Something to investigate
Image via Wikipedia...This is the scandal the Democrats tried to bury in the last Congress by doing "regulatory reform" that did not mention the real cause of the financial crisis, i.e. their disastrous housing policy. I would throw in the Community Reinvestment Act which was largely responsible for pushing those bad loans which worked their way like a cancer into the financial markets.
As even Obama's treasury secretary admitted in congressional hearings, "Fannie and Freddie were a core part of what went wrong in our system." And if it's something Tim Geithner noticed, it's probably something that's fairly obvious.
Goo-goo liberals with federal titles pressured banks into making absurd loans to high-risk borrowers -- demanding, for example, that the banks accept unemployment benefits as collateral. Then Fannie repackaged the bad loans as "prime mortgages" and sold them to banks, thus poisoning the entire financial market with hidden bad loans.
Believe it or not, the loans went belly up, banks went under, and the Democrats used taxpayer money to bail out their friends on Wall Street.
So far, Fannie and Freddie's default on loans that should never have been made has cost the taxpayer tens of billions of dollars. Some estimates say the final cost to the taxpayer will be more than $1 trillion. To put that number in perspective, for a trillion dollars, President Obama could pass another stupid, useless stimulus package that doesn't create a single real job.
Obama's own Federal Housing Finance Agency reported recently that by 2014, Freddie and Fannie will cost taxpayers between $221 billion to $363 billion.
Over and over again, Republicans tried to rein in the politically correct policies being foisted on mortgage lenders by Fannie Mae, only to be met by a Praetorian Guard of Democrats howling that Republicans hated the poor.
In 2003, Republicans on the Senate Banking Committee wrote a bill to tighten the lending regulation of Fannie and Freddie. Every single Democrat on the committee voted against it.
In the House, Barney Frank angrily proclaimed that Fannie Mae was "just fine."
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It is the scandal of the century or the last two centuries, but the Democrats never take responsibility for the messes they make and Republicans have been far too timid in going after them on this issue.
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