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  • Morning Bell: Time to End Fannie and Freddie

    Four years after home values in America plummeted, fears over America’s housing market remain. In testimony before Congress yesterday, Federal Reserve Chairman Ben Bernanke cited “the continuing depressed condition of the housing sector” as one of the factors behind America’s sagging economy. In response to the poor market, the White House is reportedly considering a repeat of the historically bad decisions that contributed to the mortgage meltdown rather than pursuing a much saner course: eliminating Fannie Mae and Freddie Mac.

    In a town hall last week, President Obama remarked that “the continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected.” So what’s he planning to do about it? The Wall Street Journal reported Monday that the White House may have “taxpayer-owned mortgage giants Fannie Mae and Freddie Mac relax their rules for loans to investors” as one way to tackle the housing slump.

    For those with short memories, Fannie, Freddie, and government policies aimed at making it easier for people to purchase homes is how the housing market wound up in its current state. And that state isn’t a pretty one. In the years since housing prices peaked in the second quarter of 2007, the value of household real estate has fallen by about $6.6 trillion—30 percent—and it continues to fall.

    Housing and Urban Development Secretary Shaun Donovan takes a positive view of the market, claiming, “It’s very unlikely that we will see a significant further decline.” Not so fast. Bloomberg Businessweek reports today that analysts like Doug Ramsey of Minneapolis investment firm Leuthold Group take a dimmer view:

    The Dow took 35 years to return to pre-crash levels. The Nikkei trades at less than a third of where it peaked 22 years ago. ‘The housing decline,’ he says, ‘will be a long, multiyear process, and the multiplier effect across the economy will be enormous.’

    How can we get back on course? The Heritage Foundation’s David John writes in a new paper that “real recovery is not likely until both Fannie Mae and Freddie Mac are replaced by a new housing finance system that does not include government distortions of the market.”

    In his paper, John explains the evolution of Fannie and Freddie—what he calls “two stories of government programs gone wrong.” Congress used the entities’ special status as government-sponsored enterprises to require them to meet affordable housing goals by issuing mortgages to lower-income and moderate-income homeowners. That policy, combined with Fannie and Freddie’s involvement in investing in and issuing mortgage-backed securities (including subprime mortgages), the housing market’s collapse, the entities’ resulting financial hardship, and the government’s move to take Fannie and Freddie into conservatorship, led to a housing market nightmare.

    John says that’s not a road America should go down again, and he lays out a detailed course for how Washington can gradually end Fannie and Freddie while avoiding the disruption of the housing market’s slow recovery:

    As the crash of 2008 showed, the old structure of housing finance was a spectacular and expensive failure. Allowing it to remain in place—or, even worse, recreating it—is the very last thing that homeowners or taxpayers need to bequeath to future generations. Instead, both legislators and the Obama Administration should work to structure a mortgage-finance system based in the private sector that has the flexibility to meet market needs while ensuring that mortgages still meet strict underwriting standards and protecting consumers from predatory lending practices.

    Yes, America’s housing market is a problem. But the answer certainly is not recycling failed policies of the past. Creating Fannie and Freddie was a mistake. Now is the time to eliminate them.

    Quick Hits:

    • President Obama abruptly walked out of debt limit negotiations yesterday and reportedly warned House Majority Leader Eric Cantor (R–VA), “Don’t call my bluff.” Talks are scheduled to resume today.
    • Moody’s Investors Service says it’s reviewing the United States’ Aaa bond rating for a possible downgrade amid continued friction in debt limit negotiations.
    • Federal Reserve Chairman Ben Bernanke says the Fed is “prepared to respond” with additional stimulus measures if the economy needs it, though he believes the country’s poor job growth is due to temporary factors.
    • India has no immediate suspects in yesterday’s three terrorist bombings that killed 17 people during rush hour in its financial capital, Mumbai.
    • VIDEO: Remember when cell phones cost a bundle? Not anymore, and it’s all thanks to capitalism. Watch the video on Foundry.org.
    Posted in Economics [slideshow_deploy]

    69 Responses to Morning Bell: Time to End Fannie and Freddie

    1. Ted Taylor says:

      I work at HUD. Yes, Fannie & Freddie should be done away with, but the administration will pick up the slack with Ginnie Mae. This fits in with their game plan of expnading government.

