Fannie Mae-No Politics (FNMA)

[HappyAlways]

Let’s Privatize All the Profits and Socialize All the Losses - by Senator Hensarling

I find it difficult to understand the low standard of the Congressman. We need to share the true information to the public.

1. Fannie and Freddie did not cause the housing crisis. Bad mortgage loans with 30% default rate from TBTF banks was the main cause. Fannie and Freddie were required by government policy to accept a fixed % of high risk subprime loans. The TBTF banks simply took advantage of the bad policy. [BTW, Low-income Family Support is a good policy at first. But, they simply pushed it too far a few years later.]
2. The GSE model is proven for decades and extremely cost efficient (0.125% overhead by my estimation). Replacing them will imply 1-1.5% higher mortgage interest rate to millions of US households and no more 30-year fixed rate mortgage loans.
3. The GSEs did not need the bailout. The bailout in 2008 was a buy-time to bailout the TBTF banks. George Bush told the public in 2008 that 'there is no bailout. The temp measure is to calm some nerves. Fannie & Freddie are private companies and will be returned to their shareholders".
4. The GSEs are counter-cyclical.
5. Many people and retirement funds invest in Fannie & Freddie at $60~$80 for a stable income. You can't call them greedy.
6. Net Worth Sweep is clearly an illegal taking of private property and unconstitutional. Do we still respect private property right ?

Some may intend to kick Fannie & Freddie out and eat their lunch free, now that all the risks are gone for the next 10 years ? It is simply too high risk to allow the TBTF banks to participate in the secondary mortgage market, and it is unfair to the smaller mortgage lenders. ICBA should watch out. IMO & GLTA.