Fannie Mae (FNM)
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- Paulson in a State of Panic [view article]
- Should I Buy Fannie or Freddie Stock Today? [view article]
- Can the Banking System Handle Huge New Write-Downs? [view article]
- The Greatest Short Sale in History [view article]
- It's All About Guaranteeing Counter-Party Risk [Housing Tracker] [view article]
- Combating Cascading Short Spirals [view article]
- How Should The Federal Government Help Homeowners? [Housing Tracker] [view article]
- Freddie Mac CEO: Home Price Drops Only 1/3 Done [view article]
- Fannie and Freddie Did Not Cause This Crisis [view article]
- 6+ Questions About the Government's Stake In Those Bailed-Out Companies [view article]
- Latest On Hedge Funds, Banks And Bailouts [Housing Tracker] [view article]
loading ...Recent FNM Articles
- Combating Cascading Short Spirals
- Can the Banking System Handle Huge New Write-Downs?
- It's All About Guaranteeing Counter-Party Risk [Housing Tracker]
- Paulson in a State of Panic
- First CDS Bullet Dodged, but Good Luck with Lehman on Friday
- Of October CDS Auctions and Helicopter Ben
- Foreclosure Relief Efforts: Update [Housing Tracker]
- Latest On Hedge Funds, Banks And Bailouts [Housing Tracker]
- Final Prices from Fannie/Freddie CDS Auctions
- Latest Mortgage Trends [Housing Tracker]
- Full List of Articles »
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ondent
Fannie and Freddie Did Not Cause This Crisis [view article]
Barack Obama, as a community organizer for ACORN used the C. R. A. to make hundreds of millions of dollars in 'subprime' loans to minorities with bad or no credit. Using charges of racism and threats to use C.R.A. to block business expansions have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.You can find an explanation in these two videos
www.youtube.com/watch?...
www.youtube.com/watch?...
Cybercorrespondent
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Fannie and Freddie Did Not Cause This Crisis [view article]
Ultimately, de-regulation allowed investment bankers to apply their complicated financial models w/ uber-leveraging in the mortgage industry. Sort of like giving Dr. Frankenstein the night shift at the morgue. ReplyFannie and Freddie Did Not Cause This Crisis [view article]
Whole heartedly agree that the "agency" issue is at the heart of the problem. However I would disagree slightly on two points. The consumer, in affect the home buyers, are motivated by simpler reasons based on baser criteria. The desire to own a home and participate in the widely promoted benefits there in. Consumers have been told for a long time that renting is waisting money and home owneship confers the triumverate of benefits, equity, appreciation, and tax deductible expenses. Naturally the average person would leap at the chance to purchase when it becomes more available through lowered lending standards and cheaper down payments. While not blameless, it is disengenuous to now impose the standard of frugal and puritan morality on the masses of people who took advantage of a buying opportunity. Likewise, it is not so unthinkable that Democratic politicians would encourage enlarging this fiasco to less fortunate consumers, when confronted with the frenzy of inflating home prices and increased purchases, however unwise it was.Indeed, the agency problem extends throughout the context of the situation. Perhaps another word to describe this is unfettered greed. Selling more snake oil without haveing to answer to anyone. It would seem disengenuous indeed to then blame the buyers for not knowing better than to buy the snake oil. Some of us will manage to avoid the traps, some can afford to avoid the trap, buy many gullibles are waiting in line for the next promise of improving their lot. Someone simply needs to regulate the snake oil salesman a little more closely, at all levels of the product chain. Fannie and Freddie, should have known better, but in the end the GSE's were just another cog in the system facilitating the spread of the contagion, failing to balance the chartered purpose against the pittfalls of agency greed. Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
Sound bites from a hearing of the Socialist Republic of the United States:(minutes in extenso tinyurl.com/3g8hmn )
Quote
H.R. 2575—THE SECONDARY
MORTGAGE MARKET ENTERPRISES
REGULATORY IMPROVEMENT ACT
Thursday, September 25, 2003
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
Mr. FRANK.
