This is good... You all have to see this.

Instead of copying and pasting the picture-book style article titled "Meltdown" to the board, I'm just going to link to it.

Take a look, and tell me what you all think.

http://directorblue.blogspot.com/2009/03/meltdown.html

Grim17 wrote:Instead of copying and pasting the picture-book style article titled "Meltdown" to the board, I'm just going to link to it.

Take a look, and tell me what you all think.

http://directorblue.blogspot.com/2009/03/meltdown.html

happy saturday morning grim,

listen... 'i love ya man' - but you really gotta stop blaming this housing collaspe on bill clinton. the changes he made to the CRA were in 1995. there was no housing crisis during his 2nd term - as a matter of fact, our country was doing quite well back then. so i don't understand how he gets blamed for shit that happened 7 years later...... ?

HERE'S WHAT CAUSED THE HOUSING CRISIS:

george bush, back in 2002, was the one who loosened everything up with his "America's Homeownership Challenge"... "Homebuyer Bill of Rights"... "American Dream Downpayment Fund" that ultimately caused this mess. from what i know, most of the homes that have fallen into foreclosure were originally purchased after 2002; under bush's administration - not clinton's. I don't think bush intended, or even expected, it to turn out this way - but never the less, it did.

CV

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

White House, Office of the Press Secretary
October 15, 2002

President Hosts Conference on Minority Homeownership


President George W. Bush hosted the White House Conference on Minority Homeownership to discuss public and private sector efforts to address the homeownership gap and increase the number of minority homeowners in America.

In June, President Bush announced the national goal of increasing the number of minority homeowners by at least 5.5 million by the end of this decade. Meeting the President's goal will not only help more Americans enjoy the benefits of owning their own homes it will also help strengthen America's economy. According to a study released today by the Department of Housing and Urban Development, meeting the President's goal will involve $256 billion in economic activity in the form of construction and remodeling jobs, spending on household goods, and other benefits.

Background on Today's Presidential Action

While the overall homeownership rate has reached an all-time high of nearly 68 percent, recent statistics point to a homeownership gap. The second quarter 2002 Census data show that non-Hispanic whites have a 74.3% homeownership rate, while African-Americans have a 48% rate, Hispanics a 47.6% rate; and Asian-Americans and other races a 53.7% homeownership rate.

In June, President Bush announced an aggressive homeownership agenda to dismantle barriers to homeownership by providing down payment assistance, increasing the supply of affordable homes, increasing support for self-help homeownership programs, and simplifying the homebuying process and increasing education. The President also issued "America's Homeownership Challenge" to the real estate and mortgage finance industries to join in his effort to increase the number of minority homeowners by taking concrete steps to tear down the barriers to homeownership that face minority families.

The Bush Administration is working to increase homeownership among minority Americans through a number of new and expanded initiatives, as well as through ongoing programs administered by HUD and other federal departments, including:

Providing Downpayment Assistance

The single biggest barrier to homeownership is accumulating funds for a downpayment. The President has proposed $200 million annually for the American Dream Downpayment Fund to help roughly 40,000 families a year with their downpayment and closing costs. In addition, the Administration has proposed the use of Section 8 funding to assist with downpayments, and provides downpayment assistance to low-income and minority homebuyers through the Community Development Financial Institutions (CDFI) Fund at the Department of Treasury.

Increasing the Supply of Affordable Homes

The President wants to dramatically increase the supply of homes available to low and moderate income families. The President has proposed the Single-Family Affordable Housing Tax Credit, which will provide approximately $2.4 billion to encourage the production of 200,000 affordable homes for sale to low and moderate income families.

Increasing Support for Self-Help Homeownership Programs

The President's budget triples funding for organizations like Habitat for Humanity that help families help themselves become homeowners through 'sweat equity' and volunteerism in their communities.

Simplifying the Home Buying Process & Increasing Education

Today's homebuyers face a confusing and complicated process. President Bush wants to empower homebuyers by making it easier for them to understand the process and benefit from cost savings. Through the Homebuyer Bill of Rights, the Bush Administration is proposing to make the settlement process easier for all consumers when purchasing a home, thereby protecting homebuyers through increased competition and simplicity. Working together, the Federal Trade Commission and HUD have begun targeting enforcement activities to stop predatory lenders from preying on uneducated homebuyers. The President also wants to expand financial education efforts so families can better understand what they need to do to become homeowners. The Departments of HUD, Treasury, and Education are working diligently to educate families about homeownership through counseling programs and financial literacy efforts. Specifically, HUD has proposed increasing housing counseling activities by 75% and is collaborating with the FDIC on a "MONEY SMART" program of financial education in minority neighborhoods.

