That John Kerry and his wife are wealthy (not just rich) isn't news to anyone in western civilization. The kind of money the Kerry family has allows them to employ financial advisors who make sure their money is invested wisely.  Now we all know there are risks in the market and that profits are never a sure thing. However, in many polls most Americans are convinced that the only way to have consistent success in the stock market is when you have inside information. Knowing certain things months before anyone else can be a boon for the savvy investor, after all don't all of us wish we knew more about Bill Gates when that little start up by the Harvard dropout called Microsoft had its initial public offering?
 
It would appear such ‘savvy’ information may have benefitted Senator Kerry and his wife while playing the housing market. It seems in the late summer ‘04 as a result of reports by the Office of Federal Housing Enterprise Oversight (OFHEO) some questions arose over the accounting practices and the long term viability of two of this country's largest Government Supported Enterprises (GSEs), the now infamous Fannie Mae & Freddie Mac. Though house Democrats tried valiantly to keep the accounting irregularities from coming to light, by Oct. 04 there was no doubt the Senate would be introducing some sort of Legislation that would attempt to regulate these two woefully mismanaged GSE's. 
 
Now this information wasn't supposed to be released to the general public, in fact Rep. Maxine Waters (D-Ca) was furious that the information appeared on OFHEO's website at all and other than the posting on OFHEO's website along with one buried New York Times article, few people paid attention to the report which called into question the overall worth of FM2 (Fannie Mae & Freddie Mac). 

* According to the New York Times, Senator Kerry is also a close friend, frequent dinner companion and neighbor of former Fannie Mae CEO Jim Johnson who is implicated in the Countrywide scandal and who is accused of cooking the books at Fannie Mae to obtain millions in bonuses.


 
By Oct 2004 OFHEO had concluded that by cooking the books, Franklin Raines was grossly overstating the value of Fannie Mae, this was potentially devastating for supporters of the Affordable Housing GSE's, as news of accounting irregularities, should they become public, would cause a mass public sell off of Fannie Mae stock.
 
Now unless you are a regular C-Span watcher you probably had no idea any of this was going on at all, what with the press being preoccupied with The 9/11 Commission and  the war in Iraq. Evidently the administrators of the Heinz Marital Trust are just that kind of savvy D.C. policy watching investors.  I say this because if the Senator were to use his privilege to information from working inside the Beltway for his own financially gain while downplaying the risks to the public, it would be highly unethical.
 
So why don't we look at just how consistently successful the Heinz Marital Trust was in playing their Fannie Mae stocks. (We should all be this good at forecasting down turns in our own portfolio!)

Please bear in mind that publicly Sen. Kerry had been denying the scope of the trouble at Freddie & Fannie but alas Senator Kerry, the question begs to be answered...
If there was no trouble as of Oct ‘04 why did your wife sell off the bulk of her Fannie Mae stocks within a two week period of OFHEO's report to Congress?
 
Senator Kerry would never be involved with anything like that some might say.  Well, perhaps not but this information comes directly from page 44 of 73 Of Sen. Kerry's 2004 tax return
under the portion dealing with the Heinz Marital Trust.
 
(Remember the last hearings by the housing oversight committee OFHEO were on 10/06/04) 

According to Congressman Shays (R-CT), the chronological focus was as follows:

On July 23, 2003 I offered an amendment during a Financial Services Committee mark-up to H.R. 2420, the Mutual Funds Integrity and Fee Transparency Act, to prevent registered investment companies from using deceptive or misleading names implying they are guaranteed by the federal government. The amendment, which failed by voice vote, was focused directly at Fannie Mae and Freddie Mac.

On September 25, 2003 the Financial Services Committee held a hearing entitled, H.R. 2575: The Secondary Mortgage Market Enterprises Regulatory Improvement Act, and the Administrations’ proposals on GSE Regulation. At the hearing, the Committee considered the Administration’s proposal to create a stronger regulator for Fannie and Freddie.

While the Administration was proposing tighter regulation, one of my colleagues insisted the “GSEs have more than adequate capital for the business they are in. We do not need radical change.”

On October 6, 2004 we held a hearing entitled, The OFHEO Report: Allegations of Accounting and Management Failure at Fannie Mae. When we questioned OFHEO director Armando Falcon and Fannie Mae CEO Franklin Raines about accounting discrepancies, members on both sides of the aisle questioned our motives.

We warned that Fannie and Freddie “are going to crash if this Congress does not wake up and do something about it.” When my colleagues and I made these predictions and asked basic questions to Franklin Raines, a colleague referred to what we were attempting to do as a “political lynching,” a comment that was intended to be intimidating and not foster constructive debate.

Furthermore, when I asked Mr. Raines why Fannie and Freddie were only required to set aside 3 percent of their portfolio aside while most banks required to keep 6 to 8 percent, Mr. Raines said, “these assets are so riskless their capital holding should be under two percent.”



 
The Heinz Marital Trust (page 44 of  the 73) sold some Fannie Mae on 1/27/04 for between 100 & 250 K before the controversy arose but in September even as the stock seemed to be trending up (Fannie Mae traded at 75.61 on Sept.21st 2004), yet for some reason The Heinz investment advisors seemed to be clairvoyant on its impending demise and the sell-off of Fannie Mae began in earnest. The records show: FNM Link to Stock Chart

  •   Heinz sold Fannie Mae on :
      9/28/04 for an amount not disclosed???
      9/29/04 for between 500K & 1 mill
    10/08/04 for between 100K & 250K
    10/20/04 for an amount not disclosed???
    10/25/04 for between 100K & 250K
    12/22/04 for between 15K & 50K     


     
    Also worth noting is that one of the first orders of business for Republicans in the 2005 Senate was to pick up where the House Republicans left off in Oct 2004 by introducing the Housing Reform Act of 2005. Apparently certain that the Fannie Mae gravy train was permanently derailed the investors for the Heinz Marital Trust sold off the remaining stock in March 2005 for 54.217 per share... Well done for the Kerry's considering Fannie Mae is trading today at less than seventy cents cents per share...
     
    I guess our problem folks is we can't afford an investor as smart as the one the Kerry's have, the kind of investor who can precisely forecast down turns in markets when no one else is capable of doing so. Could I get his card Senator???


     
    By Bob Grant with research contributions from Ken Pittman