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RUSH: All right, here we go. I’m gonna get started with the subprime business because I promised you we would do it. October 6, 2004, House hearing on the Office of Federal Housing Enterprise Oversight. Allegations of accounting and management failure at Fannie Mae. Here is a portion of Richard Baker’s remarks. He’s a Republican from Louisiana.

BAKER: It is indeed a very troubling report, but it is a report of extraordinary importance — not only to those who wish to own a home, but is to the taxpayers of the country, who would pay the cost of the clean up of an enterprise failure. The analysis makes clear that more resources must be brought to bear to ensure the high standards of conduct are not only required, but more importantly, they are actually met.

RUSH: Okay, Maxine Waters at this hearing. Okay, now it’s time to start the defense of Fannie and Freddie and her pal, Frank Raines.

WATERS: Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn’t broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines.

RUSH: So here’s Maxine Waters, the first of the Democrats (paraphrase): ‘We don’t have a problem there.’ This is 2004. ‘We don’t have a problem. Fannie Mae and Freddie Mac are just fine — especially our old buddy Frank Raines over there, everything is okay.’ Ed Royce, Republican, California.

ROYCE: In addition to our important oversight role in this committee, I hope that we will move swiftly to create a new regulatory structure for Fannie Mae, for Freddie Mac, and the federal home loan banks.

RUSH: Lacy Clay, Missouri.

CLAY: This hearing is about the political lynching of Franklin Raines.

RUSH: So the Democrats turned. We had a bunch of people, ‘Look, Fannie Mae and Freddie Mac are in trouble, subprime mortgage, we’re in trouble here, we’re out of control,’ and the Democrats — Maxine Waters, Lacy Clay — ‘You’re not gonna get in there! No way! We’re not sacrificing Frank Raines!’ So they were… This is the race card, Franklin Raines, African-American, so it’s the Democrats circling the wagons. They were not about to have it portrayed that anything they were in charge of was in any kind of trouble, Fannie Mae or Freddie Mac.

House hearing on the Office of Federal Housing Enterprise Oversight, management failure at Fannie Mae. This is Representative Gregory Meeks, Democrat, New York, had this exchange with an oversight director, Armando Falcon.

MEEKS: And what would make you — why should I have confidence? Why should anyone have confidence in, in you as a regulator at this point?

FALCON: Sir, Congressman, OFHEO did not improperly apply accounting rules. Freddie Mac did. OFHEO did not try to manage earnings improperly. Freddie Mac did. This isn’t about the agency engaging in improper conduct. It’s about Freddie Mac.

RUSH: Freddie Mac, Fannie Mae, subprime mortgages, there’s all kinds of corruption going on, the Democrats circling the wagons. Now, we’re doing this because Barney Frank says (paraphrase), ‘There never was any problem at Fannie Mae, Freddie Mac; there never was. And if there was, it was Republicans. They wouldn’t let us fix it.’ I just want you to hear that it’s the Democrats who didn’t want anybody fixing anything. Christopher Shays then asked a question.

SHAYS: And we passed Sarbanes-Oxley, which was a very tough response to that, and then I realized that Fannie Mae and Freddie Mac wouldn’t even come under it. They weren’t under the 34 act. They weren’t under the 33 act. They played by their own rules, and I’m tempted to ask how many people in this room are on the payroll of Fannie Mae, because what they do is they basically hire every lobbyist they can possibly hire. They hire some people to lobby and they hire some people not to lobby so that the opposition can’t hire ’em.

RUSH: Do you see what’s shaking out here? Now, this office, OFHEO, this was created in 1972 to oversee Fannie Mae and Freddie Mac, but they just ignored this regulator! He comes up: ‘You guys are in trouble!’

‘No, we’re not, not in trouble! You saying Franklin Raines is doing a bad job? We’re not going to let you say Frank Raines is doing that! There’s nothing wrong with Fannie Mae or Freddie Mac! He’s doing a great job over there!’

And Chris Shays says, ‘You got lobbyists hired, not hired, you’re doing everything you can to keep anybody from finding out what’s going wrong over there, a lot of people on the payroll at Fannie Mae, we find out, are making campaign donations to Democrats left and right.’

So this is the process of the regulators trying to get in there and find out what’s going wrong so that we might have some limit on the dangers of subprime mortgage, but it’s the Democrats saying, ‘Ain’t no way! There’s nothing wrong here and you’re not gonna find it if there is!’ Next, Barney Frank in 2004, this is the same hearing, had this to say.

FRANK: You seem to be saying, ‘Well, these are in areas which could raise safety and soundness problems.’ I don’t see anything in your report that raises safety and soundness problems.

RUSH: (imitating Frank) ‘Nothing in your report! Dothitzameanfubabra! What are we talking about here? There’s no problem. Fannie Mae, Freddie Mac, they are fine. Screw you! I mean, what are we doing here?’ Nothing wrong. Barney Frank again.

FRANK: But I have seen nothing in here that suggests that the safety and soundness are an issue, and I think it serves us badly to raise safety and soundness as a kind of a general shibboleth when it does not seem to me to be an issue.

RUSH: Right. Now, you go to Barney Frank yesterday, day before, this week, there wasn’t anything going on at Fannie Mae and Freddie Mac, and if there was, it was the Republicans. The Republicans wouldn’t let anybody come in and regulate it.

We’re in this mess because of all of this that you just heard. The subprime mortgage debacle is why, primary reason why, we are in this economic state right now, and there were regulators that came before Congress during the Bush administration when the Republicans ran Congress, and the Democrats were intimidating them left and right. You heard it here: Maxine Waters, nothing wrong there, Franklin Raines doing a great job. We’ve got sound bites I don’t have time to get to of the regulators actually being intimidated by these members of Congress for what they are announcing in terms of their findings.

So I meant to play this yesterday, we just ran out of time. So, actually, here I’m making up for what I said I was going to do yesterday, getting it done today because I don’t want anybody saying that I said I’m going to do stuff and not do it just to get you hooked and keep you listening — because, frankly, I don’t have to do that. Show’s compelling enough anyway as is without those kinds of tricks!

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