[GCFL-discuss] More on Mae

[Discussion of the Good, Clean Funnies List]

For those who are not yet bored to death by the subject of Fanny Mae (and
remember, crooked politicians rely on the sheeple to become quickly
bored, so that those on the inside can get away with anything), this
seems to be a more comprehensive overview of all the relevant facts. A
short synopsis follows the link.

Siarlys

http://www.nytimes.com/2008/10/05/business/05fannie.html?hp

Fannie, a government-sponsored company, had long helped Americans get
cheaper home loans by serving as a powerful middleman, buying mortgages
from lenders and banks and then holding or reselling them to Wall Street
investors. This allowed banks to make even more loans — expanding the
pool of homeowners and permitting Fannie to ring up handsome profits
along the way.

But by the time Mr. Mudd became Fannie’s chief executive in 2004, his
company was under siege. Competitors were snatching lucrative parts of
its business. Congress was demanding that Mr. Mudd help steer more loans
to low-income borrowers. Lenders were threatening to sell directly to
Wall Street unless Fannie bought a bigger chunk of their riskiest loans.

Angelo R. Mozilo, the head of Countrywide Financial, who did not return
telephone calls seeking comment, told Mr. Mudd that Countrywide had other
options. For example, Wall Street had recently jumped into the market for
risky mortgages. Firms like Bear Stearns, Lehman Brothers and Goldman
Sachs had started bundling home loans and selling them to investors —
bypassing Fannie and dealing with Countrywide directly.

“You’re becoming irrelevant,” Mr. Mozilo told Mr. Mudd, according to two
people with knowledge of the meeting who requested anonymity because the
talks were confidential. In the previous year, Fannie had already lost 56
percent of its loan-reselling business to Wall Street and other
competitors.

“You need us more than we need you,” Mr. Mozilo said, “and if you don’t
take these loans, you’ll find you can lose much more.” 


With that as essential background -- it wasn't exactly an outpouring of
concern for low income families that wanted to buy homes which
single-handedly led to disaster, Fannie's response made a major
contribution:


The ripple effect of Fannie’s plunge into riskier lending was profound.
Fannie’s stamp of approval made shunned borrowers and complex loans more
acceptable to other lenders, particularly small and less sophisticated
banks.

Between 2001 and 2004, the overall subprime mortgage market — loans to
the riskiest borrowers — grew from $160 billion to $540 billion,
according to Inside Mortgage Finance, a trade publication. Communities
were inundated with billboards and fliers from subprime companies
offering to help almost anyone buy a home.
____________________________________________________________
Click here to find the perfect picture with our powerful photo search features.
http://thirdpartyoffers.juno.com/TGL2141/fc/Ioyw6i3mDcGnApsjxve9d6ovRoJARpQn1yITZB5sXxo5EBYKzBNEcs/
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://gcfl.net/pipermail/gcfl-discuss/attachments/20081005/06d63194/attachment.htm