Fannie Mae-No Politics (FNMA)

[mike_usa]

Jennifer Barber on July 9, 2014 at 2:56 am on

http://timhoward717.com/2014/07/08/looking-through-the-fog/#comments

I would love to read a column that, in very simple terms, provided the key events in this struggle: the government mandates that caused the collapse of Fannie and Freddie, the terms of the conservatorship that the shareholders’ interests would be protected, and then how once the government gains control, it breaks the terms of the conservatorship and steals all the shareholders interest they had just promised to protect.

I think this backdrop of key events is helpful in understanding the duplicity and corruption that is now taking place. To gain public support for shareholders, the public needs to understand that the government mantra that Fannie and Freddie’s collapse was their own fault–the greed of big business, needs to be corrected. They should recognize that it was the government mandates that Fannie and Freddy “make more risky loans”, and as a result “61 percent of Freddie’s loans purchased in those years were of mortgages to statistically uncreditworthy borrowers”. Arthur Brooks clarifies this in The Battle, but I have not seen this kind of clarity in a major news article.

Once it is understood that the government clearly created the problem, it is then incredibly duplicitous for the government to blame Fannie and Freddie for having managed the companies poorly, and then make government look the savior. Furthermore, to establish a conservatorship, and clearly outline the terms that it would protect shareholder’s rights, while at the same time plotting to keep all future profits once they gain government control, is bone chilling.

Before these series of events, I couldn’t imagine a business being forced to give credit to those that aren’t credit worthy, then go into default as a result, only to borrow money to regain solvency, pay all the money back, and yet be told that the government can keep all future profits because the company would not have survived without the governments help. It’s really quite incredible!

Thank you once again for all your diligence in keeping everyone informed!