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Bush tried to regulate Freddie/Frannie in 2003

Discussion in 'Uncategorized Threads' started by Brian in Oregon, Sep 25, 2008.

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  1. Brian in Oregon

    Brian in Oregon Well-Known Member

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    Deplorable Bitter Clinger in Liberal La La Land
    Well well well....<br>
    <br>
    http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&scp=1&sq=%22barney+frank%22&st=nyt<br>
    <br>
    New Agency Proposed to Oversee Freddie Mac and Fannie Mae<br>
    <br>
    By STEPHEN LABATON<br>
    Published: September 11, 2003<br>
    <br>
    The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.<br>
    <br>
    Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.<br>
    <br>
    The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.<br>
    <br>
    The plan is an acknowledgment by the 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.<br>
    <br>
    ''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.<br>
    <br>
    Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.<br>
    <br>
    The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.<br>
    <br>
    The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.<br>
    <br>
    After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.<br>
    <br>
    ''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.<br>
    <br>
    ''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.<br>
    <br>
    The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.<br>
    <br>
    At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.<br>
    <br>
    Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.<br>
    <br>
    After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.<br>
    <br>
    ''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.<br>
    <br>
    Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.<br>
    <br>
    Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''<br>
    <br>
    The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.<br>
    <br>
    Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.<br>
    <br>
    ''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''<br>
    <br>
    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.<br>
    <br>
    ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' 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.''<br>
    <br>
    Representative Melvin L. Watt, Democrat of North Carolina, agreed.<br>
    <br>
    ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
     
  2. halfmile

    halfmile Well-Known Member

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    The pukes ain't gonna like this.

    Some economics writers were decrying the overload of debt(all kinds) on our society as much as ten years ago.

    I happened to agree with them. Got shouted down most of the time.

    Now that the baby is out...........

    HM
     
  3. grnberetcj

    grnberetcj Active Member

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    Bush and his cronies should have fired them....but they didn't! Now that a failure of leadership!

    Curt
     
  4. grnberetcj

    grnberetcj Active Member

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    Brian...

    Here's some more info on this subject...Fox News.

    Curt
     
  5. Paladin

    Paladin Well-Known Member

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    Up, for a good thread.
     
  6. Paladin

    Paladin Well-Known Member

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    Why didn't the liberals do anything about it in the last two years?? They proposed nothing, nothing!! For two years, their priority was a further reaching assault weapons ban,,and pork barrel spending. 8% approval says it all.
     
  7. bocephus

    bocephus Member

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    Paladin don't forget the lightbulb legislation they worked so hard on....
     
  8. Paladin

    Paladin Well-Known Member

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    Oh yes,,the light bulb legislation.


    How many liberals does it take to screw in a light bulb?


    It doesn't matter. They won't see the light anyway.
     
  9. The Rock

    The Rock Active Member

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    Like daddy always said "don't argue with a crazy person" 2str8 you are right.

    Rock

    Jim
     
  10. bocephus

    bocephus Member

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    Legislation that is bad for our country needs to be blocked....
     
  11. Tripod

    Tripod Well-Known Member

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    Iowa man!!
    2str8 you are indeed ignorant about this subject. As usual you quote the libbie doctrine and its always wrong.
     
  12. Dahaub

    Dahaub Active Member

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    Well we all have fingers to point with don't we? The facts of the matter are that there was nothing done when the regulations of Freddieand Fannie needed to be tightened up. Now the next president and the next group of legislatures will have to deal with all this mess won't they? I wonder if they have put the stops to the bundleing up of billions in loans and selling them to the highest bidder? I would like the legislatures to have had more time to look into the need for bailing out the largest group of thieves ever to hornswaggle America. It reminds me of an old joke about a fella at a tobbacco auction. He was being trained by an older gentelman to be a buyer of quality tobbacco leaves. At the first batch up for sale the auctioneer wanted 10 cents a pound to start with and the old man bid him 2 cents. The kid asked him why he bid only two and the old man said "well that auctioneer is a purty good ole boy but he always wants more than the product is worth. I know he said 10 cents but he meant to say 8 cents and he really wanted 6 cents and he needed 4 cents so I bid him two to keep him honest." I just hope that this isn't some kind of a scam for billions and a political ploy to keep GW's thieving buddies in the chips. I am tired of hearing what is going to happen to America if the money isn't put up. We have to take America back and put her care in the hands of those that don't have one hand held out for payment. The 700 billion represents about 400 thousand dollars for each voting age American. Figure that one out. There isn't that much money on loan out there and that's what we have to have to bail out the thieves???????????Bullshit!!!!!!!!! Dan
     
  13. Paladin

    Paladin Well-Known Member

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    2stupid,


    Your 8% approval congress has not authored any positive legislation. What they have authored is pork barrel spending and a further reaching assault weapons ban. They get an 8% approval because they are failures. Open your eyes.
     
  14. stokinpls

    stokinpls Well-Known Member

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    This was a Slick Willie Improvised Explosive Device set to go off before the 2008 elections.




    If you click on the link below, it will take you to a New York Times Article from September 30, 1999 that outlines Fannie Mae's plan to ease credit underwriting standards and make more loans to so-called subprime borrowers, bowing to pressure from the White House. The article even mentions the risks that this new strategy might lead to a government rescue similar to the S&L crisis of the 1980's.

    http://query.nytimes.com/gst/fullpage.HTML?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1

    Here's the sad fact: the NY Times predicted our current crisis of today, 2008, in 1999. If only Washington had listened then.




    --------------------------------------------------------------------------------

    September 30, 1999

    Fannie Mae Eases Credit To Aid Mortgage Lending
    By STEVEN A. HOLMES

    In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

    The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

    Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

    In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

    ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

    Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

    In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

    ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

    Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

    Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

    Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

    Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

    In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

    Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

    In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

    The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.



    ยท Copyright 2008 The New York Times Company
     
  15. grnberetcj

    grnberetcj Active Member

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    WAFI.

    Curt
     
  16. pendennis

    pendennis Well-Known Member

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    2str8 - Each time you post comments in the future, I will retrieve a comment I made to you some time back. It sums up your moronic attachment to attacks on George W. Bush, lack of thought, and general lack of intelligence.

    "Understand this. You are hopelessly uneducated, unread, naive, and ignorant; and your intransigence borders on insanity. You put together oxymoronic arguments from unrelated statements, and expect everyone agree with you because you like to throw around buzzwords like "rich", "elite", and any other digs at those who are more successful than you. You are unable to present a coherent argument supporting any position you get from the sundry liberal blog, and your posts are typical of those who have no understanding of what really underpins economics, markets, and logical, systemic thinking."

    I will continually post the foregoing quote until you leave, die, or grow a brain.

    Dennis
     
  17. Paladin

    Paladin Well-Known Member

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    Well said Dennis, well said. Thankfully, he is no longer in education as a teacher or an assistant principal.
     
  18. AJ100

    AJ100 TS Member

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    Dennis, If you don't I will.

    AJ100
     
  19. KEYBEAR

    KEYBEAR Active Member

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    2STR8 If you knew your daddy he would tell you the best part of you was wasted that night .
     
  20. AJ100

    AJ100 TS Member

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    "Understand this. You are hopelessly uneducated, unread, naive, and ignorant; and your intransigence borders on insanity. You put together oxymoronic arguments from unrelated statements, and expect everyone agree with you because you like to throw around buzzwords like "rich", "elite", and any other digs at those who are more successful than you. You are unable to present a coherent argument supporting any position you get from the sundry liberal blog, and your posts are typical of those who have no understanding of what really underpins economics, markets, and logical, systemic thinking."

    AJ100
     
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