[ms61853]

http://strategicthought-charles77.bl...e-mae-and.html

A brief history of the Fannie Mae and Freddie Mac mess is in order. Back in the days when a Bank or Savings and Loan approved a home loan, they did so with lending standards that had historically led to only safe loans. They had to because they kept the loan and were responsible if it failed. These standards included 3 major parts.


First, the mortgage payments could be no greater that a set percentage of your income, usually about 40 percent.

Second, a down payment was required of about 10 percent or above so the new owner would immediately have some equity in the home.

Third, A good credit rating was required to prove you had a history of paying your bills.


Some adjustments could be made, for example people that had poor credit could get a loan with a larger down payment so if the loan failed, the bank could still resell the house and cover the loan.

With the well intentioned goal of increasing the level of home ownership in lower income and minority groups, Lenders were encouraged to make home loans that did not meet normal standards with the promise that Freddie Mae and Freddie Mac would buy these loans and the lenders were not responsible if they failed.


The Fannie Mae and Freddie Mac crisis has its roots in the Community Redevelopment Act signed into law during the Carter Administration. President Clinton, influenced by multiculturalism, encouraged it further by dictating where mortgage lenders could lend. Tough new regulations required that lenders increase their lending in high-risk areas where they had no choice but to lower lending standards to make loans that sound business practices had previously rejected. And again, Freddie Mae and Freddie Mac bought these loans, which means taxpayers were ultimately responsible if these loans failed.


As long as home values rise, failed loans could be covered by selling the house. If however, home values fell as they did during and after the 1973 Arab oil embargo when energy prices doubled, just as they have today, these failed loans caused a huge financial impact on Lenders and Freddie Mae and Freddie Mac. The huge increases in energy costs are an indisputable part of this financial crisis.


In 2003 the huge level of risk that Fannie Mae and Freddie Mac had come to represent for both taxpayers and financial institutions was becoming apparent. The Bush Administration attempted to reign in the problem by raising standards for loans that Freddie Mae and Freddie Mac guaranteed. Congressional Democrats blocked this reform so that minorities and low-income groups could continue to buy homes that by most standards they could not really afford.

From the New York Times September 11, 2003


The Bush Administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

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.

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.


''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, and the less we will see in terms of affordable housing.''


Representative Melvin L. Watt, Democrat of North Carolina, agreed. ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

John McCain saw the huge Freddie Mae and Freddie Mac train wreck coming in 2005 and lead a reform effort to again raise lending standards and protect taxpayers from what could become catastrophic costs from failed loans.

From the Congressional Record:

FEDERAL HOUSING ENTERPRISE REGULATOR REFORM

ACT OF 2005The United States Senate, May 25, 2006

Sen. John McCain [R-AZ]: Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

For Years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac — known as Government-sponsored entities or GSEs— and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.


These efforts were blocked by Congressional Democrats. Obama never lifted a finger to help any Freddie Mae and Freddie Mac reform effort. Perhaps that’s why Obama received $105,849, Nancy Pelosi $47,000 and Harry Reid $60,500 from Freddie Mae and Freddie Mac lobbyists and John McCain got none.


In a truly amazing insult to our intelligence, Obama campaigns daily on the premise that Bush and McCain are responsible for this mess! If Obama wanted to truly be a bipartisan leader he would distance himself from Nancy Pelosi and Harry Reid who closed down Congress to go on vacation rather than allow any votes on the energy crises, and Barney Frank who fought Freddie Mae and Freddie Mac reform.

[fiveteamer]

ok ya, economy is crumbling because Clinton wanted some Mexican dish washers to have mortgages.

are you f'kin for real pal?

[ms61853]

Originally Posted by fiveteamer

ok ya, economy is crumbling because Clinton wanted some Mexican dish washers to have mortgages.

are you f'kin for real pal?

It fell because corrupt Democrats strong armed lenders into making loans to people who couldn't pay them back. As was documented, the Bush Administration saw the problems, tried to make corrections, only to be obstructed by the corrupt Democrats.

[picantel]

Dude you need to get off the drugs. Still blaming Clinton I see. The economy is shit in both Bush presidencies yet they did nothing wrong lol.

[ms61853]

Originally Posted by picantel

Dude you need to get off the drugs. Still blaming Clinton I see. The economy is shit in both Bush presidencies yet they did nothing wrong lol.

