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The " wealth-redistribution/fund your fiscally irresponsible neighbor's mortgage program" rolls on......
The Treasury said on Dec. 24 it would provide an unlimited amount of assistance to the companies as needed for the next three years to alleviate market concern that the government lifeline for Fannie Mae and Freddie Mac, the largest source of money for U.S. home loans, could lapse or be exhausted.
Lax regulation of Fannie Mae and Freddie Mac led to the mortgage companies taking on too many risky loans, Wallison said.
“It turns out it was impossible to regulate them,” he said. “They were too powerful.” He said no one knows how much will be needed to keep the companies solvent.
*****************************************************
Barney Frank helped create the problem
Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.
Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess."
*******************************************************
Still, by making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress, infuriating Republicans on Capitol Hill.
The Treasury Department gave Fannie and Freddie a bigger lifeline "without any involvement, notice (or) dialogue with Congress," says Rep. Scott Garrett, R-N.J., a member of the House Financial Services committee, who called Wednesday for an investigation into the actions.
Fannie Mae was born in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government created a rival, Freddie Mac.
After the housing market started to unravel in 2006, mortgage defaults soared, and the companies' losses mounted. By summer 2008, the companies weren't able to raise money, and their shares plunged.
The Bush administration's hand was forced. It wound up taking over the pair a week before the collapse of investment bank Lehman Brothers.
The government now has a 79.9 percent stake in each company, the maximum amount possible to still keep the companies off the federal budget.
http://wotnews.com/news/Fannie_Mae/
The Treasury said on Dec. 24 it would provide an unlimited amount of assistance to the companies as needed for the next three years to alleviate market concern that the government lifeline for Fannie Mae and Freddie Mac, the largest source of money for U.S. home loans, could lapse or be exhausted.
Lax regulation of Fannie Mae and Freddie Mac led to the mortgage companies taking on too many risky loans, Wallison said.
“It turns out it was impossible to regulate them,” he said. “They were too powerful.” He said no one knows how much will be needed to keep the companies solvent.
*****************************************************
Barney Frank helped create the problem
Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.
Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess."
*******************************************************
Still, by making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress, infuriating Republicans on Capitol Hill.
The Treasury Department gave Fannie and Freddie a bigger lifeline "without any involvement, notice (or) dialogue with Congress," says Rep. Scott Garrett, R-N.J., a member of the House Financial Services committee, who called Wednesday for an investigation into the actions.
Fannie Mae was born in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government created a rival, Freddie Mac.
After the housing market started to unravel in 2006, mortgage defaults soared, and the companies' losses mounted. By summer 2008, the companies weren't able to raise money, and their shares plunged.
The Bush administration's hand was forced. It wound up taking over the pair a week before the collapse of investment bank Lehman Brothers.
The government now has a 79.9 percent stake in each company, the maximum amount possible to still keep the companies off the federal budget.
http://wotnews.com/news/Fannie_Mae/
