Okay, I’m going to have to eventually declare a Fannie & Freddie free zone here but I’m still floored by the way Washington works.
Bloody hell, Fannie and Freddie were created by the government but became top manipulators of the government.
“They tied up almost every lobbying firm in Washington, whether they used them or not, over the past several years,” said Joshua Rosner, a financial analyst with Graham Fisher & Co. and long-time critic of both companies.
Freddie Mac (FRE, Fortune 500) spent over $94.8-million on lobbyists since 1998, making it the nation’s 12th-largest lobbying client, while Fannie Mae (FNM, Fortune 500) bought $79.5-million of influence, the 20th biggest spender, according to the Center for Responsive Politics.
“They wanted to fend off regulation of their enterprises,” said Massie Ritsch of the Center.
Until recent months, Fannie Mae and Freddie Mac largely succeeded in that effort - functioning with relatively little oversight as they aggressively grew their portfolio of mortgages to try to increase earnings.
I guess I just have to learn to accept the fact that Washington is screwed up.
{ 5 comments… read them below or add one }
Brian 09.13.08 at 10:54 am
How ironic is that? Freddie and Fannie use, what is essentially taxpayer money, to lobby the government, which is what they now are. How circular and nepotistic.
I know they were supposed to serve some purpose to make housing available and affordable, but I would personally rather see the OFHEO, or whatever it will be called, encourage and help support non-profits like Habitat for Humanity, if housing for the unfortunate is the objective.
Everyone else can just get unsubsidized mortgages like I always have, and pay mortgage insurance, if their down payment is too small.
Brian McMorris 09.13.08 at 3:43 pm
John, saw this in the new issue of Barrons today, under the heading: “How to Ride the Mortgage RollerCoaster”.
Barrons - How much more pain are we going to feel in the housing market before things start to stabilize?
I think we are about half way through. There is high momentum in terms of home-price declines, so it is pretty clear they are going lower. It always looks a lot like the hills on a roller coaster. It starts out with a flattish period. Then it starts to go down, and then it really starts to drop, and we are clearly in that period. That period is going to be with us for about another year before it flattens out and bumps along in 2010.
The S&P/Case-Shiller Index is down a little more than 15% from its peak in 2006, and I’ve believed for some time that the index will have dropped 30% from its peak. That means some markets are going to drop by 50%. That includes Miami, Las Vegas and Phoenix, all of which were fueled by subprime lending. The foreclosure overhang is so big in those areas.
Some articles are available for public viewing, so I will provide a link:
http://online.barrons.com/article/SB122125828513029783.html?mod=9_0031_b_this_weeks_magazine_main&page=sp“
MARK 09.13.08 at 5:33 pm
And the CEO’s that ran this two “entities” and walked away with millions should be prosecuted to the fullest extent of the law! But Republicans don’t believe in regulation until they make millions and the taxpayer has to suffer. There is alomst no transparency in the mortagage markets, therefore regulation/law is the only way to help prevent this unethical, immoral business, as these people know there is very little chance if they ar caught they will spend time in the can. Signed, independent forever.
Rich 09.13.08 at 5:35 pm
You’re right it is truly incredible, but really this is just the tip of the iceberg. The more you learn about the workings of our financial/political/monetary systems the worse it gets. This current crisis is just beginning to crack the outer shell and let us see inside. However, this is a situation where ignorance truly is bliss, the deeper you dig, the more depressing it becomes.
MARK 09.18.08 at 7:29 am
The whole mortgage crisis started as a result of stated income (or stated lie) loans. If people were required to prove their income, we would not be in the mess we are now.