The blame is pretty obvious:

How Bill Clinton, ACORN & Barack Obama fueled the mortgage crisis


Voters worried about losing their homes or their retirement funds have a clear choice in November. One candidate helped create the crisis. The other worked to eliminate it. Three names are key: Bill Clinton, Barack Obama and ACORN , a radical-left organization powered by “community organizers.” Where have we heard that term before?

ACORN and its “community organizers,” with help from congressional enablers like Barack Obama and Barney Frank, fanned the Fannie Mae flames in big American cities like Chicago, New York, Los Angeles and Detroit by threatening America’s banks with market mayhem — made possible by Clinton’s beefed up CRA — if they did not make more loans to people who the banks knew were unprepared to repay them.

These fraudulent loans — I say “fraudulent” because the banks and the politicians knew in advance that many of them would not, could not be repaid and, therefore, they were not “loans” even in a technical sense* — were then packaged into equally fraudulent “securities” which were then sold to gullible investors. Eventually, the house of cards collapsed in on itself.

Clinton’s and ACORN’s role in the proliferation of subprime mortgages and the junk “securities” that Fannie Mae created to sell them on Wall Street is thoroughly documented. The documentation is so abundant partly because, like the Germany’s WWII-era Nazis, these wrongdoers proudly advertised their actions to win votes from the short-term beneficiaries of their economic and political misconduct.

Barack Obama’s involvement with ACORN as a Chicago “community organizer” is also well-documented. ACORN, by the way, has enthusiastically endorsed Barack Obama for President and Obama has just as enthusiastically accepted ACORN’s endorsement.

The economic harm caused by the Clinton CRA is now painfully obvious. But the risks of that harm have were known to Clinton insiders from the beginning, as evidenced by this 1993 Clinton Whitehouse press conference transcript:

http://clinton6.nara.gov/1993/12/199...ubin.text.html

Since then, the risks have been repeatedly highlighted from time to time for political leaders to consider and act on. Here’s an example from the Winter 2000 City Journal:

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups [like ACORN], intent, in some cases [including ACORN], on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.

The CRA’s premise sounds unassailable: helping the poor buy and keep homes will stabilize and rebuild city neighborhoods. As enforced today, though, the law portends just the opposite . . .

Finally, in 2005, with real crisis looming, John McCain and a few other U.S. senators tried to stem the tide with S.190. Unfortunately, the bill died in committee. Against this backdrop, consider the very well done video below. If you feel as strongly about this as I do, please pass the link to your friends.

Given Obama’s track record with ACORN, electing him president this fall would likely result in greater crises down the road. It’s the vision thing. Obama either doesn’t have it or, if he does, what he sees is bad for America.

[Willie Bee]

I've been trying to figure out how the elephants controlled Congress for 12 years (1994-2006), six of those year with their own boy in the White House, and not every problem was solved?

[ms61853]

Originally Posted by Willie Bee

I've been trying to figure out how the elephants controlled Congress for 12 years (1994-2006), six of those year with their own boy in the White House, and not every problem was solved?

Well, without the majority having 60 seats in the Senate, the minority can use parliamentary procedures to pretty much bottle up anything.

[bleuze]

I would not bother to answer because you won't win. Most people don't read and especially if it involves facts!

[MonkeyF0cker]

Yeah. That was almost the case, ms. Get a clue. Those programs are not responsible for the subprime loan mess. You have absolutely no knowledge about finance if you believe that crap. And by the way, John McCain HAS received campaign contributions from both Fannie Mae and Freddie Mac. Try looking it up from a legitimate source once, not a propaganda site.

[Willie Bee]

Originally Posted by ms61853

Well, without the majority having 60 seats in the Senate, the minority can use parliamentary procedures to pretty much bottle up anything.

So somehow the donkeys having 49 right not has trumped this now? What exactly did the donkeys bottle up from 1994-2006?

[ryanXL977]

14 of the last 16 years under a gop congress
8 years under a gop president

and yet its the dems fault

hilarioous

[ms61853]

Originally Posted by MonkeyF0cker

Yeah. That was almost the case, ms. Get a clue. Those programs are not responsible for the subprime loan mess. You have absolutely no knowledge about finance if you believe that crap. And by the way, John McCain HAS received campaign contributions from both Fannie Mae and Freddie Mac. Try looking it up from a legitimate source once, not a propaganda site.

In 30 years of being in congress, McCain has received 1/6 of what Obama has in 4.

Forcing banks to give loans and that can't be paid back and backing those with useless securities? Yeah, that's not the problem. riiiiiight...