Providing Better Financing Opportunities

The Departments of HUD and Agriculture make it possible for thousands upon thousands of families to achieve homeownership through the Federal and Rural Housing Administrations, which insure almost $100 billion in loans each year. The Administration also implemented a hybrid Adjustable Rate Mortgage (ARM) product that makes it easier for new homebuyers to stay in their homes in the first few years.

America's Homeownership Challenge

Since the President's call to action in June, private and nonprofit partners in the real estate and mortgage finance industries have been working with the Department of Housing and Urban Development to increase minority homeownership. Commitments made by these partners include:

Substantially increasing, by at least $440 billion, the financial commitment made by the government-sponsored enterprises involved in the secondary mortgage market specifically targeted toward the minority market.
Launching twenty-five different local initiatives across the nation, geared toward eliminating the specific homeownership barriers faced by minority families in those communities;

Raising $750 million in below-market-rate investments by 2007, which will work in collaboration with local homeownership initiatives and be targeted to heavily minority program areas;

Pursuing strategic partnerships in 20 top housing markets between homebuilders, lenders, local officials, and community leaders to develop approaches that address the local challenges to building homes for minority families living in urban centers;

Establishing faith-based housing partnerships between the participants and at least 100 churches, mosques, synagogues, and other faith-based institutions;

Aggressively developing new mortgage products so that conventional market alternatives are available to combat the predatory loan products that are disproportionately targeted to minorities;

Creating new mortgage products to meet the unique needs of recent immigrants;

Dramatically expanding financial education efforts for minorities, providing financial counseling to at least 380,000 minority families, and taking measures at the local level to reduce predatory lending; and

Establishing multilingual, consumer-oriented Internet Web sites designed to help minorities overcome barriers to homeownership, including creation of a central data bank of affordable housing programs made available to real estate agents when working with clients.
http://www.policyalmanac.org/social_welfare/archive/wh_minority_housing.shtml

I will address your post when I can CV... It's spring break where I'm at, and doing double duty to help out a friend who owns a Hotel/Nightclub. So I won't have much free time for next 2 weeks.

Grim17 wrote:I will address your post when I can CV... It's spring break where I'm at, and doing double duty to help out a friend who owns a Hotel/Nightclub. So I won't have much free time for next 2 weeks.

no prob grim...

HAVE FUN!!

CV

Susan aka CV wrote:listen... 'i love ya man' - but you really gotta stop blaming this housing collaspe on bill clinton. the changes he made to the CRA were in 1995. there was no housing crisis during his 2nd term - as a matter of fact, our country was doing quite well back then. so i don't understand how he gets blamed for shit that happened 7 years later...... ?

The changes that were made to the CRA in 1995, are what's responsible for the housing bubble we had. The price for houses is based, like all other things, on supply and demand. When those changes were made, Janet Reno and the Clinton administration strong armed lenders into taking on more sub-prime loans in an effort to expand home ownership to lower income families. By doing so, it created a huge demand for homes, thus home values sky rocketed.

As we all know, many of these families simply couldn't afford to pay for these homes in the first place, but because the value of their homes was increasing so fast, they were able to take out second and third mortgages based on the equity that was building up, due to that rapid increase in value. What this resulted in, for example, was people having a $100,000 debt that they couldn't afford to pay off, to a $200,000 or $300,000 debt they couldn't afford to pay back. The reason smaller banks and lending institution knowingly made so many of these risky loans in the first place, is because they knew that they would be bought up by Fanny and Freddy. They were all told by the Clinton administration that the government would back these loans, so Fanny and Freddy went on a feeding frenzy. They took on as many of these bad loans as the smaller banks could issue, and falsely showed them on their books as "profits" or "assets". Everyone involved knew, that eventually the housing bubble would burst, and when it did, everything would fall apart. They didn't care though, because the executives of Fanny and Freddy were raking in 10's of millions in bonuses by taking on these bad loans, so they just kept it going.

