John_Schwada's Blog

In a previous blog, I explored the role of Franklin Raines in the Fannie Mae debacle and his ties to Barack Obama.

Now comes the New York Times, breathing heavily down the neck of John McCain, reporting on his messy ties to Fannie Mae, the giant financial institution that played a key role in creating the giant housing bubble that has hit our economy with the same devastating effect as a suicide bomber in a peaceful market in Iraq.

Rick Davis, the GOP presidential nominee’s campaign manager, was president of a non-profit outfit called the Homeownership Alliance created by the real estate/housing industry and bankrolled, perhaps almost entirely, by Fannie Mae and its little brother, Freddie Mac.

The purpose of the Alliance, if you want to be charitable, was to be a cheerleader for the joys of homeownership and to support efforts to make sure that joy was available to as many as possible.

Churlish skeptics, however, say the Alliance – now apparently disbanded – was a lobbying tool to protect Fannie Mae and Freddie Mac from scrutiny and regulatory controls as it embarked, during the regime of its CEO Franklin Raines, on a bold program of trying to double its earnings per share in part by jumping into that then-electrifying (just how electrifying it would take years to know) subprime market.

In fact, Davis’ consulting/lobbying firm, Davis Manafort, received about $2 million from the Alliance over five years.

And – here’s the new part - the Times reported Wednesday morning that it had two sources who claimed the firm, Davis Manafort (not Davis personally), had been paid $15,000 per month from late 2005 until this last August. Now that latter claim appeared to contradict McCain’s recent claim that Davis (who has remained throughout an owner of Davis Manafort) had had no dealings with Fannie Mae for several years.

The Davis-Fannie Mae issue is a blow tof McCain’s claim to be the scourge in the temple of Washington, D.C. influence-peddling class. Of course, not to rehash too much: Obama’s ties to two former CEO’s at Fannie Mae, including the aforementioned Franklin Raines and Jim Johnson, Raines predecessor, also do little to comfort our troubled souls.

Additionally, the McCain campaigned has pointed out Obama has accepted more than $126,000 in campaign contributions from employees of both Fannie Mae and Freddie Mac since 2004, while McCain himself has taken only $22,000 since 1998 (this according to the Center for Responsive Politics). On this latter point though, the moral algebra may not help McCain. "I would view [Obama’s]donors as one step removed from someone who is a key advisor [Davis] in the campaign," Sheila Krumholz executive director of the Center for Responsive Politics, told the Los Angeles Times. "But there's mud flung on both doorsteps. The candidates are judged by the company they keep."

McCain, of course, is slipping in the polls as the Palin boomlet subsides and as the economy – not Iraq or oil prices – moves to the front-burner on voters’ minds. McCain has seemed to struggle with the economy as an issue, looking at times flat-footed. Meantime, Obama has glided serenely through this mess, looking cool and placid, while really not saying very much about how he’d deal with the crisis.

The bail-out – excuse me, rescue plan – is unpopular with many voters. On the other hand, neither Obama nor McCain has shown any willingness to take the risk of appearing “unpatriotic” in this “national crisis” and strongly opposing the measure.

In a joint statement, the pair Wednesday called the plan “flawed” but also urged Democrats and Republicans to rise above politics and reach a bipartisan plan/solution.

So the pregnant question is: who would you want to have babysit your daughter….uhhh, I mean, oversee the rescue plan over the next few years? McCain or Obama?

Who has shown the independence of spirit that will be needed to overhaul the financial system, make sure the Treasury Department does not go on a sailor’s holiday and pay too much for the mortgage-backed securities it’ll be buying with billions of our tax dollars?

Who’ll satisfy the public’s blood-thirst and actually chase down and prosecute some of the highflying executives who ran some of these companies that engaged in predatory lending (to often greed or brainless borrowers), who passed on their mortgage-backed junk deals to others (who may or may not have been complicit) and cooked their books to hide the growing mess they had created while walking away with bonuses?

Who, indeed, will rise above our cankerous, slumping expectations?