[MonkeyF0cker]

That bill was killed in the Committee on Banking, Housing, and Urban Affairs when there still was a Republican majority in Congress. There was no filibuster, as Ms would like you to believe, since it never made it to the floor for a vote. It's just more ridiculous blame game in place of actually fixing the issues at hand.

[durito]

Both parties allowed Fannie/Freddie to become the disaster they were.

Anyone that suggests otherwise is a partisan hack.

[Willie Bee]

Originally Posted by durito

Both parties allowed Fannie/Freddie to become the disaster they were.

Anyone that suggests otherwise is a partisan hack.

Wise as usual, durito

[ms61853]

Originally Posted by MonkeyF0cker

That bill was killed in the Committee on Banking, Housing, and Urban Affairs when there still was a Republican majority in Congress. There was no filibuster, as Ms would like you to believe, since it never made it to the floor for a vote. It's just more ridiculous blame game in place of actually fixing the issues at hand.

And what has Hussein Osama ever done to fix the issues at hand. Vote present a whole bunch of times?


I don't know the inside baseball stuff of what killed the reform bills, but the McCain and Bush addressed the problem and the Democrats openly opposed any reform.

[daggerkobe]

ms61853
SBR Village Idiot

[ms61853]

Originally Posted by durito

Both parties allowed Fannie/Freddie to become the disaster they were.

Anyone that suggests otherwise is a partisan hack.

You can say that, but there is on record efforts by Democrats to oppose fixing the problems, and there is no such record of Republicans. There is also a record of warnings of an upcoming collapse. There is no such record of Democrats. At least it hasn't been presented.

[Seattle Slew]

Exactly. Both parties created this mess. Just goes to show how bad Washington works, with hacks like Sean Hannity trying to blame Democrats for everything and calling Obama a terrorist last night, when the GOP shares in this entire mess, including the stooge in the White House.

Nancy Pelosi is a joke and so are the GOP leaders.

If any bill was a bipartisan effort, this House bill was it, with both sides soundly rejecting it. Yet pundits have to try and blame somebody.

Originally Posted by durito

Both parties allowed Fannie/Freddie to become the disaster they were.

Anyone that suggests otherwise is a partisan hack.

[Seattle Slew]

You're just repeating what Sean Hannity said last night. Some of it is true, but did you see when Mike Huckabee tried to say "there's bad Republicans in this" Hannity cuts him off. Then, when former GOp senator Danforth is talking about voting scandals, he says "we're not investigating Obama" and Hannity says "you should!".

Even when GOP guests don't toe his line, he cuts them off. When Dick Morris said Obama won the debate, Hannity ended the interview in 2 seconds because he expected Morris (a McCain backer) to agree with everything he said. He's a joke, and a scumbag.

Originally Posted by ms61853

You can say that, but there is on record efforts by Democrats to oppose fixing the problems, and there is no such record of Republicans. There is also a record of warnings of an upcoming collapse. There is no such record of Democrats. At least it hasn't been presented.

[MonkeyF0cker]

Originally Posted by ms61853

In 30 years of being in congress, McCain has received 1/6 of what Obama has in 4.

Forcing banks to give loans and that can't be paid back and backing those with useless securities? Yeah, that's not the problem. riiiiiight...

The amount of subprime loans and ARM's granted in those programs has been shown to be of a lesser percentage than that of the market as a whole. There was no strong-arming here. Banks and lenders saw an opportunity to capitalize on high risk subprime lending. No government program forced them to take on the massive risks that they did. Certainly not to the extent that it had gone... If you really NEED to blame someone, blame Alan Greenspan.

P.S. - Funny how now it's 1/6. It was zero in your article. What will it be if I actually look it up?

[ms61853]

Originally Posted by Seattle Slew

You're just repeating what Sean Hannity said last night. Some of it is true, but did you see when Mike Huckabee tried to say "there's bad Republicans in this" Hannity cuts him off. Then, when former GOp senator Danforth is talking about voting scandals, he says "we're not investigating Obama" and Hannity says "you should!".

Even when GOP guests don't toe his line, he cuts them off. When Dick Morris said Obama won the debate, Hannity ended the interview in 2 seconds because he expected Morris (a McCain backer) to agree with everything he said. He's a joke, and a scumbag.

I haven't watched Hannity in quite a while. If the Dems had Repubs to blame, they'd be doing it. That's just obvious.

[ryanXL977]

where have you been the last 8 years dude?

[MonkeyF0cker]

Originally Posted by ms61853

And what has Hussein Osama ever done to fix the issues at hand. Vote present a whole bunch of times?


