Vernon P. "Vern" McKinley, born in East Chicago, Indiana advises governments on financial sector policy and legal issues. He is the co-author with the Wall Street Journal's James Freeman of Borrowed Time: Two Centuries of Booms, Busts and Bailouts at Citi published by HarperCollins in 2018. He is also the author of Financing Failure: A Century of Bailouts, published by the Independent Institute in 2012. He was a primary election challenger to 28-year incumbent Congressman Frank Wolf in northern Virginia's 10th congressional district in the 2008 elections, the only one to ever challenge Wolf in a primary during his long tenure. McKinley lives with his family in Ashburn, Virginia and they have also lived in Kyiv and Yerevan.
McKinley was born in East Chicago, Indiana and grew up in East Side, Chicago. He attended George Washington High School and Downers Grove South High School. He went on to graduate from the University of Illinois Urbana-Champaign in 1985 with degrees in Economics and Finance, graduating with honors. In 1984, Mr. McKinley worked on the re-election campaign of President Ronald Reagan and the U.S. Senate campaign of Representative Tom Corcoran in his unsuccessful bid to unseat Senator Charles H. Percy of Illinois. That year he also worked at the U.S. Senate Republican Policy Committee, which was chaired by Senator John G. Tower of Texas.
From 1985 to 1999 Mr. McKinley worked with the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the Resolution Trust Corporation and the Department of the Treasury's Office of Thrift Supervision. In 1995, McKinley graduated with honors from the evening program of George Washington University Law School.
Since 1999 he has applied his expertise as a legal advisor and regulatory policy expert to work as an advisor to governments on financial sector issues in the U.S., China, Nigeria, Indonesia, Ukraine, Kazakhstan, Vietnam, Latvia, the Philippines, Kuwait, West Bank, Yugoslavia (now Montenegro), Kenya, the Bahamas, the Eastern Caribbean Currency Union, Trinidad and Tobago, Jamaica, Barbados, Grenada, Belize, Guyana, Turks and Caicos Islands, Dominica, St. Vincent and the Grenadines, St. Lucia, Mozambique, Belarus, Moldova, Morocco, South Sudan, Libya, Afghanistan, Zimbabwe, Zambia, Armenia, Kosovo, Tajikistan, Nepal and Myanmar.
McKinley is the co-author with James Freeman of Borrowed Time: Two Centuries of Booms, Busts and Bailouts at Citi [1] [2] [3] [4] [5] [6] [7] [8] which traces the instability at the bank over Citi's 200-year history. He is also the author of Financing Failure: A Century of Bailouts. [9] [10] [11] [12] The book focuses on the response of the financial agencies to the crises during the 1930s, 1980s and 2000s, with particular emphasis on the most recent crisis. McKinley, a visiting scholar at the George Washington University Law School, has also completed policy work for the American Enterprise Institute and the Cato Institute and has served as an Alumni Council member of The Fund for American Studies.
He has applied his skeptical approach of the need for the bailouts to the narrative of the lingering status of Fannie Mae and Freddie Mac, financial institution runs, the tenure of departed FDIC Chairman Sheila Bair, the pending legacies of Federal Reserve Chairman Bernanke and Treasury Secretary Geithner and Dodd-Frank reforms. [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] He has also reviewed books on financial markets and historical reviews of financial crises. [24]
McKinley also wrote an earlier policy analysis on the bailouts with Gary Gegenheimer for Cato Institute. [25] As a follow-up to that article he brought four Freedom of Information Act (United States) suits against the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve and the Federal Housing Finance Agency to compel release of details on the bailouts. He has been represented in the cases by Judicial Watch. [26] [27] In one of the cases against the Board of Governors of the Federal Reserve requesting Bear Stearns-related documents, Judicial Watch filed a writ of certiorari on behalf of McKinley requesting that the Supreme Court review the decision of the United States Court of Appeals for the District of Columbia Circuit. [28] [29] [30] Another case against the FDIC seeking documents on Citigroup, Bank of America and the Temporary Liquidity Guarantee Program was sent back to the agency to supplement its responses. [31] [32] In a case against the Federal Housing Finance Agency the agency was ordered to produce documents regarding the choice to place Fannie Mae and Freddie Mac into conservatorship for review. [33] The final case against the Board of Governors of the Federal Reserve requesting American International Group and Lehman Brothers-related documents, resulted in the release of about 2,388 pages of redacted documents. [34]
More recently, McKinley has begun litigation to support his work on his second book to obtain records on the solvency of Citibank and the contemplation of placing the bank under FDIC receivership during 2008. [35]
McKinley has been credited with correctly predicting in 1997 that the structure of Fannie Mae and Freddie Mac would one day lead to the meltdown of the two institutions. [36] At that time, he called Fannie Mae and Freddie Mac "financial time bombs."