I'm not saying that the Bush administration is blameless in all of this. Although they did take several steps to prevent it from happening, when those efforts were twice blocked by house democrats, they chose to use the increase in home ownership for political gain, rather than sounding the alarm publicly that we were headed for financial disaster if this problem wasn't fixed.

Here are the facts CV:

1. The financial meltdown in the banking industry caused by the issuing of so many sub-prime loans, is the single largest contributor to the overall economic crisis in America today.

2. If the financial meltdown in the banking industry did not happen, we would have likely still had a recession, but a small one similar to the those in the early 90's and 2001.

3. The financial meltdown in the banking industry, is a direct result of amendments made to the CRA in 1995 by the Clinton Administration, that in essence forced banks to issue loans to families who before, would have never qualified for those loans. They implied that the government would back them in the event of failure, and threatened to remove tax exemptions, as well as apply stricter asset standards to them if they didn't take on more sub-prime loans.

4. The issuing of those loans increased the number of families buying homes, which in turn, created a huge demand for new homes, which sent housing prices through the roof causing the "housing bubble".

5. The Bush administration on 18 separate occasions, warned congress that they needed to impose stronger regulations on financial giants Fanny Mae and Freddy Mac, and that if they didn't act now, America would be facing a huge economic crisis in the near future.

6. In 2003, republicans on the banking committee held hearings to investigate the accounting practices of financial giants Fanny and Freddy. Republicans insisted that stronger regulations needed to be imposed on Fanny and Freddy, or America could be faced with a major financial crisis in the near future. Democrats on the committee insisted that there was no problem with Fanny or Freddy, and that no such financial crisis was on the horizon (see HERE). They accused republicans of manufacturing a looming crisis, in an attempt do away with the CRA. The democrats voted unanimously that no further regulation was necessary, and threatened to filibuster any effort by republicans to introduce such legislation.

7. Bill Clinton recently admitted, that the democrats shouldn't have resisted efforts by republicans in congress to impose stricter regulations on Fanny and Freddy. His comments are at the end of THIS VIDEO.

Frankg wrote:

is that a jeep wrangler obama's driving??

how very American of him to choose a chrysler product to drive as he takes this country to hell.

it's gonna be a loooooooooooooooooooooong 4 years.

CV

Grim17 wrote:

Susan aka CV wrote:listen... 'i love ya man' - but you really gotta stop blaming this housing collaspe on bill clinton. the changes he made to the CRA were in 1995. there was no housing crisis during his 2nd term - as a matter of fact, our country was doing quite well back then. so i don't understand how he gets blamed for shit that happened 7 years later...... ?

The changes that were made to the CRA in 1995, are what's responsible for the housing bubble we had. The price for houses is based, like all other things, on supply and demand. When those changes were made, Janet Reno and the Clinton administration strong armed lenders into taking on more sub-prime loans in an effort to expand home ownership to lower income families. By doing so, it created a huge demand for homes, thus home values sky rocketed.

As we all know, many of these families simply couldn't afford to pay for these homes in the first place, but because the value of their homes was increasing so fast, they were able to take out second and third mortgages based on the equity that was building up, due to that rapid increase in value. What this resulted in, for example, was people having a $100,000 debt that they couldn't afford to pay off, to a $200,000 or $300,000 debt they couldn't afford to pay back. The reason smaller banks and lending institution knowingly made so many of these risky loans in the first place, is because they knew that they would be bought up by Fanny and Freddy. They were all told by the Clinton administration that the government would back these loans, so Fanny and Freddy went on a feeding frenzy. They took on as many of these bad loans as the smaller banks could issue, and falsely showed them on their books as "profits" or "assets". Everyone involved knew, that eventually the housing bubble would burst, and when it did, everything would fall apart. They didn't care though, because the executives of Fanny and Freddy were raking in 10's of millions in bonuses by taking on these bad loans, so they just kept it going.

I'm not saying that the Bush administration is blameless in all of this. Although they did take several steps to prevent it from happening, when those efforts were twice blocked by house democrats, they chose to use the increase in home ownership for political gain, rather than sounding the alarm publicly that we were headed for financial disaster if this problem wasn't fixed.

Here are the facts CV:

1. The financial meltdown in the banking industry caused by the issuing of so many sub-prime loans, is the single largest contributor to the overall economic crisis in America today.

2. If the financial meltdown in the banking industry did not happen, we would have likely still had a recession, but a small one similar to the those in the early 90's and 2001.

