A former housing staffer of sen. Shelby confirms the real truth about GSEs!
I found something VERY interesting, please read it till the end. A former man from gov confirms the truth we spread here. Maybe someone should contact him.
So I read the comments about Wallisons book on amazon :
Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis and Why It Could Happen Again
And I found one VERY, VERY interesting comment under name Mark Calabria. First who is this man? You can google it :
CATO Institue
Mark A. Calabria, is director of financial regulation studies at the Cato Institute. Before joining Cato in 2009, he spent six years as a member of the senior professional staff of the U.S. Senate Committee on Banking, Housing and Urban Affairs. In that position, Calabria handled issues related to housing, mortgage finance, economics, banking and insurance for Ranking Member Richard Shelby (R-AL).
Worked for sen. Shelby?Remember Shelby? He was against Johnson Crapo.
Interesting? It gets better. This is guotation from his comment about the book :
First some disclosure, I handled mortgage finance (among other issues) as staff for Senate Banking Committee between 2001 and 2009. Also worked at HUD in the office that oversees mortgage market regulation, as well as spending a number of years working at real estate related trade associations. Been researching financial and mortgage markets for 20 years. So sure a little baggage.
I do think Wallison too easily dismisses other drivers of the crisis, such as easy monetary policy, but his general points are well proven. Those points are: 1) there were a lot more toxic loans in the system than generally believed; 2) government entities (FHA, GSEs) held far greater amounts of those toxic loans than generally believed; and 3) Fannie/Freddie purchased much of those toxic loans due to their housing goals, not as a drive for greater market share.
Having been closely involved in or monitoring GSE oversight since about 2001, here are some of my own recollections. As a staffer on the Senate Banking Committee when HUD proposed to increase the housing goals in 2004, I was extensively lobbied by Fannie and Freddie on the goals. Whether they can be believed or not, at the time, both claimed that the proposed goals would endanger their business and result in substantial losses. I would characterize the GSE attitude toward the goals in 2004 as one of near-panic (not that the GSEs were immune to exaggeration). I also recall a meeting with Freddie CEO Dick Syron (either in 2006 or 2007) in which he claimed the goals were killing the company and that he needed political cover to improve lending standards.
I also recall countless meetings with housing advocates beginning in at least 2001 in which the argument was presented that the GSEs should be pushed into subprime in order to “clean up” that market.
I made a phone call to the GSEs’ then-regulator OFEHO in 2003 asking what all the “other” was in the reports of GSE purchase of mortgage-related securities. Imagine my surprise when told “other” was subprime private label securities. Perhaps more shocking was when this senior OFHEO executive told me what a great thing it was, as it was providing liquidity to the subprime market. Not only was the GSEs’ safety and soundness regulator aware the GSEs were driving subprime, this same regulator thought it was “great.” So yes private label securities were a big part of crisis, but fact is that Fannie/Freddie were driving that market; their own regulator confirmed such to me and expressed support for such.
There were a lot of contributors to the financial crisis. One of those was the role Fannie Mae and Freddie Mac. While the extent of that role can be debated, what I saw first hand before the crisis was 1) a broad Washington consensus that the GSEs should drive the subprime market and 2) the GSEs were not trying to drive that market but rather policymakers were nudging them in that direction
AI
