Fannie Mae and Freddie Mac Should Be Cut Down and Cut Loose

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should seak there own end ,not bailed out!
when do you reward bad busness pratices,

harry ross of PA 4:08PM August 23, 2008

It is notoriously suspect that the Subprime Lending and Stock Trading Scam on the American People was shrewdly pulled off by crooked lobbies working in collusion with the Bush, Reid, and Pelosi Government, who systematically allowed control to be taken away from the regulatory Office of Federal Housing Enterprise Oversight over the government buyers of "conforming" housing loans, Fannie Mae and Freddie Mac.
Criminal investigations leading to heavy fines, long prison sentences, and a full recovery of the assets stolen from the America People are imperative, to sustain honest government; rather that the proposed ruinous inflationary government bail-outs so desperately proposed by Podhoretz Neo-Con Bush.

Jeugenen of MA 8:37PM July 23, 2008

Bill, are you still a Fannie/Fred lobbyist? Blame it on Wall Street is such an easy (but incomplete) explanation, however quite popular. Heck I guess we live in a populist culture, so I do not blame you. If indeed you're not a lobbyist now, I suggest you go back to work, you certainly know how to posture, especially given an overall ignorant public and clueless Congress. Wall Street was one factor in this mess. Big government and the FED are ultimately to blame, as is nearly every macro economic issue. One can pick an Enron or Bear Stearns out of thousands of private companies, but I can list hundreds of failed government programs, initiatives, sponsors, subsidies, grants, bailouts and loans, moreover other market tinkering that measures in the trillions of even our week dollar. Dissolving Fannie/Freddie is the answer, I do not believe every American is entitled to affordable housing, sounds cruel, I know.

Mike of PA 2:48PM July 23, 2008

As some readers of "Doom" (and my own blog) know, I was Fannie's chief lobbyist before I retired several years ago.
Little of what I write may change readers minds, but it is important for you to have your facts straight, if you want to restructure the nation;s mortgage finance system and do away with F/F as we know them (a move I think is unnecessary and undesirable).
The GSEs current leadership--and the much more successful crews which preceded them, did not chose the companies' "housing mission," structure and charter benefits. Those were chosen for them when Congress first privatized Fannie in 1970, really just kicked it out fo government so that Lyndon Johnson could save $235 million dollar.
The reason Fannie (and later Freddie) was extended benefits of no state or local income taxes (they both pay full local real estate and federal income taxes), a line of credit from the Treasury (and incredibly miniscule $2.25 billion), and--but no longer--exemption from SEC registration, etc. was because they were designed as "monoline" companies which were required to be in ALL markets at all times, providing the liquidity for local residential real estate finance to operate smoothly, no matter what local or regional borrowing conditions may be.
Banks and thrifts can--and do--leave markets all the time. If you are charged by law with maintaining a secondary mortgage market for US mortgages, that's your one business, which can't be put aside when times get bad. Congress decided that the companies needed those tools to achieve what Congress wanted and what, indeed, Fannie and Freddie have helped produce, a nation of home owners which increasingly over the years included large numbers of minority families and those with lower incomes.
Before anyone breathes "subprime," bite your tongue.
That mess was brought to you by Wall Street, their mortgage broker networks, hedge funds, and "private label" securities (meaning non-Fannie and Freddie), which packaged crappy loans into even crappier high yielding securities not employing the GSEs or their existing underwriting.
Most of the carnage you seen now is flowing from those decisions, NOT from anything F/F produced.
Just be careful as you look for scapegoats and prepare to fail back on the large commercial banks to make your residential real estate market, if there is no F or F, banks will abandon the mortgage market in a "New York minute" (what does that mean?),
when things get tough and with it will go consistent pricing and standardization.
If you think I am stereotyping and dismissing banks, I would ask you where did they go (and where are they still) in the "jumbo mortgage market," that piece of mortgage finance in which F/F by law could not operate?
That "illiquidity" is just now being addresses by an emergency fix to the GSEs charter which will let them buy higher balance mortgages, since the banks refused unless paid a 100 basis points or more premium.

Bill Maloni of MD 9:01PM July 21, 2008