    2. david says:

      sounds like we need to get rid of them, along with the IRS!

      • KC - NM says:

        Yes – get rid of IRS by killing the current tax system and replace it with a FLAT TAX approach – based only on income, no deductions, no exceptions, everybody pays something. Sounds fair to me.

    3. RogCol says:

      Is there anybody that believes the politicians will eliminate the biggest piggy banks they have? Excellent returns from the on the vote buying investment scheme and a place to go after leaving the actual government spotlight and make a few million as a member of the BOD.

    4. Anoldguy says:

      For those of you that think this is a great idea, read the book RECKLESS ENDANGERMENT, by Gretchen Morganson and Joshua Rosner. See what our congress and corrupt lenders can do and have done. Obama just wants to have moire government control over the housing market AGAIN!

      • Dan says:

        Currently reading the book now. Very informative also shows that sometimes the corruption is rooted in people you don't ever hear about.

    5. NWBanker says:

      Don't forget complicit efforts of organizations like ACORN. I worked for WAMU up to about one year before they closed, in the Auditing Dept. WAMU was forced by organizations like ACORN to promise to make more Sub-Prime loans in order to acquire other banks. It was the agreements to make more loose loans to Sub-Prime borrowers that helped cause the crash for WAMU. These loans to borrowers that could never hope to pay the mortgage loans were the primary cause of this recession.

    6. Tony Piscatella says:

      It's past time to end Freddie and Fannie. The Government, through this administration is again showing the public that they do not have a clue on how to get the economy back on track. Home ownership is not a right! It is a privilege for those people who can meet the criteria. Government manipulation of the market through relaxation of credit standards is what got us where we are. Who still thinks lending money to a party that can't make their loan payments is a good idea? All those bad loans do is drive up the costs on the rest of the population.

    7. Joe Minor says:

      There is no doubt that the management, policies, and direction need to be changed. However before you recommend the dissolution, you need to review the history and the positive aspects of the programs prior to the Clinton Administration making recommendations (read-dictate policies) that led to the agencies lowering underwriting guidelines and deviating into jumbo products and derivitives. If you do away with these agencies and place conforming mortgage originations solely in the hands of GNMA, you're just putting another program directly in the hands of Obama.

    8. Country Boy says:

      Some one help me out here. I'm still searching the Constitution for the place that says Govt is responsible for helping every one get a home, regardless of repayment ability.

      • Bigjet says:

        I'm so in agreement with you.
        Where in any of our miracle founding father documents allow the Imperial federal government to loan money for houses…wait I'll tell you…no where.
        Uphold and defend the Constitution my butt. Take them ALL to court for lying under oath.

      • jwalton says:

        Demand for housing is a function of household formations. With the decline in the boomers, the aging of rthe xers and no more significant growth in one of the dynamics that fuels demand for housing (the other being cheap and easy financing which caused this collapse) there is little future for the housing and general construction industries. That is where the jobs were,

    9. Trip Jones says:

      Yesterday, Bernanke also said…the private sector cannot play a significant part in MBS. I was certain I had heard that wrong until CNBC printed that point on the screen. The FNM's and FRE's provided a critical liquidity function to the banks. After all, if banks can't sell a housing loan and must keep all of them, eventually they run out of lendable money because their balance sheet has real limits. The secondary market was the solution and using a government related entity also made sense because of its implied borrowing capability. If that was the limit of the GSE's function along with leverage limits we would have been fine. Unfortunately, Dodd and Frank manipulated the structure under the concept of affordable housing which really ment that the private sector had to make bad loans. Conclusion: don't trust government.