…welcome the fact that we have in Fannie Mae and Freddie Mac a means of bringing down housing costs…Fannie Mae and Freddie Mac are sufficiently secure so they are in no great danger…I don't think that we have an impending disaster….
Mr. KANJORSKI.
…We must also ensure that the GSEs continue to achieve their statutory obligation of advancing affordable housing opportunities for low-and middle-income families…
Ms. WATERS.
…we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine
…not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100 percent loans.
…In 2002 alone, Fannie Mae provided $279 billion in credit serving low-and moderate-income households.
…since the inception of goals from 1993 to 2002, loans to African-Americans increased 219 percent and loans to Hispanics increased 244 percent, while loans to non-minorities increased 62 percent.
I am opposed to a new bureaucracy at HUD to track sub-goals. We should focus on those banks, many of them competitors of these GSEs, who avoid CRA and practice predatory lending.
Mr. NEY.
…The United States mortgage and credit markets are the envy of the world.
…This agency has an important role in ensuring our nation is focused on providing decent and affordable housing for all Americans.
Mr. BACA
…One reason Fannie Mae has been successful is because the current status encourages them to be innovative… to be proactive in reaching out to low-income families…
…we should not interfere with GSEs ability …to meet the needs of low-income families in underserved areas
…GSE must …fulfill the responsibility of their congressional charter and housing mission.
STATEMENT OF FRANKLIN RAINES, CEO, FANNIE MAE
Mr. RAINES
Today Fannie Mae is one of only two companies in America to guarantee the nationwide flow of low-cost mortgage capital at all times, even when other suppliers of mortgage capital cannot or choose not to provide such capital.
…Fannie Mae has amassed over $30 billion of private equity capital to finance $2 trillion of mortgages today.
…In 1994, we launched our trillion-dollar commitment, a pledge to provide $1 trillion in financing for 10 million underserved families before the decade was over.
…In 2000, after we met this pledge, we launched a redoubled new pledge, our American Dream Commitment, to provide $2 trillion for 18 million underserved families before this decade is over.
…lead the market in serving minority families. We pledged to provide $420 billion to help serve 3 million minority families…Fannie Mae boosted our pledge to $700 billion
…Our senior debt of course is rated AAA.
…It is by having new programs, with low down payments, and with the ability to deal with people with impaired credit and other innovations that have really allowed us to expand affordable housing.
…we are one of the only people who will buy mortgages on Indian reservations that are governed solely by the Indian judicial system…
…every time we had a new idea, a new activity, a new product, we had to go and get prior approval, that would … slow the process down…will bring innovation within the housing finance industry to a screeching halt.
Mr. BACA.
…I particularly want to thank Frank Raines…The work you do in the Latino community is very important. Both companies have impressive track records of expanding minority home ownership…
Mr. FRANK.
I don't see any financial crisis. You can always make things better, but I do think we should dispel the notion that we are here because there is something rotten that has gone on.
Mr. RAINES. We are vitally committed to our housing mission…it is our number one priority.
…Our housing mission, however, does require us to raise capital around the world. Our investors invest in Fannie Mae not because they necessarily share our housing mission, but because they think that Fannie Mae will be a good steward of the capital.
Mr MILLER
…either considering safety and soundness or considering how to make credit available…among…racial and ethnic minorities and just low-wealth families in general.
EXECUTIVE DIRECTOR, INSTITUTE FOR OPPORTUNITY AND EQUALITY, NATIONAL URBAN LEAGUE
Mr. SPRIGGS
…the size of the securities and mortgage-backed security instruments issued by GSEs is …a little larger than the U.S. Treasury-note market. And so that means that all of us should be concerned about the safety and soundness of these enterprises, and that they are very important to the security of the American economy, if not the world's capital markets.
