Fannie Mae and Freddie Mac as Villains

Repetition of facts is always essential if proper perspective is to be retained despite faulty media memory.

 Fannie Mae and its related Freddie Mac are private companies which had been blessed with special government backing. The Democrat party in power took them under its wings as a special means of helping the “poor” and minorities. It also became a device to “overcome” so-called red-lining, where minorities allegedly could not get loans because banks "unfairly" turned them down for credit. Fannie Mae and Freddie Mac helped out.

 

Hundreds of billions of dollars were soon involved. Influential politicians had friendly execs employed, with incentives to augment the gigantic volume of systemic mortgage growth and guarantees.

Over the years many observers noted the accumulated danger but the ensconced  Congressional influence, exemplified by then representative Barney Frank, pooh-poohed any attempt at reducing the growing risks to the entire mortgage system.

We know now about the subprime debacle as the banks attempted to cope with the toxic assets that has resulted from being fed Fannie Mae and Freddie Mac fare. Blame has been placed on the shoulders of the bankers by the politicians who were actually responsible.

We get more of the same, regulation with ex-representative’s Frank’s name attached to it: Dodd-Frank legislation. You can expect more of the same fiasco resulting unless cooler heads prevail in correcting the Dodd-Frank Act that does not prevent credit bubbles but helps enhance them.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewHole tweets.)