Then why did they need a federal takeover? Why were they delisted? Of course, freaks that they are, they never should have been listed in the first place.
Fannie and Freddie's government backing allowed them to set the stage for the irrational exuberance
that lead to the crisis. And their 'Rat protectors in the House and Senate prevented efforts to get them under control because that might have made house ownership less available to the typical Democrat voter.
“Then why did they need a federal takeover?”
There was no legal requirement, it was a decision made by the Bush administration. I haven’t seen them explain their reasoning, but my guess is that they thought allowing F&F to fail would bring down a lot of other pieces of the economy.
Without a doubt it would have seriously damaged the ability of banks and S&Ls to sell their mortgage paper in the secondary market. They need to do this in order to get liquid so that they can make new mortgages, which seems to be a big problem even with F&F still functioning.
“Why were they delisted?”
They fell below the capital requirements for listing on the NYSE. They still trade OTC.
“Of course, freaks that they are, they never should have been listed in the first place.”
LBJ sold Fannie off to the private sector in 1968 to get it off the federal budget. Freddie was created and sold to investors to give Fannie a competitor.
“Fannie and Freddie’s government backing allowed them to set the stage for the irrational exuberance that lead to the crisis.”
Not really. Irrational exuberance was a result of Greenspan’s extremely low interest rate policy, his unwillingness to let the economy go into recession. F&F functioned for decades without any problem, and they had no legal government backing. Bush didn’t have to bail out their investors.
“And their ‘Rat protectors in the House and Senate prevented efforts to get them under control because that might have made house ownership less available to the typical Democrat voter.”
Dubya was every bit as bad when it comes to pandering to home ownership for everyone. Dubya even championed a program of free downpayments for those who didn’t have one, a policy that even the Democrats hadn’t managed to think up. Google “American Dream Downpayment Initiative”. It wasn’t just a Democrat problem, although Fannie was certainly full of former Democrat activists stuffing their pockets by cooking the books.