3. The financial meltdown in the banking industry, is a direct result of amendments made to the CRA in 1995 by the Clinton Administration, that in essence forced banks to issue loans to families who before, would have never qualified for those loans. They implied that the government would back them in the event of failure, and threatened to remove tax exemptions, as well as apply stricter asset standards to them if they didn't take on more sub-prime loans.

4. The issuing of those loans increased the number of families buying homes, which in turn, created a huge demand for new homes, which sent housing prices through the roof causing the "housing bubble".

5. The Bush administration on 18 separate occasions, warned congress that they needed to impose stronger regulations on financial giants Fanny Mae and Freddy Mac, and that if they didn't act now, America would be facing a huge economic crisis in the near future.

6. In 2003, republicans on the banking committee held hearings to investigate the accounting practices of financial giants Fanny and Freddy. Republicans insisted that stronger regulations needed to be imposed on Fanny and Freddy, or America could be faced with a major financial crisis in the near future. Democrats on the committee insisted that there was no problem with Fanny or Freddy, and that no such financial crisis was on the horizon (see HERE). They accused republicans of manufacturing a looming crisis, in an attempt do away with the CRA. The democrats voted unanimously that no further regulation was necessary, and threatened to filibuster any effort by republicans to introduce such legislation.

7. Bill Clinton recently admitted, that the democrats shouldn't have resisted efforts by republicans in congress to impose stricter regulations on Fanny and Freddy. His comments are at the end of THIS VIDEO.

hi grim.

the problem i'm having with what you presented here is that there is no clear timeline of who did what when.

yes - republicans discussed freddie mac/mae. but the direction they wanted to take this discussion (according to the link you provided) sounds more like internal restructuring instead of regulations. maxine waters and charles schumer BOTH speak of and agree that stronger regulations were needed, but neither one thought these agencies needed to be completely torn apart like the republicans were suggesting.

Bush – thru the programs i posted earlier - "tore down the barriers" that stood in the way of homeownership in 2002!!

these hearings began in 2003. so the problems the republicans had with freddie mac/mae at that time are a result of Bush’s actions – not Clinton’s.

this is what I mean by a timeline, grim.

also, I have seen many pages of info on the internet that show median prices and % rates of homes sold after clinton made the changes to the CRA in 1995. i didn’t see a huge increase in home prices between 1995-2000 at all. the percentage rate for new homeowners increased by 2% during that time – which historically appeared to be pretty normal. the info i’ve seen shows the highest median prices and new homeowner % rates to be under bush’s watch – not clinton’s. more specifically from 2003-2005 – again, after the American Dream Downpayment Fund, Homebuyer Bill of Rights and America's Homeownership Challenge became the law of the land via george bush in 2002. if you know this to be different, please tell me where to find that info.

and then there’s this:

On the Outside Now, Watching Fannie Falter
By Anita Huslin
Washington Post Staff Writer
Wednesday, July 16, 2008; Page D01

In the four years since he stepped down as Fannie Mae's chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters.

And he's privately smoldered over the events of the past week, when Fannie Mae and Freddie Mac were portrayed as being on the brink of disaster, prompting steep drops in their stocks and a federal intervention.
In his first interview in two years, Raines remained insistent that the mortgage finance giant's problems are not rooted in the company but stem from a time when the Bush administration and the Fed insisted the government-sponsored enterprise carried no explicit federal backing.

rest of story here:

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502827

i can fully understand where there would be a lot of wiggle room on this topic – especially when power was changing during this time.

but i DO NOT & HAVE NOT seen/read anything that can honestly be used to point the finger at bill Clinton for this housing mess. this was bush’s mess – he gave birth to it in 2002.

CV

I think this is more the fault of our political system than either political party. Repubs and Dems are both to blame for this mess because they are all corrupt.

As always...this mess is making a few people very very wealthy.

Susan aka CV wrote:In his first interview in two years, Raines remained insistent that the mortgage finance giant's problems are not rooted in the company but stem from a time when the Bush administration and the Fed insisted the government-sponsored enterprise carried no explicit federal backing.

CV, do you realize you have just cited Bill Clinton's former White House budget director, Obama adviser, and former Fanny Mae head honcho Franklin Raines as proof that it was Bush's fault? Raines cooked the books at Fanny Mae so he could collect nearly $100 million dollars is bonuses. After that was exposed, he resigned his position.

