This article excerpt is from 2003 NY Times. 2003, people!!! Hindsight is 20/20 but in this situation it seems that foresight was just as accurate. We simply failed to do enough about it (republicans and democrats alike). And notice which side of the fence the parties were on in 2003...
Read the article. Or my brief excerpt...
"The plan is an acknowledgment by the [Bush] administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates... Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies...''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,''...''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' Mr. Oxley added...Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department...Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis (emphasis added),'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'""
Whew! Good thing that in the name of affordable housing we didn't limit their ability to extend trillions of dollars in credit to people that couldn't afford it. That could have turned out poorly. Good thinking, Barney Frank. (My apologies if my dripping sarcasm is making a mess all over your computer.) Ironically, today, all of those who need affordable housing are suffering with rising costs on food, gas, and housing.
Friday, September 26, 2008
5 years ago this month.
Posted by Jules at 6:00 AM
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3 comments:
Fascinating article! I read the whole thing and it is so infuriating that I think I'm glad the bailout failed today. I don't know enough about the details and implications, but I know right principles and dishonesty and socialism aren't on the list.
This is an eye-opener. Since there wasn't a melt-down going on at the time, and since financial news in general, and Freddie Mac and Fannie Mae in particular, were fairly yawn-producing topics for most of us back then, it sounds like we really went to sleep and dropped the ball on appropriate oversight and regulation. And as for CA Mom's point about it maybe being a good thing that the bailout didn't just sail through Congress, it made me think more about it, too. And in thinking that the bailout is proposed and pushed by the same people (on both sides) that brought us the crisis in the first place, it does make one wonder why their plan now should be such a good thing to do.
I agree with the Mom and the Dad. Bailout... because they shouldn't have given out a few trillion of those loans in the first place.
I remember in the years in between then and now, knowing people that bought WAY beyond their means, wondering how in the heck they could get approved for such a loan... and now recently it all comes to light and I can finally understand.
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