Free Republic

The Acorn scandal, in which amateur journalists posing as a prostitute and a pimp went seeking a mortgage for a house of prostitution and received advice on how to evade the law, is a fitting new chapter in the controversial history of the advocacy group. Acorn found its way into the mortgage business through the Community Reinvestment Act, the 1977 legislation that community groups have used as a cudgel to force lenders to lower their mortgage underwriting standards in order to make more loans in low-income communities. Often the groups, after making protests under CRA, were then rewarded by banks...

As a people we need, at all times, the encouragement of home ownership. HERBERT HOOVER, 1932The idea that home ownership confers special benefits on American society is deeply embedded in our culture—so much so that our national tax policy confers a special benefit of its own on it. Home ownership is granted an advantage over all other forms of ownership in the form of an enormous deduction on the interest payments most individuals incur in financing their homes. Nothing else in the tax code comes anywhere near that deduction in scope or size. We have decided, as a nation, that home...

It really is amazing how predictable an inevitable disaster is to see. The housing bubble created by Congress, the spike in fuel prices created by Congress (now going for a second go round), massive deficit spending again by Congress and the effect yet to be experienced by printing money, i.e. inflation. The failure of the auto company bailouts is now unfolding, they were supposed to prevent bankruptcy and didn’t and now the inevitable tossing of good money after bad in the vain attempt to save the unions, I mean the car companies. In the examples I listed above, Congress through...

LETTER: Bush raised red flags about Fannie and FreddieMarch 14, 2009 6:00 AM Bush raised red flags about Fannie and Freddie In its editorial, "Protect homeowners: It's job No. 1 for Congress" (March 8), The Standard-Times proclaimed that Rep. Barney Frank has been a victim of unfair criticism and that he was actually among the voices "warning that disaster loomed" at government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Having an entirely different recollection of the facts, I did a little digging. Here is what I found. Starting with the 2002 budget request in April 2001, the Bush administration raised...

Congressional Democrats Bankrupted the Nation *snip* The End In April 2001, before the events of 9/11 and just after entering the White House, President Bush began signaling warnings to members of congress that both Fannie and Freddie were headed into deep treacherous waters which could cause “strong repercussions in financial markets.” In early 2003, the Bush White House upgraded its warnings to “a systemic risk that could extend well beyond just the housing markets.” On September 10, 2003, Bush Treasury Secretary John Snow testified in congress that something had to be done to confront the growing storm at Fannie and...

Government-Sponsored Enterprises (GSEs): An Institutional Overview is one of thousands of documents recently made available on WikiLeaks. A veritable myriad of Congressional Research Service documents offer startling glimpses into the scale and scope of government intrusion in the free markets. Why Did Congress Create GSEs? GSEs were not created for the purpose of expanding home ownership by lower- and middle-income members of the public. Rather, Congress established GSEs "to improve the efficiency of capital markets" and to overcome "statutory and other market imperfections which otherwise prevent funds from moving easily from suppliers of funds to areas of high loan...

WASHINGTON (Reuters) – Four men who led mortgage finance giants Fannie Mae and (FNM.P) Freddie Mac (FRE.P) were called before a U.S. House of Representatives panel on Tuesday and chided for making irresponsible loans that fueled a housing crisis and helped push the economy into recession. "The CEOs of Fannie and Freddie made reckless bets that led to the downfall of their companies. Their actions could cost taxpayers hundreds of billions of dollars," House Oversight and Government Reform Committee Chairman Rep. Henry Waxman said. The committee reviewed over 400,000 documents, many that passed through the hands of Daniel Mudd, the...

Why did the mortgage market melt down so badly? Why were there so many defaults when the economy was not particularly weak? Why were the securities based upon these mortgages not considered anywhere as risky as they actually turned out to be? This report concludes that, in an attempt to increase home ownership, particularly by minorities and the less affluent, virtually every branch of the government undertook an attack on underwriting standards starting in the early 1990s. Regulators, academic specialists, GSEs, and housing activists universally praised the decline in mortgage-underwriting standards as an “innovation” in mortgage lending. This weakening of...

The government takeover of Fannie Mae and Freddie Mac was necessary because of their massive losses on more than $1 trillion of subprime and Alt-A investments, almost all of which were added to their single-family book of business between 2005 and 2007. The most plausible explanation for the sudden adoption of this disastrous course--disastrous for them and for the U.S. financial markets--is their desire to continue to retain the support of Congress after their accounting scandals in 2003 and 2004 and the challenges to their business model that ensued. Although the strategy worked--Congress did not adopt strong government-sponsored enterprise (GSE)...