      • Bill Conley says:

        If we got rid of Fanny and Freddie, the market would create more mortgage companies if there is money to be mad. It was too easy to bundle and hand off to these two, so the banks just kept making the bad loans and getting their money, leaving the taxpayer to support a screwed-up system.

        • Bobbie says:

          the banks were required by government to give out the bad loans leaving the taxpayers to support the government's corrupt system and pay off the mortgage of other peoples signed contracts. Government suggesting "predatory lending" for sympathy and disguise as the practice is/was not discriminating to anyone. It was a set-up through government control, allowing people who didn't afford housing or weren't responsible to budget, without holding mortgage borrowers accountable to their signature even though accountability is the necessary process! DISCRIMINATION!!!!! FAVORITISM!!!…and entrapment!!!

    10. Marjojo says:

      I feel like a hamster on a wheel that won't stop. Does their ignorance and greed know no bounds? Stop already!

    11. Rick says:

      Here's a perfect example how goverment and also there corrupt side liners work. This wannabe celeberity of a president spends more time running around trying to get reelected than doing his job. The unions the same way 12 men stand around and watch one work. Where else can you do this. Well as a middle class worker I would loose my job if I asked for 11 workers to help me or that I needed 2 years with pay to run for office. The sad part is this presidEnt is so caught up in his ego he has no idea what he talking about except BS that he thinks ppl blieve. As for housing we all know it will be decades before it comes back and to be honest it has a ways to go before it hits its bottom ask any person on main street not a politian who has a liquid lunch everyday on the taxpayers and has no clue with «eality. Bottom line this huge goverment is just lost and the leader trying to be a star

      • Powdermonkey says:

        Whew! I thought I was the only one who saw into Obama's inflated ego. The guy makes former Presidents look like kindergartners in the ego department. Obama should have gone to Hollywood instead of Washington. His bad movies would have been far less dangerous than his agenda in Washington.

    12. Ike Robinson says:

      Of course Obama whats to relax the standards of Freddie and Fannie……what better way to totally colapase the houseing market….I think its one of his goals…..

      • The Skip says:

        Exactly right.
        Destroy the private sector… Check.
        Crap on the Constitution… Check.
        Bring the job market to its knees… Check
        Increase the size of Gov't… Check
        Create a debt so big 3 generations will have to pay it off… Check

        The man is destroying this country and so are the left wing nut jobs intent on giving us the "Marxian Utopia" that has worked brilliantly in Europe.

    13. Jimbo says:

      Fannie & Freddie worked for years to the benefit of the consumer. The financial crisis is the result of congress placing pressure on Fannie & Freddie, as well as others, to create loan programs that would allow unqualified individuals to purchase homes. I'm a 27 year mortgage professional that has completed thousands of home loans for qualified buyers. Now we have an industry that is over regulated with underwriting guidelines that are too restrictive, resulting in qualified buyers being shut out of home ownership.

      • Kilroi1 says:

        Exactly Jimbo, some relaxation of guidelines for people with income, assets, and good credit needs to happen to solve this problem. No one is saying to go back to lending 100% to someone with a 580 FICO, but what we have now is way to restrictive for qualified people and it's literally strangling the market and any recovery.

      • John Doe says:

        Jimbo you right on. The govnment went too far to make it too easy to qualify, and now they went too far to make it too hard to get a loan. Over-kill every time. People could buy cheaper than renting now but can't meet the new standards, so one more house sits empty with us paying the bill. We need to move these empty houses and if we get one out of 10 back–we will still be farther ahead than having 10 sit empty.

    14. J. Guidry says:

      I wholeheartedly concur. Along with the rest of the useless alphabet agencies. Back to the Constitution and what it specifically allows the government to do.

    15. Frank says:

      We need desperately to move away from big government & crony capitalism asap. Getting rid of Fanny Mae & Freddy Mac would be a step in the right direction. Unfortunately, corrupt politicians won't want to do it unless the voting public hold their feet to the fire.

