A Quote by Mark Zandi
There is plenty of blame to go around for the U.S. housing bubble, but not much of it belongs to Fannie Mae and Freddie Mac. The two giant housing-finance institutions made many mistakes over the decades, some of them real whoppers, but causing house prices to soar and then crater during the past decade weren't among them.
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Congress created Fannie Mae in 1938 and Freddie Mac in 1970. For many years, these institutions prudently pursued their core mission of enhancing the availability of credit for housing.
Although not well known outside Wall Street, Freddie Mac and its corporate cousin, Fannie Mae, are two of the world's largest financial institutions and play a crucial role in the housing market.
One third of the $15 trillion of mortgages in existence in 2008 are owned, or securitized by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and the Veterans Administration. Wall Street buyers of repackaged loans didn't mind buying risky paper because they assumed that they would be guaranteed by the federal government: read bailout from the taxpayers. Today's housing mess can be laid directly at the feet of Congress and the White House.
Well, Mark, I led the charge for five or six years to get reforms for Fannie Mae and Freddie Mac. I was chairman of an organization called 'FM Policy Focus.' What we were saying was, if there was blip in the housing market, Fannie and Freddie would destabilize the greatest economy in the world.
The Great Bailout is mostly over for the banks. But for those troubled behemoths of the nation's housing bust, Fannie Mae and Freddie Mac, the lifeline from Washington just keeps getting longer.
In September 2008, the two largest housing mortgage companies called Fannie Mae and Freddie Mac, which were government-sponsored enterprises, which hold hundreds of billions of dollars of mortgages, because of the losses they took on the mortgages, they essentially became insolvent, and the government had to take them over.
These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.
RE: GSEs like Freddie Mac & Fannie Mae: "creditors will continue to underprice the risk-taking of these financial institutions, overfund them, and fail to provide effective market discipline Facing prices that are too low, systemically important firms will take on too much risk."
We faced a crisis caused by the Federal Reserve, the corporate tax system, Fannie Mae and Freddie Mac, and the Community Reinvestment Act. But the response of many people in Washington was to blame it on capitalism.
Fannie Mae and Freddie Mac - two bloated and corrupt government-sponsored programs - contributed heavily to the crisis.In order to prevent another crisis, we need to do what we should have done years ago - reform Fannie Mae and Freddie Mac. We also need to repeal Dodd-Frank, the Democrats' failed solution. Under Dodd-Frank, 10 banks too big to fail have become five banks too big to fail. Thousands of community banks have gone out of business.
Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, providing those financial institutions with capital to make new loans.
These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis.
A strong economy causes an increase in the demand for housing; the increased demand for housing drives real-estate prices and rentals through the roof. And then affordable housing becomes completely inaccessible.
We do not have a crisis at Freddie Mac, and particularly Fannie Mae, under the outstanding leadership of Frank Raines.
We have the idea of saying that put limitations on bailouts, so that the bailouts don't occur in the future, so that we don't have to do the - look to see AIG situations or Bear Stearns situations or the Fannie Mae or Freddie Mac, which is probably going to be more money spent on those two institutions than the Congress spent on the TARP program.
When George W. Bush tried to roll back taxpayer exposure to a housing crash via Fannie and Freddie, guess what two senators joined a filibuster of the Bush initiative? Yep... those saviors of the working class, Barack Obama and Hillary Clinton. They went to bat for the housing industry and voted to allow taxpayer exposure to escalate.
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