donspoliticalblogatl's Blog

With the world around us going crazy how should we respond? We could be panic stricken and sell off our future or work out the problems and survive this financial crisis.

How did all this happen?
Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt's New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This lead to the development of what is now known as the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge.

For the first thirty years following its inception, Fannie Mae held a veritable monopoly over the secondary mortgage market. In 1968, due to fiscal pressures created by the Vietnam War, Lyndon B. Johnson privatized Fannie Mae in order to remove it from the national budget. He also put in place at that time additional programs as part of his Great Society Program.

New York Times - Clinton Adminstration Pressured Fannie Mae
September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

The company was under additional pressure to go deeper into unqualified home loans during the 90’s by the politicians who wanted more minority lending. When the Bush administration asked for an investigation in 2003 to these practices they were blocked by Barney Frank and Christopher Dodd who claimed all was well in these companies and that an investigation would just hurt minority loan possibilities. Many of these politicians were getting financial aid from Fannie and Freddie including Obama and McCain. Obama receiving more than 120K and McCain over 20k. This is not a just a republican fiasco as we have been told, there is plenty to go around in both parties. It started when Johnson privatized these companies to fool the public as to his budget deficits and was magnified during the Clinton years by the push for minority housing and the elimination of mortgage redlining. This was all brought to a head when Speaker Pelosi used the opportunity of the congressional vote to place radical partisan politics into the congressional record blaming the Bush administration policies for all things negative. The Bush administration and Senator McCain had actually called for oversight in 2003 and were rejected by the Democratic House.

We will have plenty of time to place blame for this mess but first we have to get through it intact. Our goal should be to redevelop a financial basis in which to judge our future achievements. All previous goals and targets have been obliterated and should be discarded.

Just like this bailout, we are being railroaded into believing that Obama is the answer for change by the liberal press. We really need to spend some time studying his personal history and properly vetting his candidacy before rushing headlong into more problems. Our goal should be to place our trust in the person with the very best chance of making America stronger and safer both physically and monetarily. I would suggest everyone watch the David Asner program regarding the whole story behind the Freddie and Fannie collapse. Hopefully Fox will re air it soon.

To those who are for Obama, I am not asking you to change your vote, I am asking you to open your minds to the fact that he could possibly be a totally different person than you believe him to be. It doesn’t hurt to be sure does it? Wouldn’t you rather be safe than sorry, this is the only country we have.

And that’s my opinion,
Don