Well now we are in 2002 and it is the Senate's turn.
“As President Bush has correctly noted recently, Fannie and Freddie have rapidly expanding liabilities that create ‘a potential problem.’ These liabilities are particularly worrying as Fannie and
Freddie have sharply increased their use of derivatives…to hedge risk. The great concern is that taxpayers will be left standing with some or all of these debts when the music stops. Before it’s too late, Fannie and Freddie should come clean,” Paige concluded. (PR Newswire, 3/1/02)
Remember the narrative from the Dems is it is all Bush's fault.
In late 2001 Fannie and Freddie started using something called derivatives to fund the mortgages it was underwriting. This practice was particulary disturbing to many in the financial sector. It lead to statements like this being made.
Congressmen Chris Shays (R-CT) and Edward Markey (D-MA) introduce a bill (HR 4071) that would repeal Fannie & Freddie’s exemption from Securities and Exchange Commission (SEC)registration requirements
And
Congressmen Shays and Markey issued a joint statement on HR 4071 on March 21. “Every other Fortune 500 company in the United Sates is required to disclose its financial transactions to the Securities and Exchange Commission,” Congressman Shays said. “This disclosure is paramount to maintaining transparent markets and providing investors with the accurate and timely information they
need to make informed financial decisions. The exclusion of Fannie Mae and Freddie Mac from federal securities laws flies in the face of good corporate practice. Our legislation simply brings Fannie and Freddie in line with other firms, and gives investors access to vital information,” Congressman Shays said. “I’m pleased to join in introducing this bill to repeal the exemptions that Fannie Mae and Freddie Mac have had from the registration and financial reporting provisions of the federal securities laws,” Congressman Markey stated. “While there was justification for this type of exemption when these entities were part of the federal government, there is no excuse for private,investor-owned corporations to be exempted out of these important investor protection requirements.” (Statements of Congressman Christopher Shays and Ed Markey on Introduction of HR 4071, 3/21/02)
So what happened to HR 4071?
This bill never became law. This bill was proposed in a previous session of Congress. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven't passed are cleared from the books.
You must go read the whole report that I have linked to at the begining of this post but I will leave you with this.
“Our commitment to underserved markets has become the vision of our company," Raines said in issuing his annual report on the company's pledge to provide $420 billion to help three million minority homeowners by 2010. He announced that in 2001, Fannie provided $87.6 billion in financing for 680,000 minority families, more than double the $34.9 billion in targeted funding provided in the first nine months of 2000. Last year's "record-breaking numbers" included $16.6
billion for 153,000 African-American families, $32.7 billion for 273,000 Hispanics, and $38.3 billion for 253,500 other minority households, including women, immigrants, and Native Americans. Ed London of the National Association of Real Estate Brokers, an organization of minority realty professionals, lauded Fannie’s program. "This is a true commitment," he said. "Fannie Mae has taken on the challenge, not just to enhance its bottom line, but as a true ministry." (National Mortgage News Daily Web site, 3/20/02)
Here is another name to add into the mix, Terry Peterson. Mr Peterson was appointed to the Fannie Mae National Advisory Board by Franklin Raines. In 2006 he was named to Mayor Daley's campaign as campaign manager. He also contributed $500 to the Obama campaign. He is one listed as CHA/CEO.
Posts
3 comments:
Congressman Ed Markey is a Democrat.
Re: “He announced that in 2001, Fannie provided $87.6 billion in financing for 680,000 minority families.”
There are a number of problems with this statement. First, it implies that providing mortgages to minority families is bad. What is bad about it? Minorities need home loans like everyone else.
Second, it implies that the $87.6 billion were risky loans. How do you know that? There are no statistics showing that blacks default more than whites. In fact, they probably default less, since their loan applications are looked at very closely.
Finally, it implies that $87.6 billion is a huge sum. Actually, Fannie made $463 billion in loans in 2001. So $87.6 billion of that sum is 18.9%, LESS than 20%.
IF those 20% of the loan portfolio were risky, or even half of it were risky, then the article would be justified in pointing that fact out. Nothing is stated.
The article IMPLIES that the $87.6 billion is risky, but there’s no proof. In fact, within the $87.6 billion the default rate is probably just about the same as in the rest of the $463 billion. So why does this article quote the fact that minorities got a share of Fannie’s loan portfolio?
Let people draw their own conclusions.
smrstrauss
You have to go read the entire article. It is lengthy and I only pulled certain parts. it goes to the general theme that there was pressure to make minority loans but not do oversight. It isn't the minority loans per se that got us into the bind but the lack of oversight.
In the rush to give out loans to less qualified applicants to meet some sort of quota the oversight was sacrificed.
Post a Comment