Fannie & Freddie's Friends In High Places

(CBS)  It was during the Great Depression that Fannie Mae was founded - in 1938 - with a simple purpose in mind: to give lower and middle income Americans more access to the Great American Dream, owning your own home.

It did it by guaranteeing if a homeowner defaulted on a loan the bank would get paid, CBS News chief investigative correspondent Armen Keteyian reports.

Today Fannie and its smaller sibling, Freddie Mac, hold a pivotal place in the home loan market - one that has grown to include special advantages, such as:

guaranteed lines of credits from the U.S. Treasury

exemption from state and local taxes

limited government oversight

Their privileged status is that of government-sponsored Fortune 500 companies, powered by a vast political machine.

"Fannie and Freddie have probably had more influence than any set of institutions in modern times," said former Rep. James Leach.

As the former chairman of the House Financial Services Committee, Leach tried for years to hold Fannie and Freddie to tougher financial standards.

"You'd have people in Congress that would make it very clear that they wanted nothing to touch Fannie and Freddie," Leach said.

CBS News has learned Fannie and Freddie now boast nearly 150 lobbyists - spending more than $5 million this year alone.

In addition, the mortgage giants have doled out about $2 million more in campaign donations in the last four years to key member of Congress.

"The view was always held that if they lost even a small battle, it might slide into something more meaningful," said former Rep. Richard H. Baker, R-La. "So every threat was taken seriously."

A few years ago, Fannie was fined nearly $400 million after overstating earnings by $10 billion to maximize bonuses. In 2006, Freddie paid a record $4 million fine for illegal fundraisers.

Both Fannie and Freddy say they've changed their ways. But, more and more, it appears two companies designed to help average Americans have, in fact, been helping themselves.

[forthepeopl1]

Concerns about the international breadth of the fallout from Fannie and Freddie''s problems also eased. South Korea''s central bank denied a media report that it had unrealized losses of more than $7 billion in investments in U.S. agency debt including bonds issued by Fannie Mae and Freddie Mac.

Bank of China 3988.HK 601988.SS , meanwhile, may hold roughly $20 billion worth of bonds issued by Fannie and Freddie, according to a research note by analysts at CLSA.

A Bank of China spokesman could not immediately be reached for comment. Because the U.S. government has taken steps to support Fannie and Freddie, CLSA said in its note that it regards the credit risk for the two as near to that of a sovereign credit rating for the government itself.

[wardoglrs]

Dont worry we will have the new printers running as soon as we can get more green ink.

[PacificGatePost]

What is needed is leadership out of Washington. Leadership with simple common sense.

http://pacificgatepost.blogspot.com/2008/07/where-is-economic-leadership.html

[rushlimpdrug]

There is no need to worry you liberals, the Bush admiinistration has had a recievership plan for Fannie and Freddie for months now. This administration is very forward thinking.
Posted by GOP_forever at 09:02 AM


This is forward thinking for the GOP?

How wonderful.

It''s like showing your kids how
to plan to go broke / bankrupt.

Guess that''s better a plan to
be responsible.

[randynason]

Where are the right wing neocons that usually post pro business, pro bush tripe?
Posted by brianbwb

I think they''re probably tripping all over themselves to get in line and kneel in front of whoever is in charge to worship their "leaning tower of *enis." That''s what they''re best at doing.

[aggiekat2004]

Yeah, but whoever wrote this article needs to go back to school and revisit GRAMMAR 101.

Sheeeesh...these writers never cease to amaze me!

[frankbowers]

Their fines that ws charged for the bonus were paid by the tax payers, the bonus were all kept not one cent returned so the tax payer took it in the rear not once but twice thanks to the 400M $ fine which the U and I''s had to pay while congress looked real good and smuge. The president of the two companies (freddi and fanny) continue to raid our pockets and get rich doing so.
Frank Bowers

[Gary Kempf]

brianbwb;

They are swarming around the inflation post site.

[brianbwb-2009]

Where are the right wing neocons that usually post pro business, pro bush tripe? They should be all over this one, trying to explain how "limited government oversight" is such a good thing.

(Chrrrp...chrrrp...) "Mighty quiet on the right there, Marshall..."

"Yeah, too quiet..."

[drinuk]

FSTOP100 Agreed ! but why stop there, shoot every politician and government empoyee who takes a back hander from any crooked corporate. Start with Big Pharma and the FDA, they most of all are harming the nation and the next generations.