It doesn't stop there...

Fanny and Freddy also contributed over $100,000 to the political campaigns of Barack Obama, John Kerry and the head of the Senate Banking Committee, Christopher Dodd. So it should come as no surprise to you, why democrats on the Senate Banking Committee not only proclaimed that there was no problem with Raines or Fanny and Freddy, but threatened to filibuster any legislation put forth by the republicans to impose stricter regulations on the lending and accounting practices of those two financial giants.

I've already said this before, but it needs to be pointed out again... President Bush warned congress on 18 separate occasions between 2001 and 2008, that stricter lending regulations needed to be imposed on Fanny and Freddy, or America could face a financial crisis in the future. That is a fact CV, and I don't understand how you can ignore it, and instead pin the blame on Bush and republicans.

Grim17 wrote:

Susan aka CV wrote:In his first interview in two years, Raines remained insistent that the mortgage finance giant's problems are not rooted in the company but stem from a time when the Bush administration and the Fed insisted the government-sponsored enterprise carried no explicit federal backing.

CV, do you realize you have just cited Bill Clinton's former White House budget director, Obama adviser, and former Fanny Mae head honcho Franklin Raines as proof that it was Bush's fault? Raines cooked the books at Fanny Mae so he could collect nearly $100 million dollars is bonuses. After that was exposed, he resigned his position.

It doesn't stop there...

Fanny and Freddy also contributed over $100,000 to the political campaigns of Barack Obama, John Kerry and the head of the Senate Banking Committee, Christopher Dodd. So it should come as no surprise to you, why democrats on the Senate Banking Committee not only proclaimed that there was no problem with Raines or Fanny and Freddy, but threatened to filibuster any legislation put forth by the republicans to impose stricter regulations on the lending and accounting practices of those two financial giants.

I've already said this before, but it needs to be pointed out again... President Bush warned congress on 18 separate occasions between 2001 and 2008, that stricter lending regulations needed to be imposed on Fanny and Freddy, or America could face a financial crisis in the future. That is a fact CV, and I don't understand how you can ignore it, and instead pin the blame on Bush and republicans.

grim – darlin’ – sweetheart.

yes. i am fully aware that Franklin Raines was a clinton man. but would you PLEASE just agree with me that he was a BUSH MAN too!!

i am also fully aware that raines was/is a scumbag/thief – and i am certainly not fond of the idea that he’s an obama advisor. but as you know, obama has a history of being involved with shady characters, so i’m sure this didn’t surprise you any more than it did me.

as far as the bush/republicans vs dems in congress topic is concerned... i stand by what i said about the issue being the complete restructuring of fannie mae/mac vs regulations = two COMPLETELY different things! and besides that... if the repubs wanted something done so bad, why didn't they just do it?? they controlled congress until 2006, didn't they????

having said that, let’s get back to the housing crisis and who did what when. i would like for you to address bush’s activity in 2002 when he initiated the homeowner programs i have posted here. i really don’t know how you can continue to say the mess we are in now is clinton’s fault when it’s crystal clear that bush was the one who lifted the regulations ("torn down the barriers") in the world of homeowner lending, etc.....?

as i said earlier… it is my understanding that the massive number of foreclosed homes involved in this mess were originally sold AFTER bush’s agenda was put in place and raines was at hud under bush’s watch. if i am wrong about his, please prove it to me.

make me understand HOW any of this involves bill clinton…..


CV


Fannie Mae Chairman and CEO Raines Says Bush Administration Housing Budget, Initiatives Will...

Publication: Business Wire
Date: Friday, February 8 2002

ATLANTA--(BUSINESS WIRE)--Feb. 8, 2002

The Bush Administration's 2003 housing budget proposal will fuel the strong and steadily growing housing market, and advance President George W. Bush's priority of economic security, Fannie Mae's Chairman and CEO, Franklin D. Raines, said today.

In comments during the National Association of Home Builders' 2002 International Builders' Show, Raines applauded President Bush's call for "expanded homeownership, especially among minorities" and the Administration's 2003 budget proposal for the U.S. Department of Housing and Urban Development (HUD).

"The President's housing plan will fuel the power of housing, which is easing the recession, speeding the recovery, expanding jobs and ensuring our economic security," Raines said.

"The Bush Administration's strong housing agenda is important -- housing is the number one consumer product, the number one consumer investment, the number one economic driver and the number one priority of communities," Raines said.

