FANNIE & FREDDIE has everything to do with this...
“Much of that mess [in the financial markets] is due to the very people we are now turning to for solutions—members of Congress. Past Congresses created the hybrid financial institutions known as Fannie Mae and Freddie Mac, private institutions with government backing and political influence. About half of the mortgages in this country are backed by these two institutions. Such institutions—exempt from laws that apply to other financial institutions and backed by the implicit promise of government support with the taxpayers’ money—are an open invitation to risky behavior. When these risks blew up in their faces, Fannie Mae and Freddie Mac were taken over by the government, costing the taxpayers billions of dollars.
For years the Wall Street Journal has been warning that Fannie Mae and Freddie Mac were taking reckless chances but liberal Democrats especially have pooh-poohed the dangers. Back in 2002, the Wall Street Journal said: ‘The time for the political system to focus on Fannie and Fred isn’t when we have a housing crisis; by then it will be too late.’ The hybrid public-and-private nature of these financial giants amounts to ‘privatizing profit and socializing risk,’ since taxpayers get stuck with the tab when high-risk finances don’t work out... Both Fannie Mae and Freddie Mac have been generous in their contributions to politicians’ political campaigns, so it is perhaps not surprising that politicians have been generous to them. This is certainly part of ‘the mess in Washington’ that Barack Obama talks about. But don’t expect him to clean it up. Franklin Raines, who made mega-millions for himself while mismanaging Fannie Mae into a financial disaster, is one of Obama’s advisers.”
—Thomas Sowell
“For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... and the sheer magnitude of these companies and the role they play in the housing market... If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
—John McCain arguing for passage of the Federal Housing Enterprise Regulatory Reform Act (S. 190) which he co-sponsored in 2005.
For years the Wall Street Journal has been warning that Fannie Mae and Freddie Mac were taking reckless chances but liberal Democrats especially have pooh-poohed the dangers. Back in 2002, the Wall Street Journal said: ‘The time for the political system to focus on Fannie and Fred isn’t when we have a housing crisis; by then it will be too late.’ The hybrid public-and-private nature of these financial giants amounts to ‘privatizing profit and socializing risk,’ since taxpayers get stuck with the tab when high-risk finances don’t work out... Both Fannie Mae and Freddie Mac have been generous in their contributions to politicians’ political campaigns, so it is perhaps not surprising that politicians have been generous to them. This is certainly part of ‘the mess in Washington’ that Barack Obama talks about. But don’t expect him to clean it up. Franklin Raines, who made mega-millions for himself while mismanaging Fannie Mae into a financial disaster, is one of Obama’s advisers.”
—Thomas Sowell
“For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... and the sheer magnitude of these companies and the role they play in the housing market... If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
—John McCain arguing for passage of the Federal Housing Enterprise Regulatory Reform Act (S. 190) which he co-sponsored in 2005.
Views: 68
Replies to This Discussion
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Permalink Reply by Martin on -
Folks --
Most of the bad mortgage paper has come from other corporations. By the way Fannie Mae was established in the 1930's. It has survived close to 70 years with out problems. Remember Bush has been in office for 8 years. Congress was controlled by Republicans for over ten years until the election of 2006. So who do you think is responsible for the present economic crisis? The Republicans have parted out our government to any business lobbyist willing to give them a campaign contribution or a job after retiring from office. -
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Permalink Reply by Cooter on
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It hasn't existed in its same form since 1930 though. Social security has existed since the 30s, but it's drastically different today...the length of its existence has little to do with this. You have to look at when policies were changed and altered. No doubt in my mind Bush went along with some of this...though he did lodge warnings in 04.
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Permalink Reply by Dorcheated A1 on
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Martin,
I read a lot of your post your pretty smart guy. Where this one came from I don't know. This is a clunker. -
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Permalink Reply by Wendy on
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Back in 2002? Try September 1999:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A057...
Specifically, "In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's." -
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