"The dominant role Fannie and Freddie play today is no accident. The companies, Wall Street, mortgage bankers, real estate agents, and Washington lawmakers have built up an unusual and mutually beneficial codependency, helped along by extensive lobbying efforts and campaign contributions."
Guess where ALL THIS $$$ came from!!!!
I am becoming more and more convinced by Ron Paul and the like; there is nothing government does but screw things up.
Today's exhibit A:
"Fannie, Freddie critics say crisis was building; Washington had insulated them" by Julie Creswell, New York Times News Service | July 13, 2008
NEW YORK - As the Bush administration scrambles to address the sudden decline of the country's two largest mortgage finance companies, some of their longtime critics say the crisis has been building for years.
Among them is Jim Leach, a Republican former representative from Iowa, who argued in Congress that the government-chartered mortgage companies,
They were not subject to the same financial standards and tax burdens as their competitors, he had warned, and if they ran into trouble, an implicit government guarantee to back them up meant taxpayers would be left with the losses.
Congress established Fannie Mae during the New Deal to make homes more affordable for lower- and middle-income Americans, and Freddie Mac was established later with a similar purpose. Neither provides home loans. Instead, the companies buy mortgages from banks and take on the risks of possible defaults - allowing banks to make even more mortgages.
Today they own or guarantee about half of the country's $12 trillion in mortgage debt, so the free fall of their share prices last week amid concerns that they were undercapitalized has sent Wall Street and Washington into a tizzy. The dominant role Fannie and Freddie play today is no accident. The companies, Wall Street, mortgage bankers, real estate agents, and Washington lawmakers have built up an unusual and mutually beneficial codependency, helped along by extensive lobbying efforts and campaign contributions.
In Washington, Fannie Mae's and Freddie Mac's sprawling lobbying machine hired family and friends of politicians in their efforts to sideline quickly any regulations that might slow their growth or invite greater oversight of their business practices. Their rapid expansion was, at least in part, the result of such artful lobbying over the years.
And as Fannie and Freddie grew, so did the fortunes of Wall Street, which reaped rich fees from issuing debt for the two companies, as well as the mortgage and housing industries, which banked billions of dollars as the housing market boomed.
Even after accounting scandals arose at the two companies a few years ago, attempts to push through stronger oversight were stymied because few politicians, particularly Democrats, wanted to be perceived as hindering the American dream of homeownership for the masses.
Bush's vision.
Lots of perks came with Fannie and Freddie's charters and government backing: exemptions from state and federal taxes, relatively meager capital reserve requirements, and an ability to borrow money at rock-bottom rates.
And yet they are still broke -- and the TAXPAYER rides to the rescue again!
James A. Johnson, a longtime member of the Washington establishment who previously worked as a campaign adviser to Walter F. Mondale, former vice president, ran Fannie for most of the 1990s.
Bert Ely, a banking consultant in Arlington, Va., and longtime critic of the companies:
"[Freddie soon copied Fannie's playbook]. Jim Johnson was the architect of Fannie's lobbying strategy. He was the muscle guy, if you will. The guy who would walk the halls of Congress."
Keep that name in mind for later, please.
Johnson could not be reached for comment. Fannie Mae executives declined to comment; Freddie Mac executives did not respond to an interview request.
An early and, for some analysts, seminal attempt to overhaul regulation of Fannie Mae and Freddie Mac occurred in the early 1990s, when the country was still licking its wounds from the savings and loan debacle.
As legislators debated who would regulate the companies and what sort of capital cushions should be established for the entities, the two firms enlisted a bipartisan mix of Washington insiders to represent them.
For example, Fannie Mae hired John Buckley, the former director of communications at the National Republican Congressional Committee and deputy press secretary to the Reagan-Bush campaign in 1984, while Freddie Mac retained Mitchell Delk, the former chief lobbyist for the Securities and Exchange Commission.
They also hired members of top Washington law firms and former White House officials, like Kenneth M. Duberstein, who served as Ronald Reagan's chief of staff. The outcome of the regulatory tussle in the early 1990s did little to change things.
Later on, Johnson ramped up the influence of the Fannie Mae Foundation, the company's charitable arm, by doling out money to thousands of nonprofit groups. (Johnson was compelled to step down as the head of Senator Barack Obama's vice-presidential search team last month after he was criticized for receiving mortgages on favorable terms from
Change we can believe in, 'eh? Pfffffft!
Fannie Mae and Freddie Mac also forged alliances with various interest groups, including affordable-housing advocates who previously criticized the companies for not doing enough for low- and middle-income homeowners.
Leach later accused Fannie Mae and Freddie Mac of effectively buying off activist groups by making charitable contributions to them.
That is with YOUR TAX MONEY, folks! PAYING BRIBES to the "charities!"
By providing much-needed grant money to the nonprofit groups, it made it hard for them to criticize the mortgage titans.
Jonathan GS Koppell, an associate professor at the Yale School of Management:
"Likewise, there were another set of entities, essentially a huge industry, that profits from every additional loan that Fannie or Freddie can buy. The more loans they purchase, the more business there is for them and so they're willing to work with the enterprises."
Fannie also opened up what it called Partnership Offices. They were billed as regional oversight offices for housing projects financed by Fannie. In reality, critics, including the Department of Housing and Urban Development, said they were used primarily to influence Congress by providing local politicians and business leaders with ample ribbon-cutting ceremonies and photo opportunities.
Are you as angry as I am, readers?
The offices were often run by and populated with former congressional staff members. Several of those offices were staffed by family members of legislators, said Joshua Rosner, an analyst at Graham-Fisher in New York."
It is just ONE BIG PIG TROUGH down there, isn't it?
