Over Sunday, the federal government took over the government-backed mortgage giants Fannie Mae and Freddie Mac, which were running out of money due to their massive investment in defaulting (and subprime) mortgage loans, and their unusually thin capitalization (Fannie and Freddie are capitalized much more thinly than private lenders are required to be, which enabled their managers and shareholders to get rich off of high margins in good times, then stick the taxpayer with the tab in bad times, like now).
As their looming insolvency became blazingly obvious, even their long-time apologists, like Steven Pearlstein of the Washington Post, now admit that they were gambling with taxpayers money. Changing his tune, Pearlstein now admits that “a good chunk of the responsibility should be assigned to elected politicians,” who ”encouraged the jump into the subprime market by imposing more ambitious ‘affordable housing’ goals on the companies.” Federal obsessions with “affordable housing” and “diversity” did indeed play an important role in causing the mortgage meltdown which now threatens our economy.
We earlier wrote about how Fannie Mae executives engaged in fraud and bullying on a grand scale.
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[...] loans to irresponsible people with bad credit (as some longtime supporters of federal meddling now admit). addthis_url = [...]
[...] Taxpayers are now in the process of bailing out the “Government-Sponsored Enterprises” — the mortgage giants Fannie Mae & Freddie Mac — to the tune of tens of billions of dollars. The GSEs have long received subsidies that cost taxpayers perhaps $10 billion per year. As their very name suggests, the GSEs, which were created by the federal government, did not originate in the private sector. And federal oversight of these entities, far from curbing their gambling at taxpayer expense, actually promoted it, by justifying purchases of risky mortgages as promoting “affordable housing” and “diversity,” as even some supporters of a broad federal role in housing now concede. [...]
[...] mortgage lending is not exactly an unregulated, free market. Just a few days ago, Pearlstein himself admitted in his column that federal affordable-housing mandates deserved a “good chunk of the [...]
[...] the free market and an alleged lack of regulation. And journalists who recently (and belatedly) admitted the role of federal affordable housing mandates in causing the mortgage crisis, like the W… against its critics, are now back to their long-time role of cheerleading for more federal [...]
[...] the risky practices of the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which helped spawn the mortgage crisis. Liberal Congressional leaders turned a deaf ear to his pleas for reform, blocking reform [...]
[...] a former director of the failed government-backed mortgage giant Freddie Mac, which had to be bailed out by taxpayers. It’s perhaps not surprising, given that Obama was the second-largest recipient of campaign [...]