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Kill the cash cow? Lawmakers intent on dismantling Fannie, Freddie even as they return billions

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Mortgage Professional America | 07 Nov 2013, 10:08 AM Agree 0
Fannie Mae and Freddie Mac continue to pump money into the Treasury even as lawmakers plot their demise. But industry pros warn that burying the GSEs could hike mortgage rates and strangle competition.
  • Joel Epstein | | 07 Nov 2013, 10:49 AM Agree 0
    For sure they are trying to kill the geese.
    The best thing Congress and the government as a whole can do is give the GSE's some good direction and oversight then get turn them loose to do what they do best. Keep the money moving in the industry. It it absurd to kill them. They are the private capital they want infused in the market place.
    Turn them loose and get the hell out of their way.
  • Bill | | 07 Nov 2013, 11:01 AM Agree 0
    As a life long Republican I'm beginning to realize all our representatives are too inept to breath...not just the Dem's anymore. Congress pushed the GSE's in the late 90's into these eventual problems along with opening Pandora's legislative box that made it the wild west for a decade and GSE manager's were put in place that were more concerned with their commissions (never prosecuted) than proper management of the programs. After decades of successful operation, we the survivor's that were there before and now after what resulted the final mess in 2008 (the crooks left the playiong field) are having to live with the present stupid decisions by this same group that will impact us all for years to come. I can't believe I kept it this clean.
  • Traci | | 07 Nov 2013, 11:01 AM Agree 0
    Why can't they consolidate the two GSEs, with same purpose of being backstop for mortgages? Seems the CFPB is trying to eliminate brokers so they have fewer lending industries/entities to govern. Why not do the same for the GSEs? But with the economy so fragile, Congress is once again looking at the smaller picture and not the collateral damage completely dissolving them. There is not enough faith in the housing / financial market to bring in big private money.
  • Traci | | 07 Nov 2013, 11:25 AM Agree 0
    AMEN Bill and well said!!
  • JOE M | | 07 Nov 2013, 11:27 AM Agree 0
    Congress and CFPB and BIG BNKs are he** bent in trying to put the small broker
    out of business! IT would be foolish to also put
    FNMA and FHLMC out to pasture, as the only reason they needed bailed out originally was because they were forced to get into the subprime business and digress from their original, HIGHLLY successful business models of high performing conventional mortgages. With stricter underwriting guidelines now in place, per this article we are seeing that they can be very profitable! LEAVE OUR INDUSTRY ALONE WASHINGTON DC!!!! let US EARN A LIVING BY HELPING OTHERS!
  • Bayview Mortgage Inc | | 07 Nov 2013, 12:43 PM Agree 0
    They are killing them since their employee paychecks out weigh any profits produced. If they made the employee paychecks in line with other government employees and stopped any cash going out to special Congressional programs. im sure fannie and freddie would survive.
  • John C Durham | | 07 Nov 2013, 01:28 PM Agree 0
    Bill,

    Thank you so much for your remarks. I was a life long Republican until I was into my 50's. Say that doesn't make me a Democrat and doesn't make you a Democrat for speaking up against the Republicans or Democrats who, as a whole, are the made up of the same kind of spineless dumbness and corruptness to big business.

    America is on the verge of civil war and a "bail in" (where the Wall Street banks confiscate public money and pension funds) will trigger it. When the states wake up to find they have been given the "Lehman Bros." treatment (holders of derivatives were first in line to seize their assets under bankruptcy law and can immediately seize them) and they have been bailed in to save the TBTF banks "it" will hit the fan.

    It is important to owe our allegiance to each other, the Constitution and even the government if will protect us against the TBTF banking system and the large Corporations and War & Security Machine that support it when the shotin' starts.

    Any party that stands with the People, like the Justice Party, the Constitution Party, and Independent Candidates deserve our support and we need to back those leaving the Democratic and Republican Machines. Those who have violated their Oath of Office to Uphold the Constitution, some even taking the oath to Grover Norquist or the Tea Party should be exposed.
  • Randy Reed | | 07 Nov 2013, 02:24 PM Agree 0
    Politician's need to back off on the idealism that the government should back out of mortgage industry. Without governmental backing, interest rates will sky rocket, property values will decline with tougher underwritting standards, and fewer americans will spend less due to their ability to borrow. The government wants to privatize the lending industry and that may look good on paper but reality is they will kill any chance we have to recover from the worse economic conditions we've seen in decades. It wouldn't surprise me that the only reason why our politicians want this is it is just another way for them to get financial support from the giant businesses who will benefit themselves.
  • Randy Reed | | 07 Nov 2013, 02:24 PM Agree 0
    Politician's need to back off on the idealism that the government should back out of mortgage industry. Without governmental backing, interest rates will sky rocket, property values will decline with tougher underwritting standards, and fewer americans will spend less due to their ability to borrow. The government wants to privatize the lending industry and that may look good on paper but reality is they will kill any chance we have to recover from the worse economic conditions we've seen in decades. It wouldn't surprise me that the only reason why our politicians want this is it is just another way for them to get financial support from the giant businesses who will benefit themselves.
  • Cheryl M | | 07 Nov 2013, 04:25 PM Agree 0
    Just right John Durham, love the Lehman Bros treatment!!! And to think Ben Bernake is kicking himself for not letting others go the same way Lehman went down. He wasn't going to save AIG either (quote)...Jamie Dimon is barely a Democrate so he says but shovels all kinds of money into the party and doesn't agree with a thing Pres Obama does. speaking of spineless Dummies...
  • A.F. | | 07 Nov 2013, 04:38 PM Agree 0
    This is the same Fannie and Freddie who aren't reporting 180 days late mortgages, right? Do you suppose if they were reporting them they would still be considered cash cows? What a joke! This is all political posturing. Fannie and Freddie will go private when the cows come home....pun intended!
  • John C Durham | | 07 Nov 2013, 04:45 PM Agree 0
    A.F.
    The cows came home in '08 didn't they?

