Skip to comments.White House, Senators Back Deal to Do Away with Fannie Mae, Freddie Mac
Posted on 03/14/2014 10:14:53 AM PDT by SeekAndFind
It could be the end for bailed-out mortgage giants Fannie Mae and Freddie Mac as we know them, if recent bipartisan support for their elimination means anything.
U.S. Senator Tim Johnson (D-S.D.), chairman of the Senate Banking Committee, unveiled a proposed agreement with ranking member Sen. Mike Crapo (R-ID) on Tuesday that would wind down the government-sponsored enterprises over the course of 5 years.
The legislation builds on an earlier bill by Sens. Bob Corker (R-TN) and Mark Warner (D-VA) which would replace the two companies long a linchpin of the U.S. mortgage-finance system and locus of voter anger in recent elections with a single executive-level agency called the Federal Mortgage Insurance Corporation (FMIC).
In a statement, Johnson hailed near unanimous agreement between the two parties in the effort to overhaul a critical piece of the secondary mortgage market. This bipartisan effort will provide the market the certainty it needs, while preserving fair and affordable housing throughout the country, he added.
The Bush administration placed the two quasi-private mortgage giants into federal conservatorship at the height of the financial crisis in 2008, bailing out the companies with nearly $200 billion in taxpayer funds that the GSEs continue to repay.
Bloomberg News reports that Fannie Mae and Freddie Mac will have remitted $202.9 billion in dividends back to the federal government by the end of March, with another nearly $180 billion to come over the next 10 years.
However, that was before the Senate Banking Committee and White House came out on Tuesday in overwhelming support of a bill that would mean their elimination.
The Los Angeles Times quoted a White House spokesperson as saying the Obama administration support[s] this effort and believe[s] it is a workable bipartisan approach to complete the biggest remaining piece of post-recession financial reform
(Excerpt) Read more at ivn.us ...
One wonders how the Feds ever got involved in real estate in the first place. Elimination is a good idea, but merely the very beginning of all the Fed programs that never should have been imagined.
The GOP should have owned this issue five years ago.
Instead, the GOP has fiddle-farted around, making themselves look like clueless rubes in front of the banking community.
Every single solder should gay marry his brother or father or friend before he goes off to war, just in case.
The Rats bled it dry. Remember who are on the boards there. They are all Clintonistas. Time to get rid of the evidence before 2016.
Yes, it is that obvious.
When I heard the news there was bi-partisan support to disband Fannie/Freddie, I thought to myself: 'that's good, but it is strange that all the central planners, leftists, progressives, so-called compassionate conservatives, etc... in Washington would give up the power and money involved in manipulating such a huge part of the US economy."
Now I see they have no intent to give it up at all.
They aren't eliminating it. They are just replacing the two of them with ONE single program. What they are ELIMINATING is the DEBT the two still owe.
And behind the scenes they will be crafting something much bigger and more expensive.
They should have been sold off in manageable pieces 8 years ago. I dealt with Fannie and Freddie for 30 years as a mortgage loan underwriter and a mortgage broker. There was a time when Fannie and Freddie were known to be vanilla lenders. They only took the good stuff. Underwriters knew it and thats what we would tell the unhappy loan originators who had sent in a hinky loan hoping we would approve it for Fannie. Then the politicians got involved. They encouraged, coerced, forced whatever you want to call it subprime loans on a prime lender.
IF we are going to have federal involvement in mortgages. Far better to provide mortgage insurance instead of the loan. Better still would be a Federal insurance program that backs up the individual State’s insurance program, that in turn, backs up local private insurers.
Private insurers would pay a certain percentage into the state fund and would be the first line payer in the event of a mortgage failure. Payments by the state to the private mortgage insurer would be based on the % of mortgage failures and would only cover the amount of money actually lost - meaning limited to the difference between the sell price of the property in foreclosure and the cost of the loan, minus payments (note using payments here, not principle payments) already received.
The State program would then be an insurance pool (protected from general expenditure by the state) and it would in turn pay a percentage to the Feds for their protection. The state would not be in the direct mortgage insurance business but rather would pay some amount to the private insurers after a certain percentage of their customers defaulted on their loans. Moneys collected would be held in some highly liquid (say 30 day), low risk, low interest, commercial instrument (money markets??)
The last stop on this chain would be the Federal government which would pool and protect from general spending, the payments received from the states. Once a state’s insurance pool was depleted to a certain point, the Feds would start paying some percentage to the state’s insurance pool.
Key to this is that NO ONE, not the mortgage lender, not the insurance company and not the state would be protected 100%. No one is going to get all of their money back. The idea is to tide the company / state over until things turn around.
Franklin Raines, Jim Jones, and Jaime Gorelick (of the Clinton Era CIA/FBI information wall directive pre-9/11).......
All made multi-millionaires by these two quasi-government organizations. They should be arraigned, tried, convicted and executed for the trouble they caused us.
They don’t need GSE’s (gov’t sponsored enterprises) anymore b/c they succeeded in taking control of the Banks.
Or at least pushing their way into a spot at the table for control of the Banks (next to the NWO types: IMF, Rothschilds, etc).
Another boondoggle and or scam. Going to replace 2 agencies with 1 new one. Just get out of the mortgage business, period. Whatever the government touches turns to another huge disaster.