Fannie and Freddie should die. But if they go on balance sheet, we will be FORMALLY revealed to have, by far, the highest debt to GDP ratio in the world. 90% is consider the breaking point, we are at 120%.
For the bank haters, you should know that Obama and the Dems have really screwed them over (Even under Bush).
Do some research. Look up John Taylor and the Community Reinvestment Act Coalition.
Taylor’s representatives visit all banks and demand that they invest in a fund called CRAIX. If they don’t, they get sued for racial discrimination and the labor unions and other deadbeats picket the headquarters and branches.
John Taylor has cleared at least $10 million for the fund.
He is an ex labor union “recruiter.” And out of Barney Frank’s district.
Look at a conservative college economics professor eat his lunch on Kudlow.
http://www.cnbc.com/id/15840232?video=1587245714&play=1
Thanks for the post/info/link. Good stuff.
My point is the bankers should be screaming for the heads of those who pushed these mandates on them, much like the states or we the people should be screaming for the heads of these collectivist’s representatives pushing fed mandates for mythical “victims”...instead of yukking it up with them...enabling totalitarians.
Nice to see someone else paying attention. From the article:
The government controls 79.9 percent of Fannie Mae and Freddie Mac, just shy of the 80 percent threshold for placing them on the federal books.
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Yes, you’ve nailed the issue. Once they move beyond that 79.9% threshold, the government has to own up to the liabilities, and the liabilities are HUGE. I don’t know, however, if we realized these liabilities whether we’d surpass Japans debt:GDP ratio (which is currently 190% and going up).
This was the very reason why Fannie was spun out as a “private” enterprise during the Johnson administration: to get the Fannie liabilities off the US Treasury’s balance sheet, back in the days when the US dollar was already under pressure in value and it was backed by gold, which other central banks could demand in return for Federal Reserve Notes and other obligations.
So to stall the devaluation of the US dollar in the face of the deficits caused by combined outflows from Vietnam and The Great Society, Johnson spun Fannie out. And then because Congress didn’t want to be seen as creating a ready-made monopoly, they created “Freddie” as “competition.”
The situation was made far worse in the Nixon administration, when Nixon allowed Fannie/Freddie to purchase “conforming” mortgages from the private sector.
The problem with Fannie and Freddie are that they’ve cultivated a very lush network of political hacks on their payroll from both parties. Short of a “throw all the bums out of office” revolution, there’s scant chance of any real reform of these organizations by Congress.