Washington, DC- Congressman Barney Frank today made the following statement after reading press reports of Federal Reserve Bank of St. Louis President William Poole on the Government Sponsored Enterprises (GSE): "I am disappointed to read press reports of Mr. Poole's comments questioning the very existence of the GSEs. It is clear from his comments today that there is a lack of understanding of the importance of the GSEs to affordable housing and mortgage markets. I hope we can work together to strengthen and reform the GSEs so that their core mission is not compromised, and we can ensure that affordable...

The Honorable George W. Bush Presidenot f the United States The White House Washington,D C 20050 Dear Mr. President: We urge you to reconsider your Administration's criticisms of the housing-related government sponsored enterprises (the "GSEs") and instead work with Congress to strengthen the mission and oversight of the GSEs. We write as members of the House of Representatives who continually press the GSEs to do more in affordable housing. Until recently, we have been disappointed that the Administration has not been more supportive of our efforts to press the GSEs to do more. We have been concerned that the Administration's...

Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis in 2004. Republicans try to regulate fannie mae and freddie mac without success.

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems. 2001 April: The Administration's FY02 budget declares that...

The taxpayer tab for the GSEs will be big, just as the GOP VP candidate said. THE CONGRESSIONAL BUDGET OFFICE and the derivatives markets Tuesday confirmed what Republican Vice Presidential nominee Sarah Palin said over the weekend: Fannie Mae and Freddie Mac pose a substantial burden for taxpayers. Pedants on lefty blogs jumped on the Palin's statement, arguing the government sponsored enterprises aren't taxpayer funded but are stockholder owned. That may have been technically the case before the Treasury bailout plan was officially announced Sunday, but the die had been cast for an effective nationalization of the GSEs by Friday...

WASHINGTON (Reuters) – The U.S. government on Sunday seized control of mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N), in what could be the biggest federal bailout in U.S. history in a bid to support the U.S. housing market and ward off more global financial market turbulence. "Our economy and our markets will not recover until the bulk of this housing correction is behind us," U.S. Treasury Secretary Henry Paulson said at a news conference. "Fannie Mae and Freddie Mac are critical to turning the corner on housing." The two companies, publicly traded but also serving a government...

The Wall Street Journal has posted (and we republish below) an extraordinary series of editorials that, since 2002, have doggedly exposed the financial and intellectual rot that is now washing across America in the form of Fannie Mae and Freddie Mac; you could find no better primer on the origins of the crisis we face: Paulson’s Fannie Test 07/15/08 – Does Hank Paulson want to leave the U.S. financial system better than he found it? That’s his test in the wake of his commitment to use taxpayer money to rescue Fannie Mae and Freddie Mac.Fannie Mae Ugly 07/12/08 – Investors...

U.S. Senator Chuck Hagel issued the following statement today in favor of the Senate housing package. This legislation includes the creation of a new independent regulator for Government Sponsored Enterprise’s (GSEs) Fannie Mae and Freddie Mac. Hagel’s legislation was originally introduced in 2003: “This legislation will create a strong new independent regulator for Fannie Mae, Freddie Mac and the Federal Home Loan Banks and provide refinancing assistance for troubled homeowners. “Fannie Mae and Freddie Mac own or guarantee over $5 trillion in mortgages which the taxpayer could be liable for if either were to fail. Fannie and Freddie have faced...

Federal Reserve Chairman Ben Bernanke, in a speech this morning in Orlando, FL on "Reducing Preventable Mortgage Foreclosures," reportedly urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting, according to mainstream media reports. That's one way to look at it, but it actually misses the entire point of his speech. In the speech Bernanke outlines the grim path ahead for individuals besieged by declining home values and rising mortgage payment resets. This year about 1.5 million loans, representing more than 40 percent of the outstanding stock of subprime Adjustable Rate Mortgages, are scheduled to reset....

They don't know it, but taxpayers stand to lose billions as the housing bubble bursts. And in a bipartisan effort to "do something" to save the housing market, President Bush and the Democratic Congress appear set to put taxpayers on the hook for billions more. .... Some saw this coming, including presidential candidate Ron Paul. As far back as 2002, Mr. Paul - whose candidacy I'm not actively supporting - predicted the Federal Reserve would blow up the housing bubble. ....... Another Paul prediction, that Fannie and Freddie will go bust, forcing a taxpayer bailout, remains controversial because few think...

NEW YORK, Aug 10 (Reuters) - Banks reaching for the Federal Reserve's liquidity lifeline Friday offered only "agency" mortgage-backed securities as collateral, reflecting what could be increasing disfavor for these investments. In its biggest such move by the Fed since the days after Sept. 11, 2001, the central bank on Friday pumped $38 billion in cash into the banking system via three-day loans known as repurchase agreements or repos. As guarantee for repayment, banks could have also offered as collateral U.S. Treasuries or corporate agency debt of thegovernment-chartered housing finance companies Fannie Mae and Freddie Mac. But they nixed those...

