Monday, December 12, 2011
Prime Vulgar
According to a 1996 study by the Congressional Budget Office, it was found that mortgage behemoth Fannie Mae had pocketed about a third of the subsidy which the government was providing (this, as opposed to them passing it on to the homeowners). This same study also goes on to say that James Johnson, the initial executive at Fannie Mae, personally took home nearly $100 million (his successor, Franklin Raines, didn't do too badly, either). For individuals to still say that Fannie and Freddie didn't play a roll in the financial collapse is astonishing.............http://www.nytimes.com/2011/05/29/books/review/book-review-reckless-endangerment-by-gretchen-morgenson-and-joshua-rosner.html?pagewanted=all
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6 comments:
What a load of bullpucky. Was F&F poorly (and perhaps criminally) run? Did they rack up ten of millions in loses that has now been foisted off on the taxpayer? Should Congress have acted to prevent this? Should F&F and Congress be criticized for this? YES to all questions.
But to suggest that F&F overpaying their execs contributed to or caused the housing bubble is pure nonsense. What's astonishing is that Conservative partisans continue to push this ridiculous lie.
It is interesting that you single out Fannie and Freddie but say nothing of the other players in the financial meltdown. As the book review that you referenced says:
"The recent report of the Financial Crisis Inquiry Commission blamed all the usual suspects — Wall Street banks, financial regulators, the mortgage giants Fannie Mae and Freddie Mac, and subprime lenders"
"A company called Countrywide Financial became Fannie’s single largest provider of home loans and the nation’s largest mortgage lender. Countrywide abandoned standards altogether, even doctoring loans to make applicants look creditworthy"
"The Street, Morgenson and Rosner say, knew lending standards were declining but maintained the charade because it was so profitable. Goldman Sachs even used its own money to bet against the bundles — making huge profits off the losses of its clients on the very securities it had marketed to them."
"The authors are at their best demonstrating how the revolving door between Wall Street and Washington facilitated the charade."
"A tight web of personal relationships connected Fannie, Goldman Sachs, Citigroup, the New York Fed, the Federal Reserve and the Treasury."
"Curiously absent from their book are some other prominent people who have been suspected of perpetrating fraud, like Richard S. Fuld Jr., who ran Lehman Brothers into the ground, and Joseph J. Cassano, the former head of the financial products unit at A.I.G."
"The extraordinary wealth of America’s financial class also elicits boundless cooperation from politicians who depend on it for campaign contributions and from a fawning business press"
Your analysis is not exactly "fair and balanced".
wd, ONE THIRD. They pocketed ONE THIRD. That was money that was supposed to go to poor people and it went straight into the toilet. And, correct me if I'm wrong here, but wasn't the F & F bailout the biggest of them all; some 150 BILLION? No, it wasn't the only factor but it was in fact a huge one.............Jerry, my point was that a lot of people on the left steer clear of the Fannie and Freddie fiasco, that they try to pin "it" all on private businesses. I was just trying to say that there is more than enough blame to go around. And it would also be nice if these OWS people would occasionally put some of their vigor toward people like Johnson and Raines - you know, to prove that they can be fair and balanced, too.
Johnson and Raines are probably part of the 1%. They are being targeted.
Maybe, but all that I ever hear is "Wall Street".
I realize this sounds radical but somehow we must stop these mamalukes from entering society.
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