      • Marcy says:

        I agree, we need to get rid of Freddy and Fanny. Big government has to go

      • Powdermonkey says:

        Unfortunately, there aren't enough people in the "voting public" who even know what Fannie and Freddie do, much less how they have screwed up the housing market. As a result, nothing will be done.

        • Frank says:

          Probably you are correct & that's why the politicians don't seem to be listening to us. But hopefully the Internet Revolution is helping to bridge the information gap with the lame-stream media… which is part of what we all are trying to do here, in our own small way (bouncing ideas around, testing them out & searching for some truth).

    16. Jill Maine says:

      And the primary thanks should go to Carter and Clinton. They pushed the Community Reinvestment act.

    17. Jeanne Stotler says:

      When we first bought a home in the '50's, we made a down payment and in a few days we went to a lawyers office,after reading the papers, we paid the dock fee and his fee, plus adjustments to taxes and Ins. etc. the cost was a about a hundred dollars. Now when you go to closing its four to five thousand and endless clauses and papers. There is really not all that much that requires these huge fees it's just become a cash cow for some, and I am sure there are kick packs too.

    18. toledofan says:

      Each of the articles you provide continue to show the adverse affects of the lefts actions, policies and regulations on the American economy. It's pretty clear and straight forward that the current policies didn't work over the past three years, so, why would any thinking person try and do the same thing again and expect a different result, I thought that's what insanity is? Anyway, sooner or later, it's going to hit the fan and the Democrats are going to have be held to account for all of their actions or non actions. They still own 2/3rds of the government so until that changes the problems belong to them. HF keep up the good work.

    19. Denver says:

      As a licensed realtor, it's treasonous to me that the federal govt. has cynically destroyed over40% of the value of every propertyowner's most expensive and important investment. And also have managed to make home ownership highly unlikely for upcoming generations. I tend to doubt the sincerity of the professed intent of the original legislators. This is just more of Washington's ability to create disaster for the Dumbocrats to make a pretense at fixing!!!

    20. Glynnda says:

      Hmmmmmmm perhaps these guys are the first that should be cut off for funding……I wonder how much government contributes annually to this quasi-private organization. Maybe it's time for Fannie and Freddie to stand on their own two feet as a fully private organization. How much you want to be they change their economic tunes very quickly? …..or they will fail and fold.

    21. Mike the Bike says:

      Albert Einstein said,"The definition of insanity is doing the same thing over and over and expecting a different result each time". Under that definition, all of our elected officials could be considered insane.

      • cathy says:

        there are details of a congressional reform act of 2011 going around online. sounds good to me…but we ALL have to demand it!

      • Roy J SWtewart says:

        reply to: Mike the Bike
        Insanity? Congress? The Executive?
        "We The People" continue to re-elect the same 'Clowngress' over and over, and over . . .
        We are the ones to be considered Insane!
        Regarding the Debt Ceiling, and throwing a few Trillion more 'Borrowed Money' . . .
        I have heard no one demand a Reduction in the Debt Limit.
        An email to Moody's, asking what would preserve 'Our' Aaa rating has received no response . . .
        We have dug Ourselves deeply into the Bank of China

        Roy J Stewart,
        Phoenix AZ

    22. Susan Sunde says:

      Amen! One more place the government needs to butt out!

    23. Basia says:

      As a real estate appraiser for many years, I have witnessed both the rise and fall of the housing market.
      IT was well known that ACORN and the likes of Jesse Jackson have threatened and bullied lenders into giving out loans to folks that had no capability or intention of repaying. The crooks Barney Frank and Chris Dodd have caused this serious and devastating crash and cost Americans a great deal of their life's equity. How ironic that now the same bill called the Frank/Dodd bill is supposed to be the panacea. Also how ironic that Obama's good buddy Franklin Raines resigned as CEO of Fannie just a few months before the big crash and took his $90 million bonus with him. While the rest of us have lost half our home values, I'm sure Franklin Raines is doing just fine! Also remember, Obama's socialist/marxist ideology despises private property ownership and rights. I suspect Obama would LOVE to collapse the housing market totally so that we could all live crammed in small boxes near rail lines and life would be FAIR. Then instead of chanting Heil Hitler, we'll be raising clenched fists in honor of Comrade Obama!

