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Mar. 19, 2009 The date was 30 September 1999. The author of the article was Steven A. Holmes. The title of the article was “Fannie Mae Eases Credit To Aid Mortgage Lending” and so began the debacle of a crashed American economy and the slow, painstaking march toward socialism. Mr. Holmes reported: “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.” [March 2000] Of course no Government “pilot” program is ever discontinued; not even when it is a failure. When the program went “nationwide” it put more banks and more states in jeopardy of economic destruction when Fannie Mae failed. But this was not just a result of the greed of bankers. The bankers were being pressured and in some cases forced to write “at risk” loans. Quote: “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.” Fannie Mae was already taking a moderate amount of risk to be sure. But President Clinton was listening to his campaign contributors (stock holders) more than he was displaying common sense. Clinton, and those legislators with a stock stake in Fannie Mae pushed the lender into levels of greater risk and greater debt. Eventually the house-of-cards crumbled. Fannie Mae stock has become worthless and the assets of Fannie Mae and Freddy Mac still have not been given any “Mark to Market” value to clear the debts. It is also understood that the failure of Fannie and Freddy are the chief cause of the economic downturn. Yet even through all this debt-shifting Fannie Mae and Freddy Mac were faithfully funneling money to candidate lawmakers. The two chief recipients of campaign cash prior to the collapse were Sen. Chris Dodd and up and coming junior senator Barack Obama. Congressman Barney Frank, who was chiefly responsible for oversight of Fannie and Freddy was also a chief beneficiary of campaign cash from the two lenders and was also the chief roadblock to investigation and additional regulation toward reigning in the sour lending practices. Mr. Holmes reported: “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…” So Clinton was pressing the nation’s banks and the only way they could comply with the government pressure was to ask for money from Fannie Mae and Freddy Mac to guarantee the “subprime” loans. This was money Fannie and Freddy did not have, but was assumed to have because of the quasi-governmental standing of the lenders. The pressured banks were assured that what they were doing was in the best interests of lenders and borrowers. Mr. Holmes quoted then Fannie Mae chairman and CEO Franklin Raines (who you might remember was fired from his position of failure and given the reward of a $100 million severance package) “'Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements…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.” The boondoggle that has become TARP has shown those of us who are now paying the mortgages of the failed-but-not-yet-foreclosed what a “notch” is. In some cases that “notch” equates to hundreds of thousands of dollars for single loans. These were loans that never would have been issued except for the intervention of government. Market forces were not permitted to operate properly to establish actual value and proper eligibility regarding repayment. The 1999 article by Mr. Holmes was actually prescient of today’s housing crisis. He wrote: “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.” Can you say TARP? Fannie and Freddy not only ran into trouble, but were the chief cause of the trouble for writing or purchasing far many more subprime mortgages than it could cover. Mr. Holmes included this quote from a Mr. Peter Wallison of the American Enterprise Institute; who seemed to show excellent insight into the subprime mortgage scheme cooked up by Former President Jimmy Carter and expanded under Clinton, the erstwhile “first black president” of the nation: “From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison…”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.” Give that guy the cigar! Then Mr. Holmes explained the process that would destroy the American economy in 2008: “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.” To the tune of 9 million foreclosures! The “dirty little secret” here is that all of that subprime lending probably wasn’t even necessary. It was necessary only to get taxpayer money flowing freely in and out of Fannie and Freddy so lawmakers could request and/or expect large campaign donations. Mr. Holmes included some interesting statistics with his article that related to home ownership prior to the expansion of this so-called “pilot” program to give away the farm: “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.” The only reason for this “pilot” program’s existence was to secure votes for the party of the democrats. The original Community Redevelopment Act signed by Carter was a Democrat giveaway. Clinton used the FBI to enforce compliance under threat of law and since, at the time, stockholders of Fannie and Freddy were making a dollar and the national economy was seemingly going into surplus everyone involved saw an opportunity to make even more money by writing more bad loans. The first 5 years of the Bush Administration saw a break out of a short Clinton-created recession and economic growth and job creation until 2006 when the Democrats again gained control of the House and the Senate. It was then Barney Frank and Chris Dodd went into their version of the “prevent defense” and kept the Bush Administration from investigating Fannie and Freddy after receiving reports of the imminent failure of the lenders. All 17 requests during 2006-2007 for oversight and investigation by the Bush Administration were rebuffed by the Democrat controlled Congress. Democrats knew all along this wasn’t going to be a temporary “pilot” program. They were hoping for a long-term cash cow to support their powerbase in Congress. Mr. Holmes wrote: “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 [1998], 44 percent of the loans Fannie Mae purchased were from these groups.” The death of the American economy was planned well in advance. Anyone with half and economic brain knows you do not loan money to people at risk of failure to repay “Barneybob Squarefrank” doesn’t have half an economic brain. His brain wouldn’t fill a space the size of a contact lens. We know this based on his reassurance just two months before the disaster that there was nothing wrong with Fannie and Freddy. We know this too because “Barneybob” wants to continue these subprime bailouts using the TARP like its 1999! Barney Frank is a superior moron! ------------ About the Author: Michael John McCrae has contributed over 700 articles to Useless-Knowledge.com. Email: macswordV@hotmail.com Comment on this article here! ------------ All articles are EXCLUSIVE to Useless-Knowledge.com and are not allowed to be posted on other websites. ARTICLE THIEVES WILL BE PROSECUTED! |
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