freddie:

Until The Current Financial Crisis, Sen. Schumer "Had Been A Leading Voice For Deregulation," And Opposed Reducing Taxpayer Risks Associated With Fannie Mae And Freddie Mac. "Until the current credit crisis, Mr. Schumer had been a leading voice for deregulation: He has championed the repeal of a Great Depression-era law that prohibited commercial banks from underwriting securities; he has written an opinion piece calling for the Sarbanes-Oxley Act to be 're-examined,' and he has opposed a bill that sought to reduce taxpayer risk in the event of a housing market slowdown by requiring Freddie Mac and Fannie Mae to sell their entire investment portfolios of about $1.5 trillion worth of mortgage assets." (Joseph Goldstein, "Pro-Deregula tion Schumer Scores Bush For Lack of Regulation," The New York Sun, 9/22/08)

Despite Reports Of Fraudulent Accounting, Schumer Opposed Creating A Strong Regulator For Fannie Mae And Freddie Mac In 2004. "Even after Freddie Mac was shown to have manipulated earnings, Congress remained deadlocked over legislation to create a stronger regulator. Opposing one such bill in 2004, Sen. Charles E. Schumer (D-N.Y.) argued that a hostile regulator could use the proposed powers to choke the companies." (David S. Hilzenrath, "Fannie, Freddie Deflected Risk Warnings," The Washington Post, 7/14/08)

In 2005, Sen. Schumer Said "Fannie And Freddie Over The Years Have Done A[n] Incredibly Good Job" And "Have Filled In Gaps That The Market Wouldn't Touch." Schumer: "I'd like to make a couple of points here. First, I think Fannie and Freddie over the years have done a [sic] incredibly good job and are an intrinsic part of making America the best-housed people in the world. I think they have filled in gaps that the market wouldn't touch. I think they have made the secondary market flow smoothly and well. And overall, I think, if you look over the last 20 or whatever years, they've done a very, very good job." (Sen. Chuck Schumer, Subcommittee On Banking, U.S. Senate, He aring, 4/6/05)

Schumer: "The bottom line is very simple: We have a great housing market here. Fannie and Freddie are intrinsically wrapped up in that market, and you've got to be careful before you do too much dramatic change." (Sen. Chuck Schumer, Subcommittee On Banking, U.S. Senate, Hearing, 4/6/05)
In 2005, Schumer Said He Didn't See "Eye To Eye" With Fed Chairman Alan Greenspan About The Need For GSE Reform. Chairman Greenspan: "I think the most important thing to take away is that it's important to make the regulator a vehicle of safety and soundness for the GSEs, Fannie and Freddie especially. But unless there is some procedure that effectively contains the size of the GSE portfolios, we are leaving at risk a very significant segment of our financial markets." ... Sen. Schumer: "Mr. Chairman. As you know, I have utmost respect for you and think you've done an excellent job as Fed chairman, but on this issue we don't see eye to eye. And in fact I'd say some of the things you're saying -- you're a lot smarter on these issues than we are, but they almost defy common sense." (Housing And Urban Affairs, Banking Subcommittee, U.S. Senate, Hearing, 4/6/05)

Schumer Called On The Regulator For Fannie Mae And Freddie Mac To Lift Portfolio Caps To Buy More Mortgages. "Both Schumer and Christopher J. Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee, have called on Fannie Mae and Freddie Mac's regulator to lift the portfolio caps. They argue that allowing the two firms to buy more mortgages, at least temporarily, would inject much needed liquidity into the market and calm the financial markets." (Michael R. Crittenden, "Schumer Will Seek To Lift Cap On Mortgage Portfolios Of Fannie Mae, Freddie Mac," Congressional Quarterly Today, 8/16/07)

After The Subprime Housing Crisis Began, Schumer Advocated Raising The Cap On What Fannie Mae And Freddie Mac Could Lend. "Even last September, as the subprime housing crisis began to metastasize and the market was expressing concerns about the pair, Sen. Charles Schumer (D-N.Y.), the powerful chair of the Senate banking subcommittee on housing, had the very bad (and ultimately rejected) idea of raising the cap on what Fannie and Freddie could lend by 10 percent. Since then the companies have reported losses of $11 billion, and there's uncertainty about just how much more damage there will be from future defaults." (Editorial, "We Can't Say No, But We Can Regulate Them," [New York] Newsday, 7/20/08)

Other Democrats Backing Obama Also Resisted Regulatory Reform Of Fannie And Freddie:

Sen. Jack Reed (D-RI): "[Chairman Greenspan] does argue that GSEs present greater systemic risk because their assets are concentrated on mortgage related assets while banks are more diversified. However, I think this misses the point." (Sen. Jack Reed, Subcommittee On Banking, U.S. Senate, Hearing, 7/28/05)

Sen. Debbie Stabenow (D-MI): "I don't believe there is any need to change or disrupt the current regulatory system." ("Allard Subcommittee Hears About Growing Debt At GSEs," National Mortgage News, 5/14/01)