Fannie Mae-No Politics (FNMA)

[Rodney5]

Paulson said it best himself, when he told the Financial Crisis Inquiry Commission, “[Fannie and Freddie], more than anyone, were the engine we needed to get through the problem.” Treasury needed Fannie and Freddie to help keep the financial system afloat, and it simply took them, under pretense of a rescue.

The Federal Reserve’s program purchased MBS issued by the GSEs. Putting aside toxic or not the Treasury / Federal Reserve freely admitted the GSE's were used to help prop up the housing market.

The Writer of the White Paper

These two items are “Purchases of Loans Held for Sale” and “Purchases of Available-for-Sale Securities.” In millions, the outflows were $109,684 and $165,103, respectively. Part of the $165,103 outflow was due to “advances to lenders.” Without these outflows, Fannie Mae would have not had a deficit in its 2009 cash position. It is also important to note that during 2009 and 2010, Fannie Mae continued to purchase loans from originating institutions that exceeded the sale of mortgage backed securities (MBS). For Fannie Mae, 2009 was an anomaly as the Treasury created a significant outflow of cash resources into the accounts of private investment bankers who had liquidity problems and were able to sell their toxic mortgages to Fannie Mae as ordered by the Treasury. Page 6