Raines also said these factors are expected to spur the U.S. housing sector to grow steadily throughout the decade at a rate that could exceed the record-breaking 1990s. Under current economic and demographic projections for the decade, Raines said consumers will double their investment in residential housing and need twice as much housing capital -- up to $14 trillion -- to finance it.

The growing need for housing poses new challenges not only to homebuilders, but also to those -- including Fannie Mae -- that supply the housing capital that consumers need to finance homes, Raines said.
"Those who raise housing capital for America must boost the supply, lower the cost, and operate with maximum safety, soundness, openness and transparency," Raines said. "As the `glass box' of financial services companies, Fannie Mae is living proof that when you have extraordinary transparency with strong oversight, strong capital standards, strong risk-management expertise and a simple business managing safe assets, it makes your job of raising low-cost capital a lot easier."

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided more than $3.6 trillion of mortgage financing for nearly 43 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.
Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer the company exclusively as "Fannie Mae."

http://www.allbusiness.com/government/government-bodies-offices-heads/5857664-1.html


Fannie Mae Pledges Continued Support for President Bush's Nationwide Effort to Increase...

Publication: Business Wire
Date: Tuesday, October 15 2002

Business Editors

WASHINGTON--(BUSINESS WIRE)--Oct. 15, 2002

Fannie Mae Chairman and CEO, Franklin D. Raines today joined President Bush and U.S. Department of Housing and Urban Development (HUD) Secretary Mel Martinez, and other industry leaders and non-profit organizations, for a housing summit to promote the Administration's proposal to expand minority homeownership.

Fannie Mae's ten-point plan to help advance the Bush Administration's homeownership proposals was included in the Blueprint for the American Dream document released by HUD today.

"Fannie Mae commends President Bush and HUD's continued efforts to make minority homeownership a national priority through today's housing summit," said Raines. "As we know, homeownership builds stronger families, communities, and improves our quality of life. Through the expansion of minority homeownership, the Administration will advance housing equality in America."

"The Blueprint for the American Dream that we unveiled today is the response to the `homeownership challenge' President Bush issued in June to increase minority homeownership," said HUD Secretary Mel Martinez. "Our partners, representing every segment of the affordable housing industry, are committed to working together to achieve the President's goal of adding 5.5 million new minority homeowners by the end of the decade."

In his February State of the Union address President Bush called for "broader homeownership, especially among minorities." In June, President Bush challenged both the public and private sector to be a partner in his crusade to create 5.5 million new minority homeowners by the end of the decade.

Fannie Mae responded by committing $700 billion in home financing to 4.6 million minority households through 2009. This increases by 66 percent the specific pledge Fannie Mae made in 2000 to minority families through it's American Dream Commitment plan to provide $420 billion for three million minority families.

"Through our ten-point plan, Fannie Mae has pledged itself to an extraordinary set of goals, both to increase homeownership over the course of this decade and to break barriers between underserved families," Raines said. "We will reach out to all who have a stake in closing the housing gaps because together can we bring the American Dream of homeownership more in line with the American ideal of equality."

For more information on Fannie Mae's ten-point plan to increase minority homeownership visit the company's Web site www.fanniemae.com. For information on all other Fannie Mae affordable mortgage products, consumers may call Fannie Mae's Consumer Resource Center at 1-800-7FANNIE (1-800-732-6643), Monday through Friday, 9:00 a.m. to 5:00 p.m. EST.

http://www.allbusiness.com/government/government-bodies-offices-heads/5944494-1.html

JReed wrote:I think this is more the fault of our political system than either political party. Repubs and Dems are both to blame for this mess because they are all corrupt.

As always...this mess is making a few people very very wealthy.

hi jreed,

i half agree with you. the system as a whole definitely sucks.

but - i think it is very clear that bush's 2002 housing agenda had - BY FAR - more to do the housing bubble/burst than ANYTHING bill clinton did. i want people to stop blaming this mess on bill.... it's just not true.


CV

Excerpts from a 1998 NY Times story warning of the danger:

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 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.”...

...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.

***


For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.

Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

The White House released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001.

Unfortunately, Congress did not act on the president's warnings:

2001

April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."

2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004

February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)

2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)

2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

"Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)

"[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

"Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

**

In 2005-- Senator John McCain partnered with three other Senate Republicans to reform the government’s involvement in lending:

Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

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