Fannie And Freddie Enter Merging Their Failures

[Wehrwolfen]

Too Big To Fail:​

Finally, something is being done about Fannie Mae and Freddie Mac five years after they caused the mortgage crisis. Downsizing? Privatization? Nope, they will enter into a megamerger of failure.

It was years ago that President Obama pledged to "reform" the toxic twins.

But his regulator is combining them into an even bigger Democrat piggy bank for "affordable housing."

Earlier this week, the Federal Housing Finance Agency (FHFA) announced it will merge Fannie and Freddie into one entity for backing and packaging home loans.

"The overarching goal is to create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future," says FHFA chief Edward DeMarco.

Who's kidding whom?

Obviously the latter scenario will play out, with "policymakers" using the joint venture to continue to subsidize affordable housing. With Fannie and Freddie generating profits again, they'll keep milking any joint venture for political loans.

Congressional Democrats such as Rep. Maxine Waters — heir to Rep. Barney Frank's sordid legacy on the House banking panel — aren't going to give up their sacred cows. And it's Congress that has final say on the agencies' fate.

Government now controls the mortgage market directly, backing a stunning nine in 10 mortgages, and it won't sell off that power to the private sector if this president has anything to do with it.

Recall that it was Obama who said he wants to preserve Fannie and Freddie and their "vital" affordable-housing mission.

In fact, he needs them to help enforce his new rules for qualifying mortgages.

Private lenders get "safe harbor" protection from litigation if Fannie or Freddie underwrite their loans. Only with their stamp of approval can the lenders be sure to avoid penalties for predatory loans and other alleged abuses.

FHFA argues combining Fannie's and Freddie's back-office operations will create economies of scale and save taxpayers money. It also wants each company to sell at least $30 billion of different mortgage-backed products that would put private investors in a first-lost position on those loans.

But if the administration really wants to protect taxpayers, it would get rid of its affordable housing mission. That's what overexposed private lenders to risky subprime loans. That's what bled taxpayers for $190 billion in bailouts when those loans went bust.

[Excerpt]


Read More:
Fannie Mae And Freddie Mac Enter Into A Political Merger Of Failure - Investors.com

 

[American_Jihad]

Obama Nominates Dem Congressman With Ethics Issues Who Helped Cause Economic Crisis to Regulate Housing Finance


May 7, 2013 By Daniel Greenfield

The Federal Housing Finance Authority regulates Fannie Mae and Freddie Mac making it a rather important check on a corrupt system that helped cause the economic crisis that we are still living under.

That means its director should be a person of integrity with a record to match. So naturally Obama nominated the worst possible person for the job. A Democratic congressman with ethics issues who helped cause the economic crisis.

...

So another fantastically ethical choice from the most ethical administration ever.

Obama Nominates Dem Congressman With Ethics Issues Who Helped Cause Economic Crisis to Regulate Housing Finance | FrontPage Magazine

 

[waltky]

Granny axes, "Ain't we had enough o' Obamacare already?...

Proposed Fannie, Freddie Replacement Called ‘Obamacare of the Housing Finance Industry’
May 21, 2014 – Former Housing and Urban Development undersecretary Ken Blackwell compared a bill passed last Thursday by the Senate Banking Committee that would replace Fannie Mae and Freddie Mac with a larger government-sponsored enterprise (GSE) to Obamacare’s takeover of the health care industry.

“We think that it discourages private investment, and the new agency that it has created makes it tantamount to the Obamacare of the housing finance industry,” Blackwell told CNSNews.com. Blackwell is currently a director of the Coalition for Mortgage Security (CMS), which opposes the measure. The bipartisan bill, sponsored by Senate Banking Committee chairman Sen. Tim Johnson (D-SD) and ranking member Mike Crapo (R-ID), passed the committee May 15th on a 13-9 vote. It would repeal the federal charters of Fannie Mae and Freddie Mac and replace them with a new independent entity called the Federal Mortgage Insurance Corporation (FMIC).

But critics are calling FMIC “Fannie and Freddie on steroids.” “This is another instance where government is taking over one-sixth of our economy,” Blackwell said. “It’s already done it in health care, it is discouraging private investment and innovation in the energy industry, and we see that this legislation would also add $5 trillion to the liability side of the federal budget balance sheet that would tempt rating agencies to demote government bonds once again.”

CNSNews.com asked Blackwell if he was surprised that Senators Johnson and Crapo are trying to create an even bigger version of the two GSEs that played such a key role in the 2008 housing market collapse. “What I think I’m surprised at is that what they have proposed is a bigger mess, a bigger federal bureaucracy than the two entities that they are professing they want to fix,” Blackwell replied. “There’s general agreement that we should wind down the two entities [and] attract more private capital. The question is how we best do this, and we think Johnson-Crapo is not the way to do it.”

Leaders of 26 conservative and free-market groups urged Congress to reject the bill, noting in an April 22 letter that FMIC would just be “an expansion of the type of government intervention that fueled the housing crisis in the first place.” Blackwell noted that the proposed agency would not eliminate the problem of moral hazard, in which banks made risky sub-prime loans because they knew they could sell them to Fannie and Freddie. After being bailed out by the federal government in 2008, both still remain under federal conservatorship. Since at least 95 percent of mortgages sold in the U.S. are currently backed by Fannie and Freddie, Blackwell says he fears FMIC could set the stage for a second housing bubble.

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