{"id":1096,"date":"2008-12-11T15:39:35","date_gmt":"2008-12-11T20:39:35","guid":{"rendered":"http:\/\/www.jasetaro.com\/blog\/?p=1096"},"modified":"2008-12-11T15:39:35","modified_gmt":"2008-12-11T20:39:35","slug":"wsj-congress-whitewashing-fannie-and-freddie","status":"publish","type":"post","link":"https:\/\/www.jasetaro.com\/blog\/2008\/12\/11\/wsj-congress-whitewashing-fannie-and-freddie\/","title":{"rendered":"WSJ: Congress Whitewashing Fannie and Freddie"},"content":{"rendered":"

With all the buzz about the Feds corruption probe of Gov. Illinois Rod Blagojevich it’s easy for things like this Wall Street Journal column<\/a> to be missed.<\/p>\n

\n

Whitewashing Fannie Mae<\/h3>\n

Congress begins its self-absolution campaign.<\/h4>\n

Henry Waxman’s House Committee on Oversight and Government Reform met Tuesday to examine “The Role of Fannie Mae and Freddie Mac in the Financial Crisis.” Alas, Mr. Waxman didn’t come to bury Fan and Fred, but to bury the truth.<\/p>\n

The two government-sponsored mortgage giants have long maintained they were merely unwitting victims of a financial act of God. That is, while the rest of the market went crazy over subprime and “liar” loans, Fan and Fred claimed to be the grownups of the mortgage market. There they were, the fable goes, quietly underwriting their 80% fixed-rate 30-year mortgages when — Ka-Pow! — they were blindsided by the greedy excesses of the subprime lenders who lacked their scruples.<\/p>\n

But previously undisclosed internal documents that are now in Mr. Waxman’s possession and that we’ve seen tell a different story. Memos and emails at the highest levels of Fannie and Freddie management in 2004 and 2005 paint a picture of two companies that saw their market share eroded by such products as option-ARMs and interest-only mortgages. The two companies were prepared to walk ever further out on the risk curve to maintain their market position.<\/p>\n

The companies understood the risks they were running. But squeezed between the need to meet affordable-housing goals set by HUD and the desire to sustain their growth and profits, they took the leap anyway. As a result, by the middle of this year, the two companies were responsible for some $1.6 trillion worth of subprime credit of one form or another. The answer to Mr. Waxman’s question about their role in the crisis, in other words, is that they were central players, if not the central players, in the creation of the housing boom and the credit bust. Mr. Waxman released some of these documents Tuesday but kept others under wraps. Read the rest…<\/a><\/p><\/blockquote>\n

It’s easy to blame “Wall Street greed” for the mortgage bust, yes it played a part, but we can not ignore the roll played Congress and government regulators in creating the environment that allowed this to happen.<\/p>\n","protected":false},"excerpt":{"rendered":"

With all the buzz about the Feds corruption probe of Gov. Illinois Rod Blagojevich it’s easy for things like this Wall Street Journal column to be missed. Whitewashing Fannie Mae Congress begins its self-absolution campaign. Henry Waxman’s House Committee on Oversight and Government Reform met Tuesday to examine “The Role of Fannie Mae and Freddie […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[26,20,7],"tags":[160,129,113,114],"class_list":["post-1096","post","type-post","status-publish","format-standard","category-economy","category-money-and-investing","category-politics","tag-congress","tag-credit-crisis","tag-fannie-mae","tag-freddie-mac","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pfpI7-hG","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":332,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/09\/fannie-freddie\/","url_meta":{"origin":1096,"position":0},"title":"Fannie & Freddie…","author":"Jeff","date":"September 9, 2008","format":false,"excerpt":"I'm not in a writing mood today but I hate to leave this page silent so I thought I'd share a few must reads on the Fannie Mae & Freddie Mac bailout with you. First is the Op Ed by John McCain in today's Wall Street Journal: We'll Protect Taxpayers\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2486,"url":"https:\/\/www.jasetaro.com\/blog\/2009\/07\/07\/anatomy-of-a-crisis-the-fannie-mae-and-freddie-mac-debacle\/","url_meta":{"origin":1096,"position":1},"title":"Anatomy of a Crisis: The Fannie Mae and Freddie Mac Debacle","author":"Jeff","date":"July 7, 2009","format":false,"excerpt":"Republican members of the House Committee on Oversight and Government Reform have released a report analyzing the role of the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, in the housing meltdown. You can read the full report here, but here are the highlights: Political pressure led to the\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":664,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/10\/06\/finally-mccain-blasts-obama-democrats-for-fanniefreddie-meltdown\/","url_meta":{"origin":1096,"position":2},"title":"Finally: McCain Blasts Obama, Democrats for Fannie\/Freddie Meltdown","author":"Jeff","date":"October 6, 2008","format":false,"excerpt":"Update: Scroll down for the video. It looks like the gloves are really off, John McCain is going to finally start talking about the economy and going after Barack Obama and Democrats for their roll in the failure of Fannie Mae and Freddie Mac. Our current economic crisis is a\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2443,"url":"https:\/\/www.jasetaro.com\/blog\/2009\/06\/24\/barney-franks-bad-idea\/","url_meta":{"origin":1096,"position":3},"title":"Barney Frank’s Bad Idea","author":"Jeff","date":"June 24, 2009","format":false,"excerpt":"From the Wall Street Journal: Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to \"roll the dice\" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":562,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/10\/01\/flamethrower-thaddeus-mccotter\/","url_meta":{"origin":1096,"position":4},"title":"Flamethrower: Thaddeus McCotter","author":"Jeff","date":"October 1, 2008","format":false,"excerpt":"It's pure unadulterated demagoguery but it's still a hell of speech! With all due respect Congressman Wall Street didn't cause this problem... They played their part but it was Congress and government regulators who, in the name of affordable housing, compelled banks to write these risky sub-prime loans. It was\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":693,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/10\/07\/credit-crisis-chris-shays-comes-out-swinging-at-congress\/","url_meta":{"origin":1096,"position":5},"title":"Credit Crisis: Chris Shays Comes Out Swinging At Congress","author":"Jeff","date":"October 7, 2008","format":false,"excerpt":"Democrats in Congress may not want to talk about their roll in causing the subprime meltdown by refusing to regulate Fannie Mae and Freddie Mac but Rep. Christopher Shays (R-Conn) does: H\/T: Hot Air.","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/1096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/comments?post=1096"}],"version-history":[{"count":0,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/1096\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/media?parent=1096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/categories?post=1096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/tags?post=1096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}