Senate housing reform champions made money off of housing collapse

by Ryan Smith06 Jul 2016
Two senators taking the lead in housing finance reform made considerable profit betting against the housing market – albeit probably without knowing they were doing so.

Sen. Mark Warner (D-Va.) and Sen. Bob Corker (R-Tenn.) are currently the sponsors of the Corker-Warner Bill, which aims to reform Fannie Mae and Freddie Mac. But during the run-up to the financial crisis, Corker and Warner (who was then the governor of Virginia) were invested in a fund that made significant profits from Goldman Sachs products designed to bet against the real estate market, according to Yahoo Finance.

Both Corker and Warner have reported millions of dollars of income from the fund, according to Yahoo Finance – although there’s no evidence that either was aware of the fund’s strategy of betting specifically against the real estate market.

Warner and Corker appear to have invested in Pointer Management, a Tennessee-based fund that participated in a Goldman deal called a collateralized debt obligation – or CDO – that essentially requires investors to bet against each other, Yahoo Finance reported. Pointer took the short position on the housing market.

That paid off for Corker and Warner, who had invested in Pointer in 2006 and 2007, respectively. Between 2006 and 2014, Corker reported total income from Pointer of between $3.9 million and $35.5 million, including funds from selling part of his stake in 2012. In 2014, Corker sold the rest of his stake and reported a cash receivable of between $5 million and $25 million, according to Yahoo Finance. Warner reported total income from Pointer of between $1.5 million and $10 million. There is no evidence that the senators knew they’d invested in a fund that was shorting the real estate market, Yahoo Finance reported.

But the deal was one of many Goldman deals insured by AIG, according to the report. Those deals, which resulted in Goldman making collateral calls on the insurer, contributed to AIG’s collapse, which in turn helped kick off the financial meltdown.


  • by | 7/7/2016 10:30:14 AM

    Ryan--Why do you assume they knew nothing about what Pointer (the Tennessee investment fund) was doing, because their press peopel say so?

    Senators and their House colleagues lies all of the time. (Ergo, don't be quick to buy Corker's line about withdrawing from the Trump VP sweepstakes.)

    How does a Republican rookie Senator from Tennessee come together with a Democrat Senator from Virginia--both members of the Senate Banking Committee, which has jurisdiction over every US financial institution and their regulators--join to invest through a back water Tennessee fund??

    What abotu Corker famous national TV interview when he called on investors "to short" two of the nation's largest financial institutions, which, conveniently, he an Warner both oppose? Anything worth looking into there?

    Don't assume these guys were/are investment naifs.

  • by Vote -corker out | 7/7/2016 7:09:40 PM

    Why is corker or Warner allowed to make policy on any housing reform when they have investments against the housing market. I'm no expert but this sounds like stock fraud . I'm hoping some law enforcement agency is looking into this, hello sec. How does it make sense that public officials are making millions on policies the develop. Make sense now what corker and Warner are against Fannie and Freddie. I hope these two go to jail.

  • by Mark Sam | 7/15/2016 2:50:25 PM

    I wouldn't bet senator Warner didn't know. I reported in 2011 a suspected case of regional bank using insurance fraud to foreclose on high equity properties. I have since found check forged on an account to hide slander of credit enabling bank to push small woman owned business owner into bankruptcy and foreclosure. Bank also falsified evidence and lied to Federal Reserve Bank and to Senator Warner's office. When the complaint was brought up after the federal reserve bank investigator dismissed the case as no problems found (over 60k in lender forced insurance added in 18 months) Senator Warner's response was a very annoyed 'we do not get involved in civil matters'. Last I heard evidence of check forging, falsifying evidence in a civil case, stealing mortgage payments, check kiting and money laundering were felonies! Bank definitely lied as a response to Senator Warner's investigation. No one called this bank on these criminal felonies!!!!

    Of course the CEO and Pres of this bank was a sitting director on the federal reserve bank board at the time! Complainant lived in Virgina at the time also.

    Senator Warner should have forced a criminal investigation not pushed these criminal investigations off to a private resident of Virginia. Pushing these actions off on the private individual left her with zero protections when the money ran out for legal bills. Bank was worth around 120 million in 2000. In 2015 they were reported to be worth over 13 BILLION. Of course through the worst economy this country has ever seen, it was just good management. Couldn't possibly be the potential theft of mortgage holders properties combined with the potential money laundering could it.


Should CFPB have more supervision over credit agencies?