NEW YORK, Sept. 8, 2008
Limited Oversight Doomed Mortgage Giants
CBS News Investigation Finds Political Privileges Masked Fannie Mae And Freddie Mac Downfall
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Play CBS Video Video Mortgage Rates Tumble The government takeover of mortgage giants, Fannie Mae and Freddie Mac sent mortgage rates tumbling to 6.2 percent. As Anthony Mason reports, rates should continue to fall within the next few weeks.
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(AP)
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Fast Facts Fannie & Freddie A look at the government-sponsored siblings and their role in the mortgage market.
Whenever Fannie and Freddie found themselves in trouble they would invariably point the finger to a government mandate that dates back to the depression: The need to provide affordable housing to every American.
To help make that happen, the government granted them privileged status, including:
Those are powers that would only expand over the years.
"You'd have people in Congress that would make it very clear they wanted nothing to touch Fannie and Freddie," said former Rep. Jim Leach.
He said he tried to hold Fannie and Freddie's feet to the fire - with little or no success.
"At one point in time, they had more lobbyists in their employ that any other institution ever," Leach said.
In fact, CBS News has learned, Fannie and Freddie now boast nearly 150 lobbyists, spending almost $175 million combined over the past decade alone. That's more than pharmaceutical giant Pfizer and defense contractor Boeing.
The mortgage giants doled out $2 million more over the last four years through political action committees. It was money used to fend-off regulation that would have required it to maintain deeper financial reserves to act as a cushion to the kind of risky loans that led to their undoing.
"Fannie and Freddie were thuggish," said Amity Shlaes, the deputy director of the Council on Foreign Relations. "People who worked there misled other people. They used political power in an ugly way."
A few years ago, Fannie was fined nearly $400 million after an investigation revealed it overstated earnings by $10 billion to maximize executive pay. That cost former CEO Franklin Raines his job but not $65 million of the $90 million he received in bonuses.
Now the CEO's who presided over the demise of Fannie and Freddie are out the door as well, walking away with some $30 million.
While every American, it seems, is paying the price.
© MMVIII, CBS Interactive Inc. All Rights Reserved
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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The institutions were doomed as soon as the Government promised to back them with the taxpayer funded "endless piggy bank".
Rates will go up after November as will gas prices.
Meanwhile, it''s the ordinary American that will continue to be the cash cow for the con artists in charge.
Where did all that money go? You know, the trillions that were and continue to be lost due to the mortgage con job? That money didn''t just disappear, lots of people became filthy rich off of that scam......and now they get more taxpayer money to bail them out once again.
The government had no business setting these up.
Imagine an economy where if you lent money you actually had to HAVE THE MONEY TO LEND!!! What a radical concept.
If that means no 30 year mortgages; then so much the better.
Now the same crooks who made billions on the scam, will buy up all the foreclosed properties in time to pump things up again in time for the 2012 elections.
Don''t ya get it folks? We''re being played.
Meanwhile pollution and global warming just might kill the whole species in the next century.....but hey, what does John McCain care....he''ll be long gone by then eh? And Palin, hey, she don''t care either as she''ll be "Raptured" into heaven.
Where have all the brain cells gone? When will we ever learn?
Posted by zgomer at 10:39 AM : Sep 09, 2008
And what do you suggest, O Great Compassionate Conservative, to replace social programs?
Are YOU going to stand up in your community and provide money for the elderly, the kids, the single moms who didn''t get abortions, the sick, the mentally disabled, small business start-ups, FDIC bank insurances, veterans assistance for our soldiers, and on and on?
Why don''t you open your eyes and see how much pressure social programs take off your shoulders. They take responsibility for the things you don''t even see.
And lets not forget YOU YOURSELF have used social programs, doesn''t matter if it is unemployment benefits or school loans or food stamps, or what it is. They were there when YOU needed them, you don''t want them there when someone else needs them, maybe someone you love?
Tax payers money going to the equalibrium of a nation''s entire population is a far better thing than what this article details: the governmental "bailing out" of corporations whose CEOs not only made bad business decisions but also made 19.8 million for doing so.