    24. The Farmer says:

      Yes, Fanny and Freddie should go, they should never have been to begin with.
      However, It wasn't the foolishness of these two that caused the housing market to tank, they are just two of the weakest links and therefore first to break.
      The underlying problem was and remains, our govermental interferrence in the energy policy of America.
      Just before every thing begin to colapse energy prices went through the roof, which sucked the money out of our economy causing many to begin loseing jobs, subsequently their homes, etc.

    25. Seahorsey says:

      Meanwhile the GREED and corruption issue with young families paying mortgages between 1,800.00 to 2.500.00 even the old homes built 40 or more years with a high percentage with the original windows, roofs, furnaces, plumming. Story after story of families trying to get the mortgage company to work with them speak of harrassment, manipulation, lies, stalling, not really helping with lower payments. When families lose their jobs they can't afford their homes.

    26. KC - New Mexico says:

      Freddie and Fannie need to be cleaned up and the government fraud needs to stop. But the real issue is the leadership in Washington. Holding the Social Security, Medicade, and Military Pay card as a barganing chip is disgusting. There is enough revenue to cover these items. The other spending issues need to stop. Obama and the Washington professional politicians on both sides do not get it. Time for change in 2012 – “yes we can” drive change in representing what is best for America.

    27. Robert says:

      Yes, we should get rid of Fannie and Freddie ….. and HUD, and Dept. of Energy, and Dept. of Education, and Dept. of HHS as well as all of the billions of dollars of block grants that allow states and cities to create their own welfare programs. Kind of thought that was what we voted for in November of 2010 (as well as November 2000), with all of that "making government smaller" talk – but it was just talk.

    28. D. Mathews says:

      I totally agree that Fannie and Freddie have to go, but I need to point out here (with reservation), that the statement made by the White House if fact, has to do with relaxing requirements for INVESTORS, not your average home buyer. Investors make up 30+% of sales right now. Investors are also responsible for cleaning up abandoned homes and neighborhoods. You average home buyer (90%), still want to buy a home that is in move in condition – not a fixer upper. Ethical Investors, like myself, will take that fixer upper and turn it into something, you can be proud to live in. Not to mention the fact that I will also, finance the purchase of that home. Just keep in mind that there are approx. 4 million homes sitting on the books that aren't even on the market for sale. With many more to come. To Note! I personally don't support this President or any of his policies. 2012 can't come too soon for me!

    29. Frank E. Vincent says:

      Great comments. From many of the references I am and was able to clarify the causes the brought about the detrimental policies, statutes, and administrative rules that continue to tie the hands and restrict free enterprise.
      Frank E. Vincent

    30. dean says:

      Pres. Obama is supposedly very intelligent. I think he is the only one who actually believes that. Why does he keep on making the same mistakes over and over and then expect different results??

    31. John Doe says:

      Freddie and Fannie worked for years Ok until they relaxed the standards too much. Now they have tightened the standards so much that people who want to buy and meet the standards of 15 years ago can't qualify. This means that one more empty house will remain market unsold with the cost of this empty house being paid for by us. If you can't sell something, you have to lower the price or qualifying requirements to get income moving again.

    32. Dr. H.D. Sinopoli says:

      Freddie, Fanny, Boehner, Reid, Pelosi, and many more lifer-politicians on both sides have milked this system for far too many years to let this cash cow go. You are 'spitting in the wind' if you believe any lifer-politican will ever give-up a money stream.

