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Archive for Saturday, February 12, 2011

Plan calls for dissolving Fannie Mae, Freddie Mac

February 12, 2011

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— The Obama administration wants to shrink the government’s role in the mortgage system — a proposal that would remake decades of federal policy aimed at getting Americans to buy homes and would probably make home loans more expensive across the board.

The Treasury Department rolled out a plan Friday to slowly dissolve Fannie Mae and Freddie Mac, the government-sponsored programs that bought up mortgages to encourage more lending and required bailouts during the 2008 financial crisis.

Exactly how far the government’s role in mortgages would be reduced was left to Congress to decide, but all three options the administration presented would create a housing finance system that relies far more on private money.

“It’s clear the administration wants the private sector to take a more prominent role in the mortgage rates, and in order for that to happen, mortgage rates have to go up,” said Thomas Lawler, a housing economist in Virginia.

Abolishing Fannie and Freddie would rewrite 70 years of federal housing policy, from Fannie’s creation as part of the New Deal to President George W. Bush’s drive for an “ownership society” in the 2000s. It would transform how homes are bought and redefine who can afford them.

Treasury Secretary Timothy Geithner said the plan would probably not happen for at least five years and would proceed “very carefully.” In the meantime, he said the companies would have the cash they need to meet their existing obligations.

“We think there’s very broad consensus on the Hill and in the broader private market that there needs to be a transition to a much smaller role for the government,” he said.

Ever since the housing market went bust and the country fell into a financial crisis, pressure has been building for the government to do away with Fannie and Freddie and reduce taxpayer exposure to risk.

Fannie and Freddie own or guarantee about half of all mortgages in the United States. Along with other federal agencies, they played some part in almost 90 percent of new mortgages over the past year.

Comments

Liberty_One 3 years, 2 months ago

Getaroom (anonymous) says…

"Go on now, keep telling yourselves that there is no African DNA in your gene pool."

Why would I care if there was no African DNA in my gene pool?

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Getaroom 3 years, 2 months ago

NO, Shewmon, Baby Brush never gets off the hook, he was planted in his seat by The Supreme Court and not by the registered voters. I think they added a little bit of BIG BUSINESS fertilizer just for good measure. One needs look further on the subject of financial failure than good old Capitalist Greed, individuals who have lived too long with over extended credit and the The Supreme Court (procreating/messing with nature again) by turning corporations into individuals, which in turn supports the buying of politicians who make laws and rules to the BIG BUSINESS's liking. And through the fog of convenient amnesia during that debate, let us not forget the unfettered Savings and Loans failure after deregulation under the watchful eye of.... Name that Republican Hero__?
Ever lost your financial pants TS?
And fine examples of Corporate take over of BIG GOV. are: BIG HEALTH INSURANCE and BIG PHARMA that you also love to let romp unfettered in the field of the "Free Market". TS, when you, Liberty(don't mess with Texas) and the Popless Snappy let us all know you have given up your rights to Medicare and Social Security and publicly displayed your birth certificates(no copies please) then you can make it up however you want. Get a room and hash out how you want to share running your own country, buy it(private money of course), and let us know if you have any of those nasty Socialist Interstate Highways or Anchor Babies we need to avoid. Remember that when you electrify that border fence, you must remember to build your own coal fired power plant. When you say you want your country back the way it was and your Bible like Constitution, just how far back are you willing to go? Can you see the African Continent from the front porch where you have your Tea Parties? Go on now, keep telling yourselves that there is no African DNA in your gene pool. Take heart though in knowing that when you are your own gods you can make everyone in your own likenesses. By the way, do you have your papers in order comrades? Better, 'cause Baby Brush's favorite reality show, Home Land Security is on the way....... Or do you prefer Obama's private army of brown shirt ruffians checking to make sure you bought Health Insurance. Wouldn't want those "death squads" knocking on your door now, or would you.....? Drink your cool aide and go nite-nite cause it's time to count the lemmings as they/you go to the BIG WATERS. Don't forget to count your selves now and sleep tight...........glug glug glug..........