McKinley has testified before a Subcommittee of Congress [37] on issues related to U.S. consumer bankruptcy policy.
In 2007, McKinley announced his 2008 bid for the United States Congress in the 10th congressional district . [38] McKinley's campaign centered on his experience as a policy advisor to the U.S. and foreign governments, his legal and government experience, and domestic and international policy issues. McKinley positioned himself as a traditional small government Republican in the campaign. [39] Throughout the campaign Congressman Wolf refused to debate. [40] McKinley lost the June 10, 2008, Republican primary with 9% of the vote to Wolf's 91%. [41]
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New Deal, the corporation's purpose is to expand the secondary mortgage market by securitizing mortgage loans in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations. Its brother organization is the Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac.
The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons, Virginia. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with its sister organization, the Federal National Mortgage Association, Freddie Mac buys mortgages, pools them, and sells them as a mortgage-backed security (MBS) to private investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases. The name "Freddie Mac" is a variant of the FHLMC initialism of the company's full name that was adopted officially for ease of identification.
The Federal Home Loan Banks are 11 U.S. government-sponsored banks that provide liquidity to financial institutions to support housing finance and community investment.
A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy.
Henry "Hank" Merritt Paulson Jr. is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the chairman and chief executive officer (CEO) of major investment bank Goldman Sachs.
Sheila Colleen Bair is an American former government official who was the 19th Chair of the U.S. Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011, during which time she shortly after taking charge of the FDIC in June 2006 began warning of the potential systemic risks posed by the growing trend of subprime-mortgage-backed bonds, and then later assumed a prominent role in the government's response to the 2008 financial crisis. She was appointed to the post for a five-year term on June 26, 2006, by George W. Bush through July 8, 2011. She was subsequently the 28th president of Washington College in Chestertown, MD, the first female head of the college in its 234-year history, a position she held from 2015 until her resignation in 2017.
The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions of people losing their jobs and many businesses going bankrupt. The U.S. government intervened with a series of measures to stabilize the financial system, including the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act (ARRA).
William Poole was the eleventh chief executive of the Federal Reserve Bank of St. Louis. He took office on March 23, 1998, and began serving his full term on March 1, 2001. In 2007, he served as a voting member of the Federal Open Market Committee, bringing his District's perspective to policy discussions in Washington. Poole stepped down from the Fed on March 31, 2008.
The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see 2007–2008 financial crisis.
The Federal Housing Finance Agency (FHFA) is an independent federal agency in the United States created as the successor regulatory agency of the Federal Housing Finance Board (FHFB), the Office of Federal Housing Enterprise Oversight (OFHEO), and the U.S. Department of Housing and Urban Development government-sponsored enterprise mission team, absorbing the powers and regulatory authority of both entities, with expanded legal and regulatory authority, including the ability to place government-sponsored enterprises (GSEs) into receivership or conservatorship.
In September 2008, the Federal Housing Finance Agency (FHFA) announced that it would take over the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Both government-sponsored enterprises, which finance home mortgages in the United States by issuing bonds, had become illiquid as the market for those bonds collapsed in the subprime mortgage crisis. The FHFA established conservatorships in which each enterprise's management works under the FHFA's direction to reduce losses and to develop a new operating structure that will allow a return to self-management.
James B. Lockhart III is an American U.S. Navy officer, business executive, and, since September 2009, Vice Chairman of WL Ross & Co, which manages $9 billion of private equity investments, a hedge fund and a Mortgage Recovery Fund. It is a subsidiary of Invesco, a Fortune 500 investment management firm. He coordinates WL Ross's investments in financial services firms and mortgages. Lockhart serves co-chairs the Bipartisan Policy Center's Commission on Retirement Security and Personal Savings.
The Emergency Economic Stabilization Act of 2008, also known as the "bank bailout of 2008" or the "Wall Street bailout", was a United States federal law enacted during the Great Recession, which created federal programs to "bail out" failing financial institutions and banks. The bill was proposed by Treasury Secretary Henry Paulson, passed by the 110th United States Congress, and was signed into law by President George W. Bush. It became law as part of Public Law 110-343 on October 3, 2008. It created the $700 billion Troubled Asset Relief Program (TARP), which utilized congressionally appropriated taxpayer funds to purchase toxic assets from failing banks. The funds were mostly redirected to inject capital into banks and other financial institutions while the Treasury continued to examine the usefulness of targeted asset purchases.
The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.
The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2007. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.
In the United States, the Great Recession was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output. This slow recovery was due in part to households and financial institutions paying off debts accumulated in the years preceding the crisis along with restrained government spending following initial stimulus efforts. It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis.
The 2007–2008 financial crisis, or Global Economic Crisis (GEC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers, excessive risk-taking by global financial institutions, a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a "perfect storm", which led to the Great Recession.
United States policy responses to the late-2000s recession explores legislation, banking industry and market volatility within retirement plans.