Five years back who would have ever thought that Fannie Mae and Freddie Mac would be an issue in a GOP primary? To the uneducated and ignorant the housing crisis was caused by the two GSEs. To anyone who has been in this business for more than say, seven years, they know the housing implosion had multiple fathers, the GSEs being on a long list, many rungs below Wall Street. Several weeks ago when news broke that GOP presidential hopeful Newt Gingrich was a paid consultant to Freddie Mac the former House Speaker had to explain what exactly he was doing for the mortgage giant. One TV interview I caught had Newt explaining (in a general way) that he told Freddie not to invest in crappy subprime loans, which at the time I thought was a load of buffalo chips. Newt wasn’t hired to give advice to the GSE about the mortgage market and credit risk. He was hired to help the GSE maneuver the tricky political waters of Washington. But it appears that the general media has hardly scratched the surface on the issue. Candidate Gingrich, to clear his name with the voters, needs to explain in detail what he really did for Freddie Mac – and which executives at the company he dealt with. We all know that he was paid for his services. After all, that’s what many elected officials do after they leave office: they offer professional advice and they lobby – and they expect to be paid handsomely. That’s what the game is all about.
By
JAN 23, 2012
Comments (17)
I agree he should tell what he did for Freddie Mac, but I think Bill Clinton, Frank Rains, Chris Dodd, Barney Frank, Angelo Mozilleo and countless others should also have to tell why they pushed Fannie and Freddie over the clift to make "crappy" loans.
Everyone wants to blame the Commerical Banks (Bank of America, Chase, Wells etc) but who was pusing them to make the loans? The Federal Regulators and if they didn't then they ended up in the "crapper", who pushed them to take over the very institutions that made the loans? Again the Federal Government!! Anyone see a pattern here?
Where were the raiting agencies and why haven't they had to answer for they part in the melt down?
By the way, when I say "Big Bad Banks" it's not the Commerical Banks but the "Investment" Banks. You know the ones selling the actual MBSs backed by the "crappy" loans that the raiting agencies said were AAA.
Let's get the Government out of the business of Regulating eveything from the air we breath thru what Dr. we see when we have a cold and let them actually figure out how to get the mail delivered without loosing "OUR" shirt. Please give the USA a break!!!
The true guilty parties are the bond rating agencies that rated the securities based on the toxic sub-prime and Alt-A products like the Option ARM as AAA rated. These are the same agencies that are weighing in on government bonds in the US and Europe. Without the AAA ratings, the securities would not have been nearly as profitable, so in essence they enabled the creation and evolution of ever more profitable and explosive products without regard to the final investors. Fannie and Freddie, while not exempt from blame (Alt-A), still are minor players in this scenario. The problem is the crisis was (is) too complicated for the average voter, so Fannie/Freddie are easy scapegoats. Gingrich is just an opportunist.
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