    Private sector banks turned casino's were and are eating us alive and you still advocate that we depend on the private sector to help us?

    Ideology blinds good people, even the Best People.
  • A.F. | | 07 Nov 2013, 06:13 PM Agree 0
    John, I'm actually not advocating that at all. The government used Fannie and Freddie, after taking them over, as a way to clear all the garbage off the casino banks books. They then made up their own accounting rules whereby the GSEs do not have to show millions of mortgages which are up to 180 days late on their balance sheet. So when the article calls them a cash cow, it's funny to me because if you cut through their B.S. Accounting, the GSEs are and will continue to be an albatross around the tax payers neck to the benefit of the casino banks who created this mess. Amazing what millions of lobbying dollars can do....it's shameful but it's the truth.
  • John Deleva | | 08 Nov 2013, 07:49 AM Agree 0
    I think before getting all worked up about what the Congress will or won't do in regards to the GSE's it may be helpful to read the book EXTORTION by Peter Schweizer. Peter makes a compelling case about how and why many Bills are introduced, in short Congress plays corporations and industries and not the other way around as is conventionally thought.
  • Traci | | 08 Nov 2013, 08:21 AM Agree 0
    There recently was a segment on CBS news that investigated things like this in dealing with Congress. Many corporations and industries felt that "had" to contribute to PAC funds, type of congressional extortion!! Congress is a highly organized mafia in suits!! They make rules citizens must live under, yet exempt themselves and their friends and families from those very same laws. They need term limits as the Constitution originally called for. And any law that effects them, should be help to national votes.
  • Guy Schwartz | | 08 Nov 2013, 08:43 AM Agree 0
    Need to ask a very simiple (rhetorical) question here, get rid of FNMA and Freddie Mac, to be replaced by what? If it were not for these two organizations this country would have been thrown into a depression that would have made 1929 look like a vacation in Maui. For the sake of full disclosure I am a card carrying Libertarian.
  • A.F. | | 08 Nov 2013, 09:11 AM Agree 0
    All the more reason to espouse John C Durham's view about supporting Independents. While Democrat and Republican constituents are pointing fingers at each other saying "if we were in power..." Their representatives are all working for their own cause. It's absolutely ridiculous to me for congress to have single digit approval ratings yet these clowns are in office for 20, 30, 40 years. If the public were more educated, they would use their elective powers and Kick them out on their butts to make a point to their replacements. REPRESENT US,THE PEOPLE, or you can just go ahead and get your "consulting job" at (Insert corporation name here) now and move on!
  • Bill James | | 09 Nov 2013, 05:58 AM Agree 0
    I was a Mortgage Banker for 50 years (1959 - 2008) During this time we were heavy users of both FNMA and FHLMC. For about 30 of those years these organizations were run efficiently and HONESTLY. Then management move to scumbags combined with Gov regs requiring these institutions to purchase mortgages backed by unqualified borrowers. When Wall Street and the rating agencies got together to make any mortgage whose borrower could fog a mirror a "qualified product", the game was over. The crooks took over ! Interestingly not one of them even got a slap on the wrist. These companies hold the future of the mortgage industry and therefore a huge hope for the comeback of our economy. Sure, the Gove is printing money by the bushels to fund mortgages but this money is buying something TANGEBLE and positive rather than the crap the idiots in Congress normally waste on. A reasonably knowledgeable high school student can see the incredible returns Fannie and Freddie providing and this with GOVERNMENT Management !!!
    Take these two companies (yes you still need 2 competing organizations) and spin them off to the private sector, there are trillions of $$$ waiting for a purchase opportunity like this, and this money has brain power/common sense behind it. Yes, the Gove must continue a guarantee of some description but it can and should charge a fee adequate to cover the risk (just don't let the congress steal the funds ala social security trust funds) I firmly believe if Congress kills these institutions we will sink into a horrific recession/depression. Just thoughts from an old man . . ..
  • John C Durham | | 10 Nov 2013, 02:05 PM Agree 0
    Bill,
    Your comments are line with classic American (ie, Dean Baker, W.K.Black, James Galbraith, L. LaRouche today) Economics. Franklin wrote when he was in his early 20's, published in his brother James's Philadelphia newspaper, "...ships, canals, docks, bridges, postal roads, houses back the paper currency as certainly as gold or silver..." A Modest Inquiry Into A Paper Currency, B.Franklin. This thinking which found its high point after the Revolution, can be traced back to that time by Kennedy, FDR, Lincoln, Q. Adams, Washington's printing of "Greenbacks", ie, government Treasury, U.S., notes spent directly into the economy without interest for human infrastructure.
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