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Pressured to take more risk, Fannie hit a tipping point
The New York Times ^ | Oct 5, 2008 | Charles Duhigg

Posted on 10/05/2008 5:34:42 AM PDT by pennboricua

A decision, made under pressure from Congress and investors, to steer Fannie Mae into dangerous corners of the mortgage market proved to be disastrous.

(Excerpt) Read more at nytimes.com ...


TOPICS: Front Page News; News/Current Events; Politics/Elections
KEYWORDS: debt; demron; fannie; fanniemae; mortgage; socialengineering
Hopes Sarah reads this article brings it up next and the other articles from years back pointing out the house of cards that was freedie and fannie
1 posted on 10/05/2008 5:34:42 AM PDT by pennboricua
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To: pennboricua
Here is a great quote from the article:

“I’m not worried about Fannie and Freddie’s health, I’m worried that they won’t do enough to help out the economy,” the chairman of the House Financial Services Committee, Barney Frank, Democrat of Massachusetts, said at the time. “That’s why I’ve supported them all these years — so that they can help at a time like this.”

Barney (Rubble) Frank needs to be perp-walked
2 posted on 10/05/2008 5:46:10 AM PDT by Xth Legion (Peace is a great alternative, after you've won!)
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To: pennboricua
One economist I heard in a radio interview stated that in 2006, HUD set a target that 52% of mortgages must be for borrowers who were below the median income level.

With respect to the “greed” charge that is the current meme, he asked a simple question: if greed could be satisfied by lending to this segment of the population, why would HUD have to force banks to write the business??

This question destroys the greed charge. “Wall Street” financial institutions were up-stream, so to speak, on the flow of mortgage paper from the firms that sold the mortgages to the homeowner. When several government agencies and the Treasury department themselves were all scoring market participants on what percent of their total loans went to targeted economic groups, how is it “greed” when these businesses figure out efficient ways to handle the deals and make money off them??

Economist and professor Donald Boudreaux wrote a delightful comeback to this charge on the Cafe Hayek blog:

“Saying that “greed” caused today's problems is like saying that gravity caused the death of someone pushed from the top floor of the Empire State building. Some things are sufficiently constant in human affairs - and self-interest, even greed, is among them - that they explain nothing.”

see:
http://cafehayek.typepad.com/

3 posted on 10/05/2008 5:47:17 AM PDT by theBuckwheat
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To: pennboricua

The Timeline Project / Link List of Bailout History
http://www.freerepublic.com/focus/f-bloggers/2093845/posts


4 posted on 10/05/2008 5:48:18 AM PDT by Arthur Wildfire! March (BO Change is BS Change. A big Zero Change to help Ayers and Raines.)
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To: pennboricua

Adding this to the Timeline Project. FRegards ....


5 posted on 10/05/2008 5:48:53 AM PDT by Arthur Wildfire! March (BO Change is BS Change. A big Zero Change to help Ayers and Raines.)
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To: syriacus
We need to work to counteract the media's default position...that this is a Republican scandal.

Republicans need to (casually) refer to this as

The DEMron Scandal

The Democrats will object of course....but the truth needs to be spread in a simple, yet memorable, way.

Let Barney Frank sputter in indignation.

Democrats betrayed the public trust.

We don't want them to continue to run our economy into the ground.

We need real change.

6 posted on 10/05/2008 5:49:21 AM PDT by syriacus (At the intersection of Congress and Fannie Mae .... you will find the DEMron Scandal.)
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To: pennboricua
This article COMPLETELY whitewashes the Dem malfeasance by burying it deep in the article after giving the initial impression that all the bad stuff happened from 2004 onward. Prime example - third paragraph:

But by the time Mr. Mudd became Fannie’s chief executive in 2004, his company was under siege. Competitors were snatching lucrative parts of its business. Congress [GOP at the time, eh? - dirboy] was demanding that Mr. Mudd help steer more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought a bigger chunk of their riskiest loans.

What about the role of Franklin Raines? Why, initially, he seems like a miracle worker, from his initial mention in paragraph 13:

Just two decades earlier, Fannie had been on the brink of bankruptcy. But chief executives like Franklin D. Raines and the chief financial officer J. Timothy Howard built it into a financial juggernaut by aiming at new markets.

You have go DEEP into the article to get the details that show the Dem role here. You have to click on the web version to go to page 2, and I imagine in the print edition, the Dem malfeasance comes after the Page A1 copy. The accounting fraud is mentioned (but not quantified at $10 billion). Barney Frank is mentioned well after the halfway point of the article.

This is CLASSIC NY Times positional reporting.

