PDaddy

Let the GSEs Fail

All the cynics fail to understand the root cause for the feds willingness to cover the interests of Fannie and Freddie . . . the fact the feds over the last 15 years have mandated the GSE's provide riskier transactions in the form of low to mod loans. If the GSE's failed to do so, all the benefits of GSE's would be dramatically modified. The old carrot and stick game. Additionally, many of todays whinners are the same individuals and companies crying that Fannie and Freddie would only finance the highest quality loans, thereby failing to comply with the GSE's mandate. Yes, 15 years ago, the GSE's overlooked the riskier low to mod loans in the central cities and rural jurisdictions, but performed for their investors and the feds. Returning anticipated profits and splitting on a fairly regular basis. Unfortunately, we can't have it both ways!! Risk is risk. Unfortuately, the magical artificial underwriting systems created by the GSE's . . . Fannie - Desktop Underwriter and Freddie - Loan Prospector were ill conceived and have finally caught up with loans having 60% total debt ratios and marginal collateral!!

Wake up my friends and ask yourselve's whether you'd like to return to the S & L debacle of thirty years ago where private financial institutions were dialing for dollars in CD's at 16% interest rates while loaning money at 6% creating imbalanced sheets and a failing industry!!