Here’s all you need to know. This is an excrement sandwich and we’re all going to have to take a bite. Some of us will be forced to go back for seconds. Fannie Mae was foisted upon the American people in 1938 thanks to the socialist policies of the new deal, thanks Frankie D. Freddie Mac is Fannie Mae’s evil twin. Not that Fannie is as pure as the driven snow; quite the opposite.
Those of you suffering from ADD or ADHT might want to double up on your Ritalin and take notes.
Fannie and Freddie are the largest secondary mortgage buyers in the country. They are responsible for 50% of all outstanding mortgages nation wide. Here’s how it works. Let’s say you go to your local bank for a loan. Most small banks cannot set on your paper for thirty years. They don’t have that much liquidity, think cash. So, they bundle your loan with several others and sell them to hedge fund managers, larger banks or investment houses. Now, these larger institutions are buying a lot of bundled loans from all over the country. Here’s where Freddie and Fannie come in. They will buy these super bundles of mortgages and, “in a bullish housing market” slices and dices these bundles and sprinkles them throughout the investment community thereby adding liquidity to he mortgage market, think cash.
What happened? Democrats have been fighting any reform at Freddie or Fannie. Both quasi private/public companies are overseen by a house committee. Yet, in 2004 President Bush’s SEC, “securities and exchange commission” swarmed both companies with federal regulators and found they were inflating assets to reach bonus targets for their executives. Not surprisingly both companies were infested with Clinton cronies cooking the books and setting up enormous golden parachutes for themselves.
Knowing they were to big to fail and having the backing of the federal government, “our money” Freddie and Fannie stopped slicing and dicing mortgages for sale as and investment mainly because investors knew a great deal of that paper was worthless. Still, both companies hyped their assets and kept buying. After all, we, as in we the people guaranteed they could not fail.
As the bottom fell out of the housing bubble Freddie and Fannie saw their assets plummet. Yet, you have to understand how this incestuous relationship works. Most of the money Freddie and Fannie accrued to buy these bundled mortgages they borrowed from banks at short term rates. Now those notes are due and these companies haven’t the liquidity, “think cash” to pay the piper. And, a great deal of that paper they are setting on is worthless.
So, here we are. If Fannie and Freddie can’t meet their debt we’ll wake up one Monday morning and see two or three hundred banks fail. It will only get worse. The FDIC, “Federal Deposit Insurance Company” is insolvent, “think broke”. Then it’s 1929 all over again, yet worse. We are no longer an agricultural people for the most part. We have urbanized and become technologically dependent.
What we can do. We don’t have a lot of good choices; between the two giants they hold 6 TRILLION dollars in mortgage paper. Our current national budget is 3.1 trillion dollars, that’s perspective. Yes, they are too big to fail but we can make damn sure this doesn’t happen again. John Mcpalin has said he would privatize Freddie Mac and Fannie Mae by slicing them up into a lot of smaller companies and let them compete with each other without government assurances. As you might guess, the investment giants aren’t happy with this. Again, if you’re an investment firm, holding risky paper, you can always dump it on Fannie or Freddie. That’s why the investment community is the second highest contributor to Obama behind the trial lawyers. Obama has received contributions from; Goldman Sachs $653, 030, JPMorgan Chase & Co $414,760, Citigroup Inc $408,299, UBS AG $389,294, Lehman Brothers $361,482 and Morgan Stanley $307,221.
And yes, he has accepted donations from Freddie and Fannie.
The answer to this dilemma is as clear as Oprah’s bias against conservative women. Anything government touches it destroys. And, America has had enough. I don’t know what it’s going to take but I do read my e-mails and people are mad as hell. Maybe this is the tipping point but just in case I’m buying a new pitchfork and cleaning my musket.
Conservative Springfield 09SEP08
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