      Compare it to health care, now that the Republicans can blame the Democrats for getting their greedy little paws into this revenue stream, don't ever think it will be repealed. The Republicans will feed off it just like the Democrats…it will not disappear…just like Fanny & Freddy wil never totally disappear.

      I think Heritage is a great organization, but rather naive when they believe any Republican lifer-politician has the best interest of the Country at heart. With guys like Boehner it survival and how many times he can play golf with Barry O. on our dime.

    33. jrt says:

      While there are definite problems with our government policies, the other half of this equation is a lack of common sense in home buyers and a lack of personal responsibility. Why should people trust a real estate agent when they tell you that you can afford a much bigger, better, larger home than you thought?
      If you know you can only afford a $100,000 home then don't look at $125K or $150K.
      If a home seems overpriced to you, then don't buy it!
      Why do so many people buy into the "L'oreal" mindset- "I'm worth it!"
      So what if many people have granite counter tops if you cannot afford them?
      Let's live within or under our means.

      In 1989, married one week, my husband and I, at age 21 and 18, put down a very hard earned $2000 on our first home which cost $38,000. Our mortgage payment was less than $400 a month.
      My husband only made 20K a year before taxes.
      It was not in a "nice" neighborhood, it was in a neighborhood that some would say was in decline.
      In our 1910 bungalow we had 2 bedrooms, one bathroom, living, dining, and a kitchen.
      We had to put in a lot of sweat equity in the form of cleaning, spackling, caulking and painting to fix it up. Nothing was new but it was OURS. We did not have a "special" mortgage.
      We lived within our means and would not consider buying a home outside our means.
      22 years and 3 more homes later (one at a time) we have always purchased "fixer uppers" that we made into nice livable homes that are within our means. No hot tubs, no granite counter tops, 2 of those homes had no dishwasher, two had clotheslines instead of a dryer. We have never defaulted on a loan, never declared bankruptcy, and always lived humbly.
      Our daughter, married at 21, and her husband will probably never own a home, mostly because they are not willing to start at the bottom and improve their own circumstances through hard work.
      They would "never" live in a less than impeccable neighborhood so they are living with his parents on N. Fairway Lane.
      We hope she will wise up and teach her new hubby a few things about hard work and standing on your own two feet because that is the way she was raised.
      Let's be personally responsible, let's be self sacrificing, let's delay gratification so that we can have a better tomorrow. Works for families and it will work in government too.

      • KXA says:

        That was probably the most on-point answer yet. When we stop treating buying a house like we're trading stamps and actually earn what we have, rather than having it handed to us by mommy and daddy or by the government, then it becomes more meaningful to us.

        When you overcrowd the market with buyers who can't actually afford what they are purchasing, then everyone's investment declines when they walk away from their mortgages to "get back" at their banks for charging them so much. Guess what-it's your fault, not the banks', that you bought more than you could afford. Then again, many people who were not educated and didn't bother educating themselves on the process were taken advantage of and are now in dire straights, again, pulling the rest of us down too.

        We need to get serious about housing prices (stop using them as money makers so you can drive housing prices up and up) and get serious about buying within our means. Then there is no bubble to burst.

    34. RedBaker says:

      We have a criminally stupid, socialist government. They are either dumb as dirt or they are intentionally trying to destroy the economy of the US. Everybody should read in depth about the subprime housing crisis, and how government required it to happen, without realizing it, and how they refuse to learn from history. Read first Peter Wallison's dissent from the FCIC commission tasked with analyzing the crisis. http://fcic.law.stanford.edu/

      The short version is: HUD housing quota requirements to write under-prime mortgages started at 30% in the 1990's under Clinton. The quotas were periodically raised, up to 57% by 2007. The quotas applied to Fannie and Freddie, who wrote 40% of all under-prime mortgages. They also applied to all big banks which wanted to expand. By the time of the crash 47% of all US mortgages were under-prime.

