Fannie Mae-No Politics (FNMA)

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Delaware Bay's Hindes on Fannie Mae and Freddie Mac: "THE
MYTH OF PRIVATE GAINS AND PUBLIC LOSSES (Turns out the
opposite is
true.)"
PR Newswire
8:00 AM ET

If you repeat a lie often enough, lots of people will end
up believing it. As Joseph Goebbels, the German
Government's Minister of Propaganda and Public Enlightenment
advised during the Nazi era, "when one lies, one should lie
big, and stick to it." And thanks to the internet, the
number of times a lie can be repeated and spread around the
world has increased exponentially, making it even more
believable to the masses. As an example, consider Fannie
Mae and Freddie Mac (hereinafter, the "GSEs" or "the
twins"). Even though it has been disproven, many people
have been snookered into believing that they caused the 2008
financial crisis. Pure bunk.1 (Or as Joe Biden would put
it, "malarkey".)

There has also been a
constant drumbeat out of Washington that the two mortgage
insurers had been operating under a "broken business model"
of "private gains and public losses." Unfortunately, with
few exceptions, this shibboleth has also been accepted
pretty much without question by numerous journalists (think
the Wall Street Journal editorial page), as well as
politicians, most notably, U.S. Sens. Bob Corker (R-TN);
Mark Warner (D-VA); U.S. Rep. Ed Royce (R-CA), and, sadly,
even President Obama himself.

Except it
isn't true.

As I explained last month2,
the so-called "bailout" of Fannie Mae and Freddie Mac during
the financial crisis of 2008 was anything but: it was
actually a "stick-up". Using the then-raging financial
crisis as cover,3 Treasury Secretary Henry Paulson put into
effect a carefully-crafted and highly-confidential plan to
nationalize the two companies without compensating their
owners. Contrary to widespread belief, it was hardly a
"fog-of-war" decision; it was meticulously pre-planned. And
there can be no doubt that President George W. Bush was
himself in on the scheme.4 (Link to full article:
http://delawarebayllc.com/images/The_Myth_of_Private_Gains_an
_Public_Losses.pdf

1 "We conclude that
these two entities contributed to the crisis, but were not a
primary cause. Importantly, GSE securities essentially
maintained their value throughout the crisis and did not
contribute to the significant financial firm losses that
were central to the financial crisis." Report of the
Financial Crisis Inquiry Commission (at page xxvi). See
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd
1&cad=rja&uact=8&ved=0ahUKEwib-IL3g7rOAhXmIcAKHW0EAx4QFgggMAA
url=https%3A%2F%2Ffcic-static.law.stanford.edu%2Fcdn_media%2F
cic-reports%2Ffcic_final_report_conclusions.pdf&usg=AFQjCNELz
qgbHant83M5fXhV7IRCYQ1Zw

2 HINDESight,
August 4, 2016
http://delawarebayllc.com/images/Physician,_Heal_Thyself.pdf


3 As then-U.S. Rep. (currently mayor of
Chicago) Rahm Emanuel put it at the time, "you never let a
serious crisis go to waste. And what I mean by that (is)
it's an opportunity to do things you think you could not do
before."

4 "'Do they know it's coming,
Hank?' President Bush asked me. 'Mr. President,' I said,
'we're going to move quickly and take them by surprise. The
first sound they'll hear is their heads hitting the floor'."
Henry M. Paulson Jr: On the Brink (C) 2010 Hachette Book
Group, excerpted at
http://abcnews.go.com/GMA/Books/book-excerpt-brink-henry-paul
on-jr/story?id=9713451. To his credit, the President may
not have known the full extent of what Paulson and the
Treasury Department had in mind, for he also reports that
Bush's final words were "we have to make clear that what we
are doing now is transitory, because otherwise it looks like
nationalization." (Emphasis added.)

To
view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/delaware-bays-h
ndes-on-fannie-mae-and-freddie-mac-the-myth-of-private-gains-
nd-public-losses-turns-out-the-opposite-is-true-300321645.htm


SOURCE The Delaware Bay Company, LLC