Fannie Mae-No Politics (FNMA)

[big-yank]

It is illegal to steal from anyone, whether couched in the form of a law and whether directed against a private company or anyone else. I certainly agree on that point. But that is not what transpired.

You and I and others can argue forever over whether Fannie or Freddie were mismanaged which somehow led to the crisis in 2008. From my perspective, I actually think FnF did a pretty good job with the mess they got handed.

There was a political initiative to provide mortgage backing to less qualified home buyers. The amount of these loans was inconsequential in comparison to the subprime, jumbo and PLM default issues that transpired. Maybe, like, $10B? Such an initiative remains part of the DC landscape and was, I believe, the primary reason for Chuck Schumer withdrawing his support for Crapo's shutdown bill.

My final point is that Fannie does not originate loans. They do not approve the risk profile of the borrower. They simply buy the bank paper, repackage it as government-guaranteed MBS and sell them as investment instruments which most closely resemble T-Bills. It would be a huge stretch to claim that the government forced Fannie to accept risky loans. In fact, much of the legal settlement stuff, since, has been the government suing banks for misportrayal of the quality of the paper dumped off on FNMA as something it really was not. The issue may be fraud... I can't really say... but it was not fraud initiated by the government, IMO.

This is my last post for today.