7 posted on 10/05/2008 5:49:22 AM PDT by dirtboy
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To: pennboricua

I remember reading a great business book by Jim Collins called “Good To Great”. It talked about the principles, philosophy, leadership and approach that the “Great Companies” all seemed to make, distinguishing themselves from other “good companies”. I can’t remember his criteria for selecting “Great” companies (I don’t have my copy handy) but it was a reflection of the stock appreciation, return on equity, etc. etc.

In his book, there were only some 11 companies (out of the 500 some companies that I think he screened) that he considered having made the leap from Good to Great. Any Fannie Mae was among them. Looking at Amazon.com, I note that the book was first published in 2001. I’m not sure if that was the original First Edition or a follow-up hardcover.

But I remember that Fannie Mae’s “hedgehog concept” was to be a full capital markets player (as good as any other) and to develop its unique capability to assess risk in mortgage related securities. That latter point was what they were “The Best In The World” at. And the thing that drives their economic engine was “Profit Per Mortgage Risk Level”.

I don’t know if Collins has written about “whatever became of Fannie Mae” or not (he also had Wells Fargo among his “Good To Great” companies) but it would be fascinating to hear. And I sense that Barney Frank and Congress can and should be blamed for pushing this once “great” compnay (according to Collins) over the edge and turning it into the Black Hole that may have sucked down our entire financial system.

Professor Collins, if you’re smart enough to be reading this blog: now there’s a project for you!


8 posted on 10/05/2008 5:50:29 AM PDT by ReleaseTheHounds ("The demagogue is one who preaches doctrines he knows to be untrue to men he knows to be idiots.")
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To: TigersEye; MeekOneGOP; floriduh voter; loboinok; snippy_about_it; null and void; ovrtaxt

This is the Change we need!

New York Times Not Fish Wrap for a ‘Change’.


9 posted on 10/05/2008 5:54:16 AM PDT by Arthur Wildfire! March (BO Change is BS Change. A big Zero Change to help Ayers and Raines.)
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To: Xth Legion
Here is a great quote from the article:

And how deep in the article is that quote buried? And there is no mention that the White House proposed reforms for Fannie and that Barney Frank blocked those reforms.

10 posted on 10/05/2008 5:54:34 AM PDT by dirtboy
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To: pennboricua

Ah...for a minute there I though this in the NYT. Must be early...coffee time.


11 posted on 10/05/2008 5:56:10 AM PDT by Islander7 (The only thing Obama has to fear is the truth!)
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To: dirtboy

I believe this article like the ayers article gives the ammo to Gov. Palin to make the bailout issue the issue from here on, the Times have published articles from the 1990s pointing out what just happened and it was the dem leadership that refused to take measures to prevent what just happened from happening.
If the economy is the issue from now on then the rats and culprits have to be pointed out, I wish on her next campaign speech they would play all the You Tube videos of the Dems, from the meeting with the Congresional Black Caucus, to the oversight committees under Franks and Dobbs,
on a giant screen prior to her starting talking.
She can get move this back to the front pages and directly into the American mind, those that have not totally closed it anyways.


12 posted on 10/05/2008 5:59:38 AM PDT by pennboricua
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To: dirtboy
I agree completely with your take on the article. There were only 3 references to Raines: 1) he turned the company into an conomic juggernaut between 1998-2004; he resigned promptly in 2004 when accountants started looking into the books - with a take home pay of $90 in those 6 years; he is now living a lavish lifestyle and improving his golf game (next to last paragraph).

The NYT has identified the fall guys Democrats will focus on: Daniel Mudd, who took over in 2004 and is portrayed in this article as a know nothing, incompetent pansy completely out of his league and Angelo Mozilo of Countrywide, who it is claimed by anonymous sources (of course) that he pressured and threatened Mudd into taking on toxic loans from Countrywide or else Countrywide was not going to do any more business with Fannie M.

As dirtboy wrote, the article does mention Democrats' involvement in exhorting Fannie M. to take on more high risk mortgages, but you have to get to page 3 to read about that and even then, it's portrayed as Democrats just trying to help out the little guy.

My advice to Mudd and Mozilo - INCOMING MISSILES LASER GUIDED TOWARD YOU. Better sign on some good attorneys - maybe F. Lee Levin is available because you're going to be starting right up Waxman's nostrils in a couple of months.

13 posted on 10/05/2008 6:00:25 AM PDT by randita (Keep our own FR safe - stop the DBV's (Drive By Vanities).)
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To: pennboricua
I believe this article like the ayers article gives the ammo to Gov. Palin to make the bailout issue the issue from here on, the Times have published articles from the 1990s pointing out what just happened and it was the dem leadership that refused to take measures to prevent what just happened from happening.

Show me where the article gets after the Dem leadership. This is a whitewash, pure and simple, just as the Slimes also whitewashed the Obama/Ayers relationship.