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Tom Shewmon 3 years, 2 months ago

So is GWB exonerated now from the accusations from the hysterical left leading up to the 2008 election? Seems like an after-the-fact admission from Mr. O's adm.

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Liberty_One 3 years, 2 months ago

just_another_bozo_on_this_bus (anonymous) replies…

"But the fact remains that almost all of the liar loans originated with private lenders, not Fannie or Freddie,"

Very true, but why would all the banks suddenly become so stupid at the same time? Why would all these professional lenders, who very survival depends upon making sound lending decisions, make all these terrible loans? It's call moral hazard--the government promised to save the banks when things went wrong, and it did bail out the banks. If you are promised that no matter how stupid and greedy you are, the government will always save you, is it any wonder that this happened?

If we had free market banking, banks that took such foolish risks would be punished and go out of business. Knowing this, they would never have made all those loans in the first place. You can blame greed all you want, but if left alone, greed is held in check by market forces. When the government promises to save the greedy from themselves, there is no check and the bad decisions run rampant.

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sr80 3 years, 2 months ago

they will only change the names to frick and frack,sounds legit to me.

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BigPrune 3 years, 2 months ago

But if Fannie and Freddie disappear, what will Chris Dodd and Barthney Frank do for perks for themselves and their friends and lovers?

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CorkyHundley 3 years, 2 months ago

Social Security, Government 'backed' mortgages, Medicare, Medicaid, Stimulus, cash for clunkers, welfare, food stamps, Battery cars, windy spinners and Wizard Trains (Wizard- PC for Bullet)....I can hardly wait for government run Hawaiian Dudecare.

Life is going to be at 'least' as good as it is in Egypt.

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Richard Heckler 3 years, 2 months ago

This should alarm smart people far more than the national debt:

Still Banking on Fraud | Dollars & Sense

Reforms Fail to address the “control fraud” that caused the financial crisis. By William K. Black

A truly amazing thing has happened in banking. After the worst financial crisis in 75 years sparked the “Great Recession,” we have

* Failed to identify the real causes of the crisis
* Failed to fix the defects that caused the crisis
* Failed to hold the CEOs, professionals, and anti-regulators who caused the crisis accountable—even when they committed fraud
* Bailed out the largest and worst financial firms with massive public funds
* Covered up banking losses and failures—impairing any economic recovery
* Degraded our integrity and made the banking system even more encouraging of fraud
* Refused to follow policies that have proved extremely successful in past crises
* Made the systemically dangerous megabanks even more dangerous
* Made our financial system even more parasitic, harming the real economy

And pronounced this travesty a brilliant success http://www.dollarsandsense.org/archives/2011/0111black.html

Face it Bank of America,Goldman Sachs and CitiBank should be subject to an FBI investigation and Grand Jury probe over the home loan scandal.

Bring on the FBI and the Grand Jury!!!

What to do? Your money is your vote!

Move Your Money - To local institutions and do your community a large favor.

A database to assist those wishing to move their money out of big banks that took taxpayer money and used it to pay themselves large bonuses:

http://moveyourmoneyproject.org/

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jmadison 3 years, 2 months ago

These two agencies were major culprits in the bubble that caused the financial panic of 2008 and subsequent downturn. For years, these agencies were safe places for the politically connected to receive outlandish salaries while their party was out of power, i.e. Rahm Emanuel, Jamie Gorelick, Franklin Raines, all dems, and Robert Zoellick and John Buckley, both repubs. These agencies have been bilking the taxpayers for years. As many things in Washington, an agency is presented as the answer to some social ill, and is perverted to line the pockets of the politicians. In addition to the big banks fleecing their customers, then being bailed out by their friends in government, these two agencies were complicit in the fleecing of the taxpayers. I believe that Franklin Raines, a former chief of OMB in the federal government, received over $90 million in remuneration from Fannie Mae. Good riddance to both agencies--if in fact it happens.

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