NEW YORK (MarketWatch) -- Fannie Mae said Thursday it's uncovered new accounting problems in the course of an ongoing review, with the mortgage giant identifying more than $10 billion in issues related to derivatives, insurance accounting and other matters.In a filing with the Securities and Exchange Commission, the Washington-based company (FNM:Fannie Mae), which has previously said it will restate several past periods of financial results, now expects that its 2005 annual financial report won't be completed before the second half of 2006.Fannie also said the New York Stock Exchange is reviewing the company's listing since it's been unable to file...

Privatize Fannie and Freddie Government reformers need to look toward the markets. By Mallory Factor Two centuries ago, Thomas Jefferson argued that private property was the touchstone of American democracy. If he were alive today I am sure he would still be making that argument, because the idea is just as valuable now as it was then. And so I don’t hesitate to argue, in the spirit of Jefferson, that Congress today is jeopardizing the American Dream. What are they doing to contravene the wishes of our third president? Confronted by a real problem related to the semi-governmental status of...

WASHINGTON, D.C. - As director of the U.S. Office of Federal Housing Enterprise Oversight, Armando Falcon took on the once untouchable mortgage finance giants, Fannie Mae and Freddie Mac. His efforts ultimately led to higher standards for risk management and the dismissals or retirements--depending on whom you ask--of top suits at both companies. On Falcon's watch, Fannie and Freddie's fancy accounting footwork was exposed, encouraging some in Congress to try to limit the powers of these government-sponsored enterprises. But Falcon, who resigned in April and now helps institutional investors understand the policy world of Washington from his perch atop Canonbury...

It’s a familiar story. An enormous company reveals its “accounting problems.” The problems are found to be far worse than anyone realized. The CEO is forced to resign. Other high-ranking executives follow. The stock price begins to drop. Billions of dollars might be lost. The politically savvy CEO even has direct connections to a presidential administration. If the word “Enron” has formed in your mind, you’d be close, but wrong. Welcome to Fannie Mae, the nation’s second-largest financial company.

White House warns of GSE risks Fannie, Freddie enjoy perception of backing, Mankiw saysBy Matt Andrejczak, CBS.MarketWatch.com Last Update: 4:50 PM ET Nov. 6, 2003 WASHINGTON (CBS.MW) - The notion that the U.S. government would bail out Fannie Mae and Freddie Mac if they ran into financial trouble "creates a source of systemic risk for our financial system," a top White House economic adviser warned Thursday. Fannie Mae (FNM: news, chart, profile) and Freddie Mac(FRE: news, chart, profile), government-sponsored enterprises created by Congress to help fund home mortgages, enjoy special privileges, such as lines of credit with the Treasury Department....

Freddie director confident restatement out in Nov Reuters, 10.16.03, 2:08 PM ET WASHINGTON, Oct 16 (Reuters) - A director of embattled mortgage finance company Freddie Mac (nyse: FRE - news - people) said on Thursday an earnings restatement, which was delayed from the end of last month, is likely to be complete in November. "I am quite confident that it will be November," Freddie Mac board of directors member George Gould said at a Senate Banking Committee hearing. An accounting scandal at Freddie Mac rattled investors in June. The company said it underreported earnings between 2000-2002 by $4.5 billion or...

DJ Freddie Regulator: Detected Acctg Problems In '01 >FRE . By Dawn Kopecki Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Freddie Mac's (FRE) federal regulator told lawmakers Thursday that the company's accounting problems have been brewing for several years, and it questioned Freddie's competence in that area when it tried to implement complicated derivatives rules in early 2001. The Office of Federal Housing Enterprise Oversight flagged problems with Freddie's 2000 and 2001 consolidated financial statements which were also noted by Freddie's auditor Arthur Andersen in an internal letter to senior managers. Outgoing OFHEO Director Armando Falcon told the Senate Banking Committee...

<p>Martha Stewart is a too-easy target, an overstuffed pink pinata swinging in the wind, waiting to be thwacked by every last critic of capitalist excess. But the stock-dumping doyenne is no match for the real mother of all brewing financial scandals. That moniker belongs to the twin behemoths Fannie Mae and Freddie Mac.</p>

<p>On Wall Street, Freddie Mac's new chief executive, Gregory Parseghian, won quick praise as a financial pro who can restore credibility to the shaken mortgage behemoth.</p> <p>But it may well be in Washington, D.C., where the fate of Mr. Parseghian -- and of Freddie Mac -- is ultimately decided.</p>