This one had me laughing all day… until I read that the Feds loaned them $85b instead of just $75b.
Fannie and Freddie were quasi government/private entities, now of course they are fully government owned. AIG, fighting to survive at this very moment, is under assault partly because of losses related to Fannie/Freddie. It’s important to understand that it is precisely because of government using the financial markets as a tool for social agendas that we are in this mess that we are in. Greed plays a part in all of this, but capitalism itself is founded on self-interest driving markets, so I fail to see how you can indict greed in the absence of fraud without also throwing under the bus the very ideology that the U.S. has prospered under for over 230 years.
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Furthermore, the involvement of government in financing entities leads to a host of unwelcome and destructive political processes, like using these entities as political appointment favors, none more egregious that Master of Disaster Jamie Gorelick, who knew bubkus about financial markets before landing a plum vice chairman seat on Fannie’s Board of Directors, along with Clinton pal Franklin Raines. Gorelick’s paycheck for her part in ruining Fannie, $27 million. BTW, Gorelick is also Duke University’s civil counsel and advised the university through the bogus lacrosse rape case… seriously, it’s not overstating things to suggest disaster follows this woman around wherever she goes.
UPDATE: More on political malfeasance in the credit markets. It’s really too bad that some of these politicians can’t be held civilly liable for the damages that they have brought on.
Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.
My only purpose in pointing this out is to high something very interesting that they did, which I also think is a great idea. In addition to making available the final version, Clear also posted the redlined version and a third version that includes additional commentary about what the changes mean. Posting the redlines is very cool because it makes you a “fly on the wall” to the edit process that occurred up until the final version. Very cool.
BTW, in addition to using your Clear card at airports, you can now use it to jump to the front of the line at Atlanta Falcon and San Francisco 49er home games.