Posted on 01/17/2016 4:50:51 PM PST by Lorianne
In the midst of the financial panic seven years ago, the government took over and bailed out two of the culprits of the bubble, the mortgage giants Fannie Mae and Freddie Mac. Now, as we start 2016, they have $5 trillion in assets but are still entirely wards of the state. It’s high time to resolve this great unfinished business. We need to extract Fannie and Freddie from their government bondage, while simultaneously ensuring they will never repeat their disastrous free ride on the taxpayers.
In September, 2008, Fannie and Freddie were put in federal conservatorship as their losses from bad loans and subprime investments swamped them. The Treasury Department eventually invested $189 billion of taxpayers’ money to get their capital up to zero. Under the bailout deal, Fannie and Freddie had to pay a 10 percent annual dividend on the $189 billion in senior preferred stock that the Treasury acquired. (In addition, the government owns warrants on 79.9 percent of Fannie and Freddie common stock, which pays no dividend.)
(Excerpt) Read more at politico.com ...
Wind them down and go out of business. Sell their portfolios to actual banks to recoup some of the costs of bailing them out.
Stop all government guarantees!!!
Indeed, just let them fail. And keep one-celled-brain Bawney Fwank far, far away from anything associated with it.
Close them down.
The root of the problem is that the banks in the big cities are forced to make housing loans to minorities whether they are qualified or not. Otherwise they were sued for big bucks and often closed down. LBJ, Jimmy Carter, Bill Clinton, et al., put through those laws, and the urban politicians all push them as a way to gain votes.
Does the Atlantic really think that the Democrats or the GOPe will put a stop to all that? For that matter, would they really WANT them to? I seriously doubt it.
Burn them.
It’s the only way.
And as far as I know, not one single person went to jail over that fiasco.
How to fix Fannie and Freddie
Throw the Clontonite cronies that used it for their own goals in prison.
That was certainly a factor, but I would hardly consider it the root of the problem. The bigger issue was that a lot of people who were perfectly capable of qualifying for a mortgage went out and got much bigger mortgages than any sane lender ever would have given them. Once these folks started getting laid off during the early stages of the current recession, they couldn't make their mortgage payments and couldn't sell their homes because too many people were in similar situations.
In my area, the vast majority of the underwater homes with huge mortgages fit the same pattern:
1. Two spouses working, and qualifying for a large mortgage on a home that they never would have considered buying at that price ten years earlier.
2. One spouse getting laid off and unable to find a job, or both spouses getting laid off and getting new jobs that pay far less than their previous incomes.
3. Two people struggling to make payments on a mortgage whose balance exceeded the appraised value of the home.
Correction:
Stop all TAXPAYER guarantees.
CONGRESS wants to pony up their OWN $$, I could care not care less; unlike when THEY use MY wallet for a piggy-bank.
4. Taking out HELOCs to the max allowed thereby depleting any equity they might have built up.
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