      Those who refuse to learn from history are doomed to repeat it. – Santayana

    35. Enrique Betancourt says:

      What happened to the responsible for this debacle, the biggest bankruptcy in history has gone unnoticed for justice?

    36. Krehbiel says:

      The current administration is determined to destroy the economy in order to end up with government control and/or ownership of everything. Their goal is Socialism. Returning to obligating banks to make loans to unqualified people is just another step toward their goal. The only way to stop this madness is to get rid of these idiots in 2012.

    37. Nobama says:

      Hey don't throw the baby out with the bath-water. FNMA and FHMLC ran just fine for years. It is the government policies which led them down the wrong road. Keep them around, and let them be somewhere institutions can sell mortgage loans – just get back to doing loans that make sense. Not eveyone gets to be a part of the club. You have to qualify – what a concept.

    38. Ben C., Ann Arbor, MI says:

      ABSOLUTELY. It is the unintended consequences of well intentioned legislation that is destroying our country. Add to the above the consequences of granting human hospitals tax exempt status. I’ll post more on this in the future.

    39. Tom says:

      Fiscal responsibility has been undermined by government policies for decades now. Fannie, Freddie and other GSE's are just one example of failed entities and policies. We need to have a complete return to an environment that ensures capitalism can move forward mostly unrestricted. The current government is thoroughly confused about it's role in the life of a typical, reponsible, working American. We are not Europeans nor do we want to become like them. Vote the adminisration and their cronies including the unions, out asap! And for cryin' out loud, stop the spending now, cut back, do not raise taxes and shrink government if we want to have fighting chance to right the ship. Geez, basic common sense please!

    40. TBone says:

      How short sighted we have become. These two agencies performed well and fueled the growth of homeownership for decades without a blip. Their charters were amended by congressional intrusion to allow borrowing from unqualified persons. Did they originate the bad mortgages? NO! Banks, Mortgage Lenders, Brokers, Wall Street and the regulators turned their watchful eyes away in pursuit of the almighty dollar.

      • Susan Minerly says:

        I agree they were fine until greed got in the way, the same as all of Wall Street. If you want capitalism, it can't be unregulated and unrestricted as it has been, there are profits and losses to it's participants. The free market not FNMA and Freddy made a mistake in issuing subprime mortgages FIRST but let's be fair Main Street and Wall Street were making money on the rising values of homes that the PRIVATE investors of said companies wanted in on.

        The Negative Equity Housing and Foreclosure Crisis is a result of unregulated greed on the part of everyone including the government, but IT IS HERE NOW, let's solve it based on the principles of capitalism, existing law and the precedent set shown in the capitalist petition Unitedinprosperity.org creating a six billion dollar monthly stimulus that doesn't cost the taxpayers one penny and protects the capital investment of the investors of the MBS's with no principal reductions for anyone.

    41. BoGo says:

      The elimination of Fannie & Freddie are a subset of the terms that should be required to increase the debt ceiling. Now is the time to "fundamentally transform" us back into a Republic.

      Here's the biginning of my list of terms:
      Repeal 16th Amendment – replace w/ Fair Tax and a 0.5% charge on assets over $10M to be dedicated toward debt reduction.

      Repeal the 17th Amendment
      Eliminate Dept of Ag, Dept of Commerce, Dept of Ed., Dept of Energy, EPA

      That's just a start. We need a house-cleaning even bigger than Coolidge's.

    42. Donald DaCosta says:

      "the Obama Administration should work to structure a mortgage-finance system based in the private sector"

      We had this before big government inserted itself in an aspect of banking where it had no business in the first place. Let banks and private lending institutions institute their own, free market based criteria that made for healthy competition and for MBS derivitives worthy of serious consideration as a financially attractive and relatively safe alternative investment vehicle.

      This economic malaise where experiencing now and for who knows how far into the future was caused by Government meddling; an experiment in social engineering instituted by politicians who have not clue one how America's free market system works. Their "solutions," like so much of what they attempt when they meddle, always have unpleasant and sometimes, like now, disastrous consequences.

