Fannie Mae-No Politics (FNMA)

[955]

The effect on F&F was devastating:

We conclude the failures of credit rating agencies were essential cogs in the
wheel of financial destruction. The three credit rating agencies were key enablers of
the financial meltdown. The mortgage-related securities at the heart of the crisis
could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened
without the rating agencies. Their ratings helped the market soar and their downgrades through 2007 and 2008 wreaked havoc across markets and firms.
In our report, you will read about the breakdowns at Moody’s, examined by the
Commission as a case study. From 2000 to 2007, Moody’s rated nearly 45,000
mortgage-related securities as triple-A. This compares with six private-sector companies in the United States that carried this coveted rating in early 2010. In 2006
alone, Moody’s put its triple-A stamp of approval on 30 mortgage-related securities
every working day. The results were disastrous: 83% of the mortgage securities rated
triple-A that year ultimately were downgraded.
You will also read about the forces at work behind the breakdowns at Moody’s, including the flawed computer models, the pressure from financial firms that paid for
the ratings, the relentless drive for market share, the lack of resources to do the job
despite record profits, and the absence of meaningful public oversight. And you will
see that without the active participation of the rating agencies, the market for mortgage-related securities could not have been what it became.

SOURCE: p. xxv, FCIC Report, http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

Oh, I see.

Don't forget that HUD also increased F&F's requirement to buy sub-prime loans in 2004 because "they were falling behind the private lenders" (paraphrasing). I don't think that hurt F&F much, comparatively, because even the sub-prime loans F&F backed looked like AAA prime compared to the stinking liar loans coming from the likes of WaMu.

Quote:
HUD, under collusion between government and banks to take down F&F, places FHA & F&F in direct competition with each other, banks with assistance of credit rating agencies (Moody's et al) flood housing market with bad NTM's,