…However, it is equally important to remember why Congress created the GSEs…to establish increasing access to home mortgages for underserved areas, and this mission must remain paramount in assessing different measures of safety and soundness…
Unquote
Have a good day
Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
Fannie, Freddie, and government regulations and incentives to promote home ownership are, in my mind, one giant government hand of intervention. Wall Street's model had problems, but it was government that chose to sanction that model to fit a social agenda. However, all of this is just the symptom of the disease.The real cause of the bubble was cheap money created by the Fed. Without that money, Wall Street couldn't have created so much credit and government intervention wouldn't have proved as large a problem. Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
The people voted for a new Congress in '94 when they found out that Congressmen were using their in house post office as a piggy bank.Maybe they'll do the same when they realize Congressmen were using Fannie & Freddie as thier private piggy banks Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
The article said nothing about Democrat or Republican. Insiderman your comment only illuminates you and not one of the relevant issues in the article (i.e., the percentage of responsibility for the bubble attributable to Fannie and Freddie). Part of what caused the agency failures in this crisis is a lack of reasonable public discussion focused on issues placed in a proper heirarchy. These get entirley lost as commentary is devoted to rewriting the past and, in this case, rewriting an article that made a truely legitimate attempt simply to be logical and analytical. It is well known that Fannie and Freddie did not start the subprime securitized/derivative... market. The subsequent entry into that market was not necessarily a significant structural event in the chain. Ask yourself these questions: Why is blaming anyone but a member of your party so important? Why is convincing yourself and the public of the benefits of a blanket ideaology more important than fixing a world wide financial crises? Finally, how can you ignore the widely disseminated information that Fannie and Freddie were manned by members of both parties and Fannie and Freddie successfully lobbied both parties? Replygordon
Fannie and Freddie Did Not Cause This Crisis [view article]
well frannie did go hog wild to generate big bonuses for the managers, but problem was caused by predatory lenders who grabbed their big fat fees & ran off (to the cayman islands?) with them.> jack Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
All the "experts" are doing the Monday Morning QB, but I have yet to see who will lose their jobs and/or be indicted as co-facilitators in this financial collapse. I'm saying now that FEW, IF ANY, CONGRESSMEN will be voted out of office NEXT MONTH.NO WALL STREET SUB-SLIME VULTURES who ran stocks into the ground by FALSE RUMORS & NAKED SHORTING will be prosecuted by SEC.
NO WALL STREET EXECS will be fined/punished/suspend...
Power & Influence runs America and those who perpetrated this scam/fraud on the taxpayers will prove to be insulated from personal risk and above the law..........
IMHO Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
Great article though time consuming to read and digest. Let's cut to the chase and sum up the problems. The problem is giving loans to people who did not have a dog in the loan like putting a down payment for the loan. It has been proven many times in the past that when you give someone something for free like the housing projects that the government built then the people will not respect or take care of what they have. If they have a dog in the race like their own money being spent for something then they will take care of it. It is very simple. ReplyFannie and Freddie Did Not Cause This Crisis [view article]
Ridiculous cop-out by Thoma. Even Barney Frank acknowledges Fannie was the problem but is trying to evade responsibility with a big lie.On O'Reilly's "The Factor" , Barney Frank claimed he was not responsible for the Fannie, Freddie debacle because from 1995 to 2007 his party was in the minority on the Housing Committee and he had no power until he became Chairman on Jan. 31, 2007.
This is a Big Lie.
For Your Information;
You should be made aware of the following facts that O’Reilly did not have.
During that 1995-2007 period Barney Frank was not powerless but had DE FACTO CONTROL of the Housing Committee on matters concerning Fannie, Freddie and sub-prime mortgages.
Barney Frank was the ranking member and had all the Dems on that committee voting with him as a block and intimidated a few vulnerable Republicans with threats of racism unless they voted with him on matters concerning Fannie and Freddie.
This gave Frank the majority he needed and DE FACTO CONTROL of the Housing Committee.
Unfortunately, O'Reilly's staff didn't equip him with this information.
