Fannie And Freddie’s Lasting Impact **UPDATED**
By Rabble Rouser Reverend Amy on April 1, 2010 at 9:00 PM in Bailouts, Bank Bailouts, Barack Obama, Bush administration, Congress (House & Senate), Current Affairs, Democrats, Depression, Fannie Mae, Franklin Raines, Freddie Mac, Housing & Housing Crisis, Mortgage Crisis, National Debt, Unemployment
~~Bumped Up~~
The DOW continues to be on the rise, which is certainly some good news, particularly for investors. Unfortunately, that is not translating into new jobs. Quite the opposite, in fact. For the second week in a row, first time unemployment benefits have risen, this week close to half a million (484,000), a rise of 24,000.
But there is another new high, and this one is troubling indeed. Home foreclosures have had their biggest increase in five years:
A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.
Holy smokes. Now is the time when Democrats will blame Bush and the Republicans, as if they have not been in power for over three years. Even more than that, though, is how Fannie Mae and Freddie Mac were run by Democrats. THAT is one of the single biggest issues that led to our current economic crisis, as I have noted before. Now there is this editorial weighing in on this, too, particularly in light of oversight: How Fannie and Freddie Foiled Regulators.
The headline sets the stage for how that was able to happen:
Mismanagement of Fannie Mae and Freddie Mac and obstruction of their regulators by Congress and successive presidential administrations played a pivotal role in creating and then bursting the housing bubble at the heart of the economic meltdown of 2008, according to testimony of officials before the congressionally chartered Financial Crisis Inquiry Commission. Rather than offer a serious discussion of how to reform the two government-sanctioned enterprises (GSEs), however, President Obama and the Democratic leadership in Congress are only offering legislation to punish bank CEOs and stiffen regulations for private sector banks.In 2006, Dan Mudd, then Fannie Mae’s chief operating officer, wrote in an e-mail to Chief Executive Officer Franklin Raines that the GSE desperately needed reform because “the old political reality was that we always won, we took no prisoners … we used to… be able to write, or have written, rules that worked for us.” Mudd’s e-mail was cited in testimony last week before the FCIC by James B. Lockhart, who in 2006 was acting director of the Office of Federal Housing Enterprise Oversight (OFHEO), the GSE watchdog. Lockhart said OFHEO’s regulatory authority was inadequate because “[Fannie and Freddie] could borrow so cheaply and at unlimited amounts to fund their portfolios because their lenders and rating agencies applied no market discipline.”
Remember Franklin Raines? His name may be familiar to you not for his involvement with housing, but it sure should from his involvement with Barack Obama. Yep, Obama sought advice from Raines on housing while running his campaign. They are buddies.
Back to the editorial:
Lockhart told the FCIC that before the housing bubble burst, he recognized that the GSEs faced serious credit risks and recommended freezing Freddie’s portfolio. That recommendation ran into “quite intense” pushback, according to Lockhart. The neutered watchdog could barely enact any reform at all, he said: “OFHEO was regulating two of the largest and most systematically important U.S. financial institutions and yet its powers were much weaker than bank or even state insurance regulators … OFHEO did not have all the necessary powers to deal with these giant housing enterprises.”Armando Falcon, Lockhart’s predecessor at OFHEO, told the FCIC that when the understaffed regulator needed additional resources to conduct a special examination of Fannie Mae’s accounting practices, “we encountered more difficulty and delay. Fannie’s lobbyists were on the Hill spreading misinformation about my motives and asserting that the special exam was unnecessary.” Whenever faced with a report with negative connotations about the companies, Fannie’s supporters would launch an assault on OFHEO — from a full investigation of the group to demanding Falcon’s resignation.
So now the question is whether the FCIC will name names in its forthcoming report of those in Congress and the executive branch who protected and advanced Fannie and Freddie, at grievous expense to American taxpayers.
No wonder our housing market is in such dire straits. No wonder our economy is in such dire straits. That companies of this magnitude can be SO mishandled, and receive so little oversight, is mind boggling. And now Obama is going to have the government, the same one that oversaw Fannie and Freddie, oversee our HEALTH CARE?
So, let’s recap: DOW up, yay! Unemployment up, BOO! Home Foreclosures up, BAD! And Debt spiraling out of control with Obama & Co. wanting to spend more and more and more, VERY BAD!!!!
I didn’t use to buy the whole “Tax and Spend Democrats” meme, but there is nothing like cold, hard reality to change a saying to a truism. Yep, we’re in for a world of hurt, alright, and the current Administration seems completely tone deaf to the grave issues facing our nation. Obama will continue hosting summits like this nuclear one that end up accomplishing essentially nothing, talking a lot, but saying nothing, and ignoring the glaring warning signs.
Hold onto your wallets, folks, it’s gonna be a bumpy ride…
UPDATE: Kenoshamarge provided the following video which clearly highlights the problems going on with Fannie and Freddie SIX YEARS ago. The Democrats stonewalled the regulators at every turn:
2004 – Dems Refuse to Reform Freddie & Fannie
Uploaded by Ibn-Khaldun.
Wow – and did you catch Maxine Waters defending “Frank” Raines? And how about Barney Frank denying there is anything wrong? Holy cow. This pretty much says it all. Fannie Mae didn’t follow the rules then, and we are paying for it now…
by Ronald Scott
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