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Public Statements

Fraud Enforcement And Recovery Act Of 2009

Floor Speech

Location: Washington, DC


Mr. COBURN. Mr. President, I appreciate the chairman giving me this time to offer this amendment. We have adopted an Isakson amendment. We have a McCain-Dorgan amendment. This is a similar amendment, but I think it gets to the root of the problem. It does not cost very much, and it actually will tell us something we need to know.

The underlying assumption with the bill is that fraud is the primary, if not the sole, cause of this crisis. That may be true. We do not know that. But what we do not know is how much we as Members of Congress played and the extent to which we played a role in helping create this crisis. This is a fairly straightforward amendment that asks the IG to come give us information so we get the answers to the question about our own role in the evolution of the problems we find today.

What we do know is the GSEs undertook an unprecedented assumption of subprime and all-day loans, and those need to be investigated--the extent of them, the amount. We also know they invested more than $1 trillion in those loans. But what we do not know is the volume, the timing. What we do not know is the impact of the significant amount of lobbying by these GSEs and what effect that had on policies and procedures both within the administration and the Congress.

For example, when did Freddie and Fannie begin to purchase large quantities of subprime and all-day loans? In what years were those types of purchases the highest? To what extent were these purchases induced by congressional action or executive order? To what extent were those purchases induced by the Department of Housing and Urban Development affordable housing regulations issued in 1995? What actions by Fannie and Freddie contributed to the overvaluation of mortgage-backed securities?

The amendment also looks to the possibility that congressional action could have contributed to the risky changes in behavior of Fannie and Freddie. What we know is, between the 2000 and 2008 election cycles, GSEs and their employees contributed more than $14.6 million to the funds of both Senators and representatives. We also know Fannie spent $79.5 million in that period and Freddie spent $94.9 million in that period on lobbying Congress. Mr. President, $170 million was spent lobbying Congress making them the 20th and 13th largest lobbying spenders in the country.

This amendment will assure and ensure that some of the toughest questions are asked regarding the GSEs'--Fannie Mae's and Freddie Mac's--special relationships with Congress and whether any conflict created by those relationships influenced the GSEs' behavior, especially to the taxpayers' detriment.

It requires the inspector general to study what political contributions were made, what lobbying expenditures were made, what contributions were made to any other lobbying organization.

It is a compromise step. It is something we already have the people in place for. It is something they have the access to the numbers for. We ought to be able to get that.

We have a mess. Usually, as a physician when I have a mess, I start thinking back: What did I do before? And what caused part of the mess? Where was I wrong in my diagnosis of the signs, symptoms, and history? And then what do I do about it?

If we do not look through the IG at these things, then it is highly unlikely--no matter how many commissions we put together because commissions are going to ask for this anyway--but we are going to ask for it as a special report from the IG under this amendment.

There are a lot of additional considerations, and I will not take time on the floor at this time to do that. But if you want to have a transparent Congress, this is the first question we have to ask: How much were we involved? How effective were the lobbying efforts to change things that were detrimental? Maybe they were positive. But the fact is, we ought to know those things.

The idea is we will be transparent with the American people, both in terms of the lobbying efforts, the contributions they made, and the timing--not just for Congress but also the executive branch; where we look at the actions of both of those--so the American people can see the culpability. Where is it? I happen to believe it is right here in this body, us. We allowed this to happen. I think the onus of the blame needs to be here rather than pointing at other people.

That is not to distract from the idea that we ought to go after fraud. But the biggest fraud is to deny the fact that we had some culpability, and this amendment is designed to measure how much culpability we had by using the IG, the inspector general, to tell us this very specific information.

With that, I yield the floor.


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