The REAL story behind Freddie and Fannie- as told in 2003 (hint it's Bush's fault)

[NJmaverick]

Forget the right wing lies blaming the Democrats. The TRUTH is quite a bit different.

On Feb. 4, the Office of Federal Housing Enterprise Oversight (OFHEO), which has oversight over the two giant housing-finance enterprises known as Fannie Mae and Freddie Mac, released a report entitled, "Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO." Its report examined the potential for the generation of a systemic crisis at Fannie and/or Freddie.

After pro forma formulations that Fannie and Freddie are "fundamentally sound," and that the possibility of a serious crisis "is remote," OFHEO made a stunning statement about a worst-case scenario in which either Fannie or Freddie had a severe crisis which caused it to default on its debt. Such a default, it said, "could lead to contagious illiquidity in the market for those securities, cause or worsen liquidity problems at other financial institutions ... potentially leading to a systemic event." This systemic event would deliver a shock to the entire financial system, and a "substantial loss in economic activity."

SNIP

On Feb. 5, a mere 24 hours after the report's issuance, the Bush Administration demanded that OFHEO Director Armando Falcon submit his resignation. Falcon, who been appointed to this post in 1999 by President Bill Clinton, had overseen the report's release. While the Bush Administration delivered the order for Falcon to resign, both the circumstances of the firing and subsequent events make it clear that the actual order for the firing originated from inside the boardroom of J.P. Morgan Chase—the world's largest derivatives bank with $29 trillion in derivatives outstanding—and the boardrooms of other major institutions that are heavily invested in derivatives and housing market paper.

At the same time that it declared Falcon had "resigned," the Administration announced that it would nominate Mark C. Brickell, to replace him as Director of OFHEO. While the man on the street may never have heard of Brickell, he needs no introduction to those in the financial community: For the past decade and a half, he has spearheaded the fantastic, cancerous growth of derivatives.

http://www.larouchepub.com/other/2003/3010ofheo_rpt.html

[Lasher]

1. Well well. I had missed that.

Bet 1 or 2 other folks did also.

K&R

[NJmaverick]

2. I missed it as well and this clearly puts Freddie and Fannie on Bush

and his goons.

[soothsayer]

3. the truth is that both political parties were up to their eyeballs in this fraud

There is just sooooo much money in that industry, it's way too tempting, so you can imagine the influence peddling that goes on. HUD is another major criminal operation (and cuomo was a major crook there).

[Gin]

4. each thing I read adds to the sadness and frustration I feel....

Bush had a total victory...he rewarded his base...and we will pay for it for many,many years. (IMHO)

[NJmaverick]

5. What's worse is I think the Bush people deliberately encouraged the housing bubble

so the economy wouldn't look that bad under his rule. He just mistimed when it popped. I think he was hoping it would go for another 6 months.

[NJmaverick]

8. I think this falls mostly on the Bush administration

when you consider the price for giving a good warning is termination.

[itsrobert]

6. Founding Editor Lyndon LaRouche?

Nice article, but the editor isn't credible.

[NJmaverick]

7. Is the Washington Post credible?

The White House has announced that it will nominate Mark C. Brickell, an expert on financial derivatives, to head the federal agency that oversees Fannie Mae and Freddie Mac, the giants of the secondary mortgage market.

Sources familiar with the situation said Armando Falcon Jr., head of the Office of Federal Housing Enterprise Oversight, was asked by administration officials for his resignation Tuesday morning.

That was just hours before Falcon released the findings of a "systemic risk" study, which laid out a scenario in which Fannie Mae and Freddie Mac could experience severe financial difficulties that then would cause wide-ranging disruptions in the housing and financial markets.

An OFHEO spokesman said Falcon and the agency had no comment beyond his official resignation letter, which said he looked forward "to a smooth transition."

http://www.suite101.com/discussion.cfm/investing/86836/750463