Thread: About Fannie and Freddie

The housing/mortgage crisis is something that I have been reading a lot about lately. While many people want to blame Bush, and only Bush, the blame goes much further.

Our economy needs improvement, and in order to accomplish this, we need to endure hardships first. There is no magic solution, and people need to realize that. Things will get worse before they get better.

Everything cannot be blamed on Bush. There are many others to blame. Look at Fannie and Freddie. There were attempts to push reform of these companies, which were blocked. Because of the implicit government guarantee, Fannie and Freddie were reckless. They made all the money, while the tax payers took the risk!

Ultimately, the borrowers, the banks, Wall street, Congress, and the mortgage brokers are all to blame for the housing mess. But Pelosi claims the dems have nothing to do with it, but I disagree.

I came across this article...from 2003.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.



The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

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Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

Which brings me to the community reinvestment act.
It drove banks to give loans to those with low incomes. Why would you compel the banks to give loans to people who would have a greater chance of defaulting? You could also read here.

Here is another interesting article.
OpenMarket.org » Archive » Affordable Housing, Diversity Mandates Caused Mortgage Crisis

Anytime the government interferes with the market, they cause problems...all for the sake of fairness? They never think about the unintended consequences. The government then finds someone else to blame, and the solution is more government!

Here are two more interesting reads here and here.

Now, I am not claiming that Bush doesn't bear responsibility...he does. Were their Republicans who were greedy, and are just as much to blame? Of course there were! But Pelosi's claims that the dems bear no burden is a lie.

Originally Posted by mjdsr

Now, I am not claiming that Bush doesn't bear responsibility...he does. Were their Republicans who were greedy, and are just as much to blame? Of course there were! But Pelosi's claims that the dems bear no burden is a lie.

True. A lot of this stupidity started under Clinton. Who really wasn't a liberal, so much. He was actually pretty conservative, economically. At least he was smart enough to leave "most" things alone.

Unfortunately, one of the things he DIDN'T leave alone, was this idea that banks could buy insurance companies, and vice versa. And brokerages, and securities and real estate dealerships - .... all that, had been ILLEGAL since the Great Depression.

And yes, Clinton in responsible for Jamie Gorelick's 23 million dollar bonus. And lots of others too.

But, it goes back even farther than THAT. Reagan, was responsible for a lot of it too. And I mean, this ties in with monetary policy too, which goes all the way back to Nixon.

BUT, Bushie had the chance to FIX all this. If he'd done all the stuff he said he was gonna do, when he was campaigning, he probably would have been a great Prez. And then there wouldn't have been a NEED for any of this idiotic Neo-Fool crap. But, he took the road of expediency instead of the road less traveled, and, we got what we got. My take is, he was just too damn busy with that idiotic war, to pay much attention to anything else.

So yeah, it's more a question of priorities than anything else. There's always too much that needs doing and not enough funds. So I mean, you don't have to INVENT ways to piss money away, right?

Love your sig, btw. "Wall street got drunk". That's a good one!