In 1938, Fannie Mae was founded as part of post-Depression New Deal
Back before the government got into the mortgage business, borrowers couldn't count on banks having money to lend where and when the funds were needed.
President Franklin Delano Roosevelt created Fannie Mae to pool together a national fund for mortgage lending, making home ownership an affordable dream for cash-strapped Americans.
TODAY, Obama proposes eliminating Fannie Mae AND Freddie Mac
Specifically, the president will lay out a proposal to overhaul the mortgage finance system and urge Congress to phase out Fannie Mae and Freddie Mac, which were bailed out by the government five years ago.
In its place, Mr. Obama will propose shifting the bulk of the burden of backing mortgages to the private sector.
Yes, of course, in our post-apocalyptic economic crash, let's do the opposite of what FDR did.
Well, in all fairness Fannie was privatized in 1968.
As the Vietnam war piled debt onto the federal budget, President Lyndon B. Johnson looked for places to cut – and decided to sell off Fannie Mae to private investors. The new company, while private, was still federally regulated and benefited from discounted interest rates.
We call these arrangements Public Private Partnerships. They all seem to work the same way. Our hard earned tax dollars help some private entity who gets to make and keep profits. Seems a bit one-way-street to me, but what do I know.
Obama also announced he'd like to phase out Freddie Mac.
Apparently the privatized, federally funded Fannie Mae began to monopolize the mortgage industry in 2 short years.
In 1970, Freddie Mac was formed to break Fannie's monopoly on the secondary mortgage market. Freddie Mac became the third government sponsored mortage enterprise.
Ginnie Mae was #2, and was also created in 1968 but Obama didn't mention Ginnie Mae today.
Freddie Mac emerged as a third "government-sponsored enterprise" exclusively to finance mortgages for S&Ls. Well, we know how that turned out.
So, here we go again. The economy seems unrobust, so say the very least.
America is no longer geared up to manufacture much and who knows what's left of oil and gas beneath our aquifers that has played a part in the "recovery."
Housing is and has been the Go To for economic stimulus for a few decades now.
The Crash of 2007 was the culmination of DC Dickering with the housing market.
The Savings & Loan Crash was also the culmination of DC Dickering with the housing market.
And here we are. Our President Obama wants Congress to Dicker with the housing market again.
And before you begin denigrating Fannie, Freddie, Ginnie, HUD, FHA etcetera, please read this timeline for a better insight on just why these government backed agencies are rife with corruption and repeated failure, although they did quite well for decades prior to 1968.
A TIMELINE OF DC HOUSING MARKET DICKERING
And let us NOT forget! President GW Bush launched the "A House for Everyone" debacle in this 2002 Speech
President George W. Bush addresses the White House Conference on Increasing Minority Homeownership at The George Washington University Tuesday, Oct. 15, 2002
Fannie and Freddie were front and center of Bush's push to dicker with the housing market.
And now Obama is lining up. Well, I'm sorry. To date the DC Housing Market Dickering has amounted to $Squat in the last 4 years.
As a matter of fact, not only were homeowners cast out of their homes en masse, millions were foreclosed illegally and the only ones who have made ANY money are entities paid over $2Billion in consulting fees.
The worst was Promontory Financial Group.
A Federal Settlement Billed As Making Foreclosure Victims Whole Is Now a Bigger Scandal Than Robo-Signing
On January 9 of this year, it was announced that Julie Williams, the Chief Counsel of the Office of the Comptroller of the Currency (OCC) who had stepped down the prior summer, was taking a job as a Managing Director at Promontory Financial Group.
This is the outcome of the President's "Homeowners Bill of Rights" plan which, if you read this article sounds a lot line Bush's 2002 Happy Housing talk script linked above.
In truth the plans to "make-or-break moment for the middle class" mentioned in Obama's 2012 speech broke the middle class.
The DC Housing Dickering since 2008 is a prime example of why revolving door executive recycling leads to serious questions of conflicts of interest:
Meet the Two Men Behind Promontory Financial Group, Architect of a Growing Foreclosure Settlement Scandal
Promontory Financial Group was founded in 2001 by Eugene Ludwig and Alfred Moses (Chart below), two long term partners of Covington & Burling, a law firm with intimate ties to Wall Street banks.
In the material below, OCC refers to the
Office of the Comptroller of the Currency (OCC). A little about the OCC
The OCC does not receive appropriations from Congress.
Instead, the OCC's operations are funded primarily by assessments on national banks and federal savings associations.
National banks and federal thrifts pay for their examinations, and they pay for the OCC's processing of their corporate applications. The OCC also receives revenue from its investment income, primarily from U.S. Treasury securities.
Gee, what could possibly go wrong with this arrangement?
Promontory, again founded by partners at Covington & Burling LLP, is famous for being where OCC personal go to make their fortunes after a stint at the OCC. This has definitely been the case for the last few decades.
From the "Meet the two men" article linked above:
Ludwig headed the OCC from 1993 to 1998. He, along with other Wall Street sycophants like Robert Rubin, Larry Summers and Alan Greenspan, championed the deregulation of Wall Street and the repeal of the Glass Steagall Act.
John Dugan, who has returned to Covington to chair its Financial Institutions Group, headed the OCC from 2005 to 2010 – the critical period leading up to and including the collapse of major Wall Street banks.
Promontory made nearly $Billion in fees while 80% of homeowners with foreclosure claims received less than $1,000 each.
HOW ARE OCC, PROMONTORY & COVINGTON BURLING CONNECTED? THE MAPS
Here's a Muckety Map for Covington & Burling, where the founders of Promontory fared from, where you will find some strange bedfellows. Larger, interactive map found here.
Here's is the map for Alfred H Moses, a Promontory founding partner, and partner at Covington Burling which also lobbied for Promontory
And a map for the other Promontory founder, Eugene A Ludwig
Here's Julie L Williams map who went from OCC to Promontory
Lastly, here's John Dugan's map
So, tune in folks.
DC is about to Dicker with the Housing Market again, just when it is beginning to show some signs of shallow breathing again.
PS: Now might be a good time to sell that home if you have any equity that you think you might need for survival, but I'm no economist so don't depend on my opinion.
MORAL COMPASS: This is one of the moments when we get to check in on our hearts. If there is some scam money to be made with the upcoming DC Housing Dickering, will we join the sharks and screw our fellow citizens IF the opportunity arises.
No, I didn't think so. This is WHY we are not part of the 1% (not that all in the 1% are greedy sociopaths)