    43. John says:

      Which is worse? The federal government defaulting and the economy collapsing now, or later? The sooner it happens, the less money for Democrats to further mess up everyone's lives.

    44. cathy says:

      and end The Fed.
      scrap the thousands of thousands of pages of punishments and favors that is the current tax code with a simple fair tax that everyone pays with no deductions, no loopholes, no filing and no social engineering by congress.
      end the department of energy
      end the department of education
      end career politicians and replace them with citizen legislators
      google the congressional reform act of 2011 for the details
      and what about the Physicians for a National Health Program…pnhp….as an alternative to Obamacare or doing nothing.
      all these would probably save enough to pay off the national debt. how cool would that be?

    45. Jim Buzzell says:

      I concur, Freddie, and Fannie need to go; sell them off to the private mortgage industry with no attached guarantees; take what we can get for them, and stay out of the housing business. Fannie, when first setup was a stable secondary market for the private lenders to lay off their paper after funding; when I was in the business we were required to replace any loans sold to Fannie that went bad, the put the onus on us to package quality loans for the secondary market. So when the reqiuirement replace bad loans went away with the corruption of Fannie by those that were hell bent on getting everyone in to a home whether they could afford it or not. Fank and Dodd along with liberal coherts are most of the reason why we had the melt down; because of the lack packaging requirements and the attached guarantees affoded wall street when they bought the loan portfolios from Fannie. Freddie is another whole story even more sorted than Fannie but easily researched to verity why our government ended up owning a quasi government agency.

    46. Blair Franconia, NH says:

      Ronald Reagan said that there was nothing that smacked of immortality than a government program. He was right. Fannie and Freddie should be, in the words of former Florida congressman Alan Grayson, should be allowed "to die quickly."

    47. Joe Fuller says:

      Spot-on article. Anyone familiar with Morgenson's book, Reckless Endangerment will certainly agree. These two tax payer black holes need to be scrapped, and the sooner the better while Raines and most especially Johnson needs to be hunted down, stripped of his $100M and thrown into jail…that's the tax payer's money he used to buy his 'nest' in Palm Desert. What a bunch of crooks, those at Fanie May and those that were bought and paid for in the house and senate.

    48. Handyman says:

      We also need to get rid of acorn another hole we put money into that doe's no good!

    49. Mary Due says:

      I agree with all the above statements. I'm sure the majority of good Americans can agree with doing away with Freddie Mac and Fannie Mae.

    50. Howard Wolf says:

      Death to Fannie and Freddie! Why is it that real estate transactions and financing happen so well in other countries (Canada, France, UK) without the connivance of government?

    51. Bobbie says:

      too many exceptions are made today where in the past it was "FAIR" that purchasers were held accountable to their signature and responsible to the accounts of it. Today government steps in and makes exceptions for those irresponsible to their signatures, by calling out what all mortgage companies do but as "predatory lending" holding the banks and tax payers accountable for the signatures unwilling to carry out or be held accountable to their signed contract.

      "predatory lending" is a false description of this down right corruption!!!!
      That won't hold people responsible they hold them inferior/ Why would they call a practice of the mortgage industry "predatory?" We were put through the same lending practice and just said no about 10 times. Let them run their business. People make a choice to do business and it is FAIR they are expected to carry out the responsibilities of their choices…

    52. Linda, Louisiana says:

      I suppose the goal of the Obama Administration and the Democrats is, if you don’t fail enough, keep trying. Refunding Freddie and Fannie will be the key to that. How much more can Obama spend on frivolous and unnecessary things. Why can’t he and others realize that you cannot keep borrowing and going further in debt. What about all the mosques we are funding in foreign countries. Readers should check into that. Mr. Cantor should call Mr. Obama’s bluff. Since Obama is acting like a child, let him pick up his toys and go home.

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