I don't know the inside baseball stuff of what killed the reform bills, but the McCain and Bush addressed the problem and the Democrats openly opposed any reform.

First off, Obama is not in a financial committee. He is in committees for foreign affairs, homeland security, health, and veteran's affairs. How exactly would he be involved in banking and investment oversight and regulation?

[ryanXL977]

this guy is still debating if bush is the best president ever, or second after lincoln

why even bother

[DavidCopper]

hahaha Pelosi is partially reatrded I think

[losturmarbles]

both parties are guilty in being spineless pandering government whores.
both parties benefited from and were complicit with the irresponsible lending.
both parties have spent beyond our means and have let the federal reserve abuse our money system in order to mask inflation.

[ryanXL977]

this is bush's war
plain and simple

[topgame85]

hey pal still noones listening

[losturmarbles]

ms does make solid points
why does no one debate his points?
instead its he's the village idiot and where have you been the last 8 years. i guess i shouldnt expect anything more than liberal cheerleading from ryan and dagger though.

lets say Tom, Dick, and Harry each want to buy a house. Harry gets approved and buys a house. Tom and Dick have bad credit and are high risk borrowers. Bank XYZ gives Tom and Dick a mortgage and in turn sells it to Fannie and Freddie. This was still very profitable for the lender and encouraged by the government. But now because there are 3 times as many buyers in the market as there should be, house prices are increasing at an unatural rate due to simple supply and demand. It then becomes profitable for a lender to make bad loans now even if you dont sell them to fannie and freddie. you can charge them higher interest rates or even sabotage them into taking interest only or adjustable mortgages. if you have to foreclose, the value of the house wouldve still rised above the loan value and could very easily be resold at profit. at the same time more demand for homes meant more new construction to meet demand. this is the bubble blowing up.
now why did it stop?
because its all based on a perpetual state of rising debt.
Fiat money = debt. that's the core to this whole mess

if you don't understand what fiat money is, or how it works, watch this:
its part 2 of "money as debt" video


you can watch part 1, 3-5 here:
http://www.youtube.com/watch?v=cy-fD78zyvI

[ryanXL977]

what liberal cheerleading
what are you talking about. this aint liberal vs republican
there is no debate
the last 8 years have pretty much ended any debate

[MonkeyF0cker]

Originally Posted by losturmarbles

ms does make solid points
why does no one debate his points?
instead its he's the village idiot and where have you been the last 8 years. i guess i shouldnt expect anything more than liberal cheerleading from ryan and dagger though.

lets say Tom, Dick, and Harry each want to buy a house. Harry gets approved and buys a house. Tom and Dick have bad credit and are high risk borrowers. Bank XYZ gives Tom and Dick a mortgage and in turn sells it to Fannie and Freddie. This was still very profitable for the lender and encouraged by the government. But now because there are 3 times as many buyers in the market as there should be, house prices are increasing at an unatural rate due to simple supply and demand. It then becomes profitable for a lender to make bad loans now even if you dont sell them to fannie and freddie. you can charge them higher interest rates or even sabotage them into taking interest only or adjustable mortgages. if you have to foreclose, the value of the house wouldve still rised above the loan value and could very easily be resold at profit. at the same time more demand for homes meant more new construction to meet demand. this is the bubble blowing up.
now why did it stop?
because its all based on a perpetual state of rising debt.
Fiat money = debt. that's the core to this whole mess

if you don't understand what fiat money is, or how it works, watch this:
its part 2 of "money as debt" video


you can watch part 1, 3-5 here:
http://www.youtube.com/watch?v=cy-fD78zyvI

And this supports ms's copy and pasted "points" how exactly? It actually adds credibility to my points that the banks and lenders are responsible for this mess. Or do you just choose to ignore everything I stated?

[losturmarbles]

Originally Posted by MonkeyF0cker

And this supports ms's copy and pasted "points" how exactly? It actually adds credibility to my points that the banks and lenders are responsible for this mess. Or do you just choose to ignore everything I stated?

i never said it adds credibility to ms, i was just wondering why dagger and ryan never argue the point and just dismiss it with bush sucks, game over.

i already said 2 posts above that , that both parties are to blame.

[ryanXL977]

where did i say bush sucks
still waiting for any evidence of anyting you say

thanks

[$$POOLCRAZY$$$$]

friggin government caused this financial disaster.Now they think they can pull a fast 1 on every1 and point fingers at every1 but themselves.Wake up peeps,every1's gonna pay for this eventually except the friggin crooks that robbed us blind!!!!!!!