The bottom line though is Barney Frank, all the Dems on the Housing Committee and Franklin Raines are the prime culprits in the Fannie, Freddie, sub-prime disaster.
Paraphrasing the WSJ Sept 9, 2008 DEMS and BARNEY FRANK USE FANNIE MAE AS THEIR PIGGY BANK
"But the biggest payoff for Mr. Frank is the "affordable housing" trust fund he managed to push through as one political price for the recent Fannie reform bill.
This fund siphons off a portion of Fannie and Freddie profits -- as much as $500 million a year each -- to a fund that politicians can then disburse to their favorite special interests".
Reply
Fannie and Freddie Did Not Cause This Crisis [view article]
Look, they are not alone in causing this mess, they had many helpers, both in the market and in Congress. That said, they are clearing culpable for their contribution, and were horribly mismanaged, and our politicians rather than siding with 'caution' panicked and threw all restraints to the wind.You can say they were not a major part of the problem, but they also were not sole cause of it. Reply
aker
Fannie and Freddie Did Not Cause This Crisis [view article]
RebMarketMaker Pulpit Says, Great Point Of View...But $hit happens & it all caused the start of a bank not lending or trading, i.e. LIBOR...Hencefore a financial mother of a global level stampede, & it is not very far from over, there has already been allot of spilt milk hyannis like blood out there...& it could go either way up or down, but not for to much longer, i mean sooner rather then later, it will be back to big ass biz as usual...for the rea! big guys, & just rementioning, Go Figure...it has all become a free for all irrational market place...& i guess just about anything goes...to & for & by, the ever changing "casino like" house always win$, like rules...i agree with the Dick Grasso & Ken Langone, best of best ever interviews with, Neil Cavuto on Fox Business News, ReplyFannie and Freddie Did Not Cause This Crisis [view article]
Agents respond to incentives. FNMA and Freddie set up the incentive to allow unqualified borrowers to apply for loans. THESE AGENCIES SOUGHT SUBPRIME AND ALT-A PAPER in order to expand low income and minority home ownership at the request of the Democrat controlled oversight committees in Congress. To put the blame anywhere but on those who started the chain -- ON PURPOSE -- smacks of malpractice as a financial writer. How typical of the Democrat Party to believe it proper that someone else should pay for their lovely ideas. ReplySA Editor
Mortgages and Lending In The Subprime Meltdown [Housing Tracker] [view article]
Dear Curbs-In,Sadly, this phenomenon isn't new. Barry Ritholtz pointed out months ago that Michigan houses were selling for a dollar, as did the NY Times back in May www.nytimes.com/2007/0....
I suspect that there are many who would pay you to buy their house right now, if you could just get the millstone off their necks!
The point is, these kinds of crazy asking prices have been around for awhile. The house mentioned in the Chicago Sun Times article is a foreclosed property, which means the rights to the property don't necessarily come with just $1.75. Back taxes, liens, fines for upkeep, etc. can reach in to the thousands.
Michigan's macro environment is poor, and is likely to get poorer as the credit crunch hits automobile manufacturers even harder. Michigan's high homeownership rate is also clogging the market on its way down. See Mark Perry: seekingalpha.com/artic....
High unemployment, poor job market prospects and mobility; the list is pretty long. I don't know much about Saginaw, but i haven't noticed anyone touting the solution to Michigan's problems recently.
On the other hand, that may be the clearest contrarian signal that the market is in absolute despair, and so it's time to jump on those crazy offers.
I'd like to say there's a bright side to this: Like maybe the market is actually moving up. After all, if back in May the headlines were about $1 houses, maybe prices have risen 75% and are now $1.75, indicating a positive trend??? Or maybe your half joke about putting in a $5 bid is an indication that, even in jest, buyers are looking for bargains and so may be moving back in to the markets.
Somehow, I have the feeling that this isn't the case. But you have to trust your instincts!
All the best,
- Judy Reply