You, and other conservatives, need to get off the ever easy liberal-blame button already and start facing reality again. It was fun for you guys but the free ride is over.
Hey, Taxpayers: how do you feel about helping out these corporations and the bad business decisions of their high-paid CEOs (Freddie Mac CEO got $19.8 million in 2007)?
Your 3 or 4 digit paycheck stretches how far these days?
OUR GOVERNMENT has gotten our national debt up to $9,375,000,000,000. That is $149,314 per US family to pay off.*
Now Bush is bailing out corporations at our expense, on credit. He will leave these "take-overs" for you and me, the taxpayers, to pay for.
Bush will leave our nations over-extended credit for the next administration to clean up.
Bush will leave our national debt for the next generations of Americans to clean up.
Let''s vote John (95% of his votes are with Bush*) McCain and Sarah (government can fix social ills**) Palin into office to make more of these kinds of America-first decisions, shall we?
*
http://www.babylontoday.com/national_debt_clock.htm
**
http://www.aflcio.org/issues/politics/mccain_bush.cfm
***
http://www.cbsnews.com/stories/2008/09/08/cbsnews_investigates/main4427776.shtml
Typical misguided under supervision of the industry including both the industry agents and the borrowers. I won''''t blame the conservatives because a real conservative knows better. However clearly the current administration whatever they are do not.
Posted by misha128
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Bingo. You nailed it on the head.
Posted by zgomer at 10:39 AM : Sep 09, 2008
I thought until this weekend Freddie and Fannie were both private companies without government guarantees. So did many others when they heard Gov Palin complain about them as wasteful government entities, yesterday.
Posted by zgomer at 10:39 AM
Typical misguided under supervision of the industry including both the industry agents and the borrowers. I won''t blame the conservatives because a real conservative knows better. However clearly the current administration whatever they are do not.
Then why are there so many prosecutions for predatory loan practices and misconduct inside the industry instead of prosecutions of borrowers alone?
Since you have twice clipped phrases out of context perhaps you would consider the entire sentence next time.
Posted by maxify55 at 08:27 AM
within reason I would agree less government is preferable. However, when enforcement is lax for years as evidenced by all the current cases streatching back for many years being brought after the meltdown, I believe that it is clear that less government was taken too far so that there was too little government to prevent the abuse by both the industry agents and the borrowers.
[Posted by zgomer at 10:39 AM : Sep 09, 2008]
do you conservatives have any programs ... other than the ones where you start wars against soveign nations, spy on it''s citizens, provide immunity from prosecution to corporate entities that break the law for you, and/or bail out large organizations where the ceos get 10''s of millions in bonuses ... even when what they''re leading is failing?
Again, this would preclude that they forced you into a loan contract. You don''''t deserve more than that which you earn. ...
Posted by maxify55 at 08:23 AM : Sep 09, 2008
I own my home outright, however it is losing value from the illegal actions of industry agents (who sometimes falsify applications on their own) as well as speculators and fraud by unqualified buyers. We with homes or condos are hurt by the lax enforcement of the industry and less regulation and less government will not solve it.
If the illegality was not on the part of the industry and their agents why are practitioners of such acts being prosecuted at the present time. Consider the losses of a single industry agent that created losses through multiple and repeated abuse of the system vs the single homeowner that had one loan. Speculators in the housing industry strangely got McCain''s support saying he supported helping those that lost on the real estate investments (plural) and not real estate investment (singular as in primary residence). Perhaps you should check out Senator McCain''s current position hand find out what class of speculators he feels deserve assistance.
Ronnie used to rapturize about the "magic of the marketplace". Actually it was a formula to let the predators plunder the people.
And the Bushites have carried on with a vengeance.
Can''t let any pesky law enforcement get in the way of Bushit''s Billionaires making tons of money by *** the American people!
That how the Republicans have ruined our economy and destroyed the financial security of millions of Americans.
Hope you''re happy, Bushites!
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Posted by gophockeymom at 08:58 AM : Sep 09, 2008
+ report abuse
Yes, yes deregulate everything said the GOP VP candidate from the podium. The rest of her speech was unintelligible after she started speaking in tongues.
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