14 posted on 10/05/2008 6:04:40 AM PDT by dirtboy
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To: dirtboy

that they did, and you know that it is currently in more MSM than it was pryor to Gov. Palin making an issue of that article, I believe in whitewashing the fiasco in this article it opens the door for Sarah to point out more aggresively what they left out.


15 posted on 10/05/2008 6:08:46 AM PDT by pennboricua
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To: ReleaseTheHounds; syriacus
The Demron Scandal

Turning Fannie Mae into the Black Hole that may have sucked down our entire financial system.

This must be the "change" Obama was talking about as he took a position of leadership while representing ACORN as a community organizer, ahem (and lawyer).

16 posted on 10/05/2008 6:10:22 AM PDT by ROCKLOBSTER (RATs...nothing more than Bald Haired Hippies!)
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To: pennboricua
http://www.nbc.com/Saturday_Night_Live/video/clips/c-span-bailout/727521/

Follow this link, contributed by someone on an unfortunately locked thread, for the best summation I've seen. From a somewhat unexpected source.

17 posted on 10/05/2008 6:14:02 AM PDT by SamuraiScot
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To: pennboricua

Cleverly papering over bad paper (legislation) papering over bad paper (subprime mortgages)

And so it goes...the machinations of criminals, their accomplices, their sycophants, their propagandists.

Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, FREE CREDIT, and so on, and so on. All these plans as a whole — with their common aim of legal plunder — constitute socialism. - “The Law” - Frederic Bastiat (CAPS MINE)

No investigation, no root cause determined, no criminals prosecuted. Neat, tidy, done. See, hear, speak no evil.


18 posted on 10/05/2008 6:23:59 AM PDT by PGalt
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To: dirtboy
You're EXACTLY right. What a bunch of BS! The article tries to blame it all on Bush and make Fraklin Raines out to be some sort of hero. Disgusting!
19 posted on 10/05/2008 6:28:23 AM PDT by libertylover (The problem with Obama is not that his skin is too black, it's that his ideas are too RED.)
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To: theBuckwheat
“Saying that “greed” caused today's problems is like saying that gravity caused the death of someone pushed from the top floor of the Empire State building. Some things are sufficiently constant in human affairs - and self-interest, even greed, is among them - that they explain nothing.”

Wonderful quote! I'm going to write to the blog and see if they'll let me cite it in a letter I am writing to my (Catholic) pastor, who gave a Respect Life Sunday homily that essentially said abortion wasn't that crucial an issue, greed under the current political leadership had led us to a situation where people weren't "being taken care of" by the government and thus we weren't expressing "pro-life attitudes," and Catholics had to vote for "change." This, of course, was his way of saying what he didn't dare come out and say, which was that Catholics should vote for Obama.

It won't do much good, but I'm writing a letter to the pastor and the bishop (who unfortunately shares his opinions), and sending a copy to the appropriate NCCB office.

I am sick and tired of this "greed" theme that, as the writer said, is a constant and explains absolutely nothing in itself.

20 posted on 10/05/2008 6:52:35 AM PDT by livius
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To: pennboricua

It appears there were no risks too great.


21 posted on 10/05/2008 7:43:45 AM PDT by AIC
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To: pennboricua; All
Don't understand why the MSM is now reporting this? Well, I was reading over the transcript from the VP debate and I thought I heard Biden say something that was off. Well here it is:

No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it's their capital gains tax, their income tax, investment tax, any tax. And 95 percent of the people in the United States of America making less than $150,000 will get a tax break.

. (emphasis mine)I think "say it ain't so Joe" said this to now give cover to Obama when he starts to change his tax plan closer to the election. I don't think it was a gaffe since no one included this in the 14 or so mistakes he made.

22 posted on 10/05/2008 7:44:33 AM PDT by bobsunshine
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To: dirtboy

Also the article tries to paint it as Freddy/Fannie being pressured equally to buy risky loans by both the Congress AND Wall Street. The proof? Mean phone calls from Wall Street types and a meeting where Mozilo told Mudd Freddy/Fannie would become irrelevant if it didn’t. Meanwhile the Democrats were “demanding” the same thing. The question is which is more persuasive — words spoken by Wall Street or demands issued by Democrats, the latter being backed up by the power to investigate and harass.


23 posted on 10/05/2008 8:26:31 AM PDT by Yardstick
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To: pennboricua

bttt


24 posted on 10/05/2008 4:13:10 PM PDT by neverdem (I'm praying for a Divine Intervention.)
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To: theBuckwheat
...if greed could be satisfied by lending to this segment of the population, why would HUD have to force banks to write the business??

Because the "greed" wasn't in the banks...

Follow the money...

25 posted on 10/06/2008 8:22:43 AM PDT by GOPJ (If Sarah was friends with Timothy McVeigh, would the MSM give her an "Ayers pass"?)
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