Replies to post #801845 on Fannie Mae-No Politics (FNMA)

[Viking61]

Amen brother Guido!

[DaJester]

No flack, but I'd disagree on this one Guido. The difference is with Covid, it was seen as temporary and people could begin to get income/jobs back to cover the mortgage that they could afford before the pandemic. In 2008, there was no light at the end of the tunnel. The lower adjustable rate ARM were not possible to get back, so there was no path to resuming or affording the current or future mortgage payment. The jump in interest rate and/or balloon payments coming due could not have been solved with forbearance.

[DCBill]

We will never know, but remember the poorly underwritten, bad mortgage loans (many brokered), were created by the banks, not the GSEs, put into Private Lable Securities (PLS), backed by the banks, inaccurately/falsely rated by Moody's and others, and heavily marketed around the world, suggesting--wrongly--they were doing what the GSE did successfully.
F&F's real losses were minimal and importantly, they had market access for their securities (debt and MBS).
But, they were politically poisoned, not business failures.
Historically noting, no other financial service companies in that era were forced into "Conservatorship," where the two remain.

[jog49]

"There would probably have been no need for the conservatorship and the need to buy all the bad loans held by TBTF banks."

But Hanky Panky Paulson, former head of Goldman Sachs, had ulterior motives and could easily sell his wishes to the bird brain George Bush without much effort. Thus, the "fall" of Fannie Mae and Freddie Mac.