REVIEWING THE FINANCIAL COLLAPSE

As the Bush tax cuts reach their expiration point, it is time to remind ourselves of the incompetence of the people running our country. After all, we remain in the midst of a recession. What caused the recession? That we can debate, but one thing should be obvious. Government has no business being in the mortgage lending business.

One of the myths is that Wall Street created the mortgage lending crisis. Undoubtedly, Wall Street greed had a role, but government largely engineered the mess. Here, in Fannie Mae Unsold $5 Billion Homes Bring Peril to Shareholders, we show that Fannie Mae (a government sponsored lending agency) had significant exposure to subprime mortgages. In addition, Fannie Mae owned a lot of Alt-A loans which are just about as absurd.  When Fannie Mae’s and Freddie Mac’s mortgages became insolvent, that created a cash crunch that forced Uncle Sam to take them over (not that Uncle did not effectively control each agency already).

Here, in Key facts about Fannie Mae and Freddie Mac, is the thoroughly Liberal view. Reading this article, you would never know the extent to which Fannie and Freddie (one of Fannie’s smaller cousins) exposed us to bad loans. Instead, you would think Fannie just suffered from the bad decisions of Wall Street.

Here, in Countrywide VIP loans reached deep into Fannie Mae, we have a rare bit of real news from the AP.  The AP reports the cozy relationship between the dearly departed mortgage lender, Countrywide, and Fannie Mae executives.

In addition to providing a bit of history, this article, The Fuel That Fed The Subprime Meltdown, explains how subprime and other bad loans got packaged with good loans.

This article, Subprime Lending: Helping Hand Or Underhanded?, explains how government created and encouraged subprime lending.  The Community Reinvestment Act of 1977 put the government (once again) in the role of promoting a certain outcome instead of just regulating business transactions to prevent fraud. Remember that blindfold on Lady Justice? Do we really want our government to pick winners and losers?  Is that not the same as taking up one man’s cause at the expense of another?

Here, in Housing policy must be set on sustainable basis, former Treasury Secretary Hank Paulson speaks up. He is most certainly not my hero. Unlike him, I want government completely out of the lending business.  However, he does “politely” point out something important. That so-called financial reform bill did not address the root cause of the financial collapse.

Because our government sponsored Fannie Mae and Freddie Mac, our government backed bad loans as investment securities. People believed (and it turned out they were right) that Uncle Sam would pay up even if the loans went bad. So they took risks that they should not have taken. As a result, our government put agencies with trillions in assets in conservatorship.

Was the cause of the collapse exclusive to Fannie Mae and Freddie Mac? No. Private businesses also took unacceptable risks.  But who were they competing with for investor funds? Who encouraged this crap?

There is a difference between good political decisions and good business decisions. That’s why we should not allow politicians to make what rightfully are business decisions. Thus I suggest one more refernence. In Fannie Mae, Freddie Mac Still Too Big to Nail, Jonathan Weil begins by observing:

The White House says it’s finally ready to consider new ideas for what to do about Fannie Mae and Freddie Mac. Still absent from the government’s agenda is any serious effort to hold anyone accountable for their ruin or investigate why they collapsed.

Since government, particularly the Democrats, would have a lot to explain if anyone investigated Fannie’s and Freddie’s collapse, is the absence of an investigation a surprise?

Comments are closed.

Blog at WordPress.com.

Up ↑

The Curmudgeon

Not afraid to offend

Lines By Liming

Reflections And Thoughts Of A Fortunate Man

Faithful Steward Ministries and FSM Women's Outreach

Christian Outreach Ministry to those Incarcerated, with Addictions and our Military

On the Pilgrim Road

“If you don't behave as you believe, you will end by believing as you behave.” - Fulton Sheen

Jesus Quotes and God Thoughts

“God’s wisdom is something mysterious that goes deep into the interior of his purposes.” ~Apostle Paul

We gathered life only to find...

...'Twas just the willow-wisp of time

The Lions Den

"Blending the colorful issues of life with the unapologetic truth of scripture, while adding some gracious ferocity.”

cookiecrumbstoliveby

Life through the eyes of "cookie"

Rudy u Martinka

What the world needs now in addition to love is wisdom. We are the masters of our own disasters.

Theo-Logis

Supplying the Light of Love

The Recovering Legalist

Living a Life of Grace

Write Side of the Road

writing my way through motherhood

Freedom Through Empowerment

Taking ownership of your life brings power to make needed changes. True freedom begins with reliance on God to guide this process and provide what you need.

In My Father's House

"...that where I am you may be also." Jn.14:3

TLP

Finding Clear and Simple Faith

Amatopia

Author Alexander Hellene - Pulp with Style

John Branyan

the funny thing about the truth

Because The Bible Wasn't Written In English

Welcome to Conservative commentary and Christian prayers from Gainesville, Virginia. That's OUTSIDE the Beltway.

Victory Girls Blog

Welcome to Conservative commentary and Christian prayers from Gainesville, Virginia. That's OUTSIDE the Beltway.

Through Ink & Image

...Pursuing a God Inspired Life

D. Patrick Collins

liberating christian thought

Conservative Government

Welcome to Conservative commentary and Christian prayers from Gainesville, Virginia. That's OUTSIDE the Beltway.

The Night Wind

Welcome to Conservative commentary and Christian prayers from Gainesville, Virginia. That's OUTSIDE the Beltway.

In Saner Thought

"It is the duty of every man, as far as his ability extends, to detect and expose delusion and error"..Thomas Paine

SGM

Faithful servants never retire. You can retire from your career, but you will never retire from serving God. – Rick Warren

christeeleisonblog.wordpress.com/

“The harvest is abundant but the laborers are few" Luke 10:2

All Along the Watchtower

A new commandment I give unto you, That ye love one another; as I have loved you ... John 13:34

Always On Watch: Semper Vigilans

Welcome to Conservative commentary and Christian prayers from Gainesville, Virginia. That's OUTSIDE the Beltway.

Luis C. Almeida, Ph. D.

College Professor

praythroughhistory

Heal the past. Free the present. Bless the future.

Lillie-Put

The place where you can find out what Lillie thinks

He Hath Said

is the source of all wisdom, and the fountain of all comfort; let it dwell in you richly, as a well of living water, springing up unto everlasting life

quotes and notes and opinions

from a Biblical perspective

partneringwitheagles

WHENEVER ANY FORM OF GOVERNMENT BECOMES DESTRUCTIVE OF THESE ENDS (LIFE,LIBERTY,AND THE PURSUIT OF HAPPINESS) IT IS THE RIGHT OF THE PEOPLE TO ALTER OR ABOLISH IT, AND TO INSTITUTE A NEW GOVERNMENT...

nebraskaenergyobserver

The view from the Anglosphere

bluebird of bitterness

The opinions expressed are those of the author. You go get your own opinions.

Pacific Paratrooper

This WordPress.com site is Pacific War era information

THE RIVER WALK

Daily Thoughts and Meditations as we journey together with our Lord.

atimetoshare.me

My Walk, His Way - daily inspiration

Truth in Palmyra

By Wally Fry

Kingdom Pastor

Living Freely In God's Kingdom

%d bloggers like this: