It’s official.. Government caused the crisis

[Dave007inVegas]

Federal Government Was Culprit in Housing and Economic Crisis, Says Congressional Report
Wednesday, July 08, 2009

www.cnsnews.com/public/content/article.aspx?RsrcID=50680

 

[PatPatriot]

The fuckin truth finally comes out...imagine that.
Who'd have guessed it? Goverment intervention of free markets causing economic disaster.
What a great ideal lets lower standards for people who have never earned or saved a dime in their lives to own $250,000 homes.Nice job democrats another social program disaster.

 

[tiznow]

wow great report and great read

finally a bright spot as far as something coming out of government that isn't full of crap and they lay it on hard

http://blog.heritage.org/wp-content/uploads/2009/07/7-7-09-housing-crisis-report.pdf

i like this snipet

As publicly traded corporations, the GSEs faced the obligation of all corporations – to
maximize the value of shareholders’ equity. This meant seeking out profitable
opportunities to invest in housing and, to the maximum extent possible, pushing the
envelope of innovation in mortgage finance to compete for market share. However,
unlike any other publicly traded corporation, Fannie Mae and Freddie Mac also answered
in a very direct way to the federal government and elected officials in a manner
reminiscent of the “crony capitalism” of countries such as Russia or China, which
preserve a large state-owned enterprise sector. Fannie and Freddie answered to the
Department of Housing and Urban Development (“HUD”), which set quotas for GSE
investment in affordable housing, as well as to Congress and the White House, which
sought to use them as vehicles to advance the politically popular goal of increasing the
national homeownership rate.

this snipet is for you right dubya/palin/neocon supporters

its not just a lefty problem

Congress granted HUD the authority to adjust these three
affordable housing quotas for the GSEs over time, allowing both Democratic and
Republican Administrations to consistently make campaign promises to boost
homeownership through government intervention in the market. Consequently, under
both the Clinton and Bush Administrations, HUD dramatically increased these quotas,
which reached their zenith when the Bush Administration raised them to 56 percent, 27
percent and 39 percent, respectively.

another

When Congressman Jim Leach (R-IA) proposed assessing a fee on the GSEs to offset the
federal subsidy they receive on their cost of borrowing, “it took just twelve hours for
Fannie to blow the idea out of the water.” Fannie Mae also forced then-Treasury
Secretary Larry Summers to “tone down” a report that was originally going to criticize
the cozy relationship between the federal government and the GSEs.43 When
Congressman Paul Ryan (R-WI) sought to increase regulation of the GSEs, Fannie Mae
sent lobbyists to harass him in his Wisconsin congressional district, going so far as to call
his constituents and accuse him of seeking to increase mortgage rates, generating 6,000
angry responses to his office. When Ryan transferred to a committee without direct
oversight of the GSEs, Fannie CEO Raines sent him a “congratulatory” note. “He meant
good riddance,” said Ryan.44 When Congressman Christopher Shays (R-CT) introduced
legislation to end the GSEs’ unique exemption from SEC registration, he “had lobbyists
literally barging into my room,” while Fannie CEO Raines reportedly called the
lawmaker to ask, “What the hell have [you] done?” The GSEs retaliated by ending their
home-buying forums in Shays’ congressional district in an attempt to hurt him
politically.45 Congressman Cliff Stearns (R-FL), who scheduled hearings on Freddie
Mac’s use of improper accounting procedures in 2004, had his jurisdiction over the GSEs
stripped by House Speaker Dennis Hastert (R-IL), who assigned the task to Michael
Oxley (R-OH), for whom Freddie Mac held at least 19 campaign fundraisers.46 47
Just as the perils of opposing the vested interests of the affordable lending coalition were
rife, so the rewards for supporting them were lucrative. From 1998 to 2008, GSE
employees contributed nearly $15 million to the campaigns of dozens of Members of
Congress on key committees responsible for oversight of Fannie and Freddie.48 At the
time federal regulators seized the insolvent companies, sitting Members of Congress had
received over $4.8 million in political contributions since 1989, with over $3 million of
that coming from the GSEs’ political action committees. Of that total, 57 percent went to
Democrats, and 43 percent to Republicans.49 Not all of this fundraising was in
compliance with federal law. In 2006, Freddie Mac paid the largest fine in Federal
Election Commission history – $3.8 million – for improperly using corporate resources to
hold 85 fundraisers for Members of Congress, raising a total of $1.7 million.50

 

[tiznow]

man is this a great report or what

if we had a real (not in bed with government and the big players) media this would be a front page story

instead not many americans will ever see or read this report and dave has to find it on some no name website

instead media continues to pound us with more talk about ex football player who was cheating on his wife banging a crazy 20 yo who went crazy and shot him and a child molester who granted made some revolutionary music's death.....

and u wonder why we are getting flushed down the toilet bowl

 

[PatPatriot]

this snipet is for you right dubya/palin/neocon supporters

its not just a lefty problem

now now tiznow,leave miss sarah out of this.
bush was part of this after the fact.
the dems made it fertile ground for bandits and borrowers alike.
It came to a head under bush but it started under democrats to help the poor and disenfranchised to become even more irresponsible.

when i bought my first home i needed 20% down and I made about 200 bucks a week...I did it and got about a 60k profit from that house 10 years later.

 

[tiznow]

just so sick of the left/right debate

when in the end both parties to blame for our problems overall

obviously when it comes to this issue the left more to blame no doubt

bottom line if anything is ever going to change in this country we need more TRUE conservatives in congress along the lines of a ron paul....till that happens nothing will change

the liberals will go and fuck a bunch of shit up....than a neocon dubya type will take power and fuck shit up and piss people off.....than the liberals will take control and fuck a bunch of shit up....than the neocons will take control and fuck shit up

rinse...wash...repeat....as the increase of commufascism continues with no end in sight

if only the GOP would have listened to ron back in 2003 when they had control of congress...instead as usual he's just a "kook" to many right wingers

Ron Paul in the House Financial Services Committee, September 10, 2003

Mr. Chairman, thank you for holding this hearing on the Treasury Department's views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.

I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today's hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

 

[PatPatriot]

just so sick of the left/right debate

when in the end both parties to blame for our problems overall

obviously when it comes to this issue the left more to blame no doubt

I agree with you.I am certainley not opposed to Ron Paul or someone like him.
Thats why I like sarah.she may be not ready for the WH by a long shot but she is not liked by either the GOP elite or dems.And she will be a major player at the grass roots level.

 

[Dave007inVegas]

I agree with you.I am certainley not opposed to Ron Paul or someone like him.
Thats why I like sarah.she may be not ready for the WH by a long shot but she is not liked by either the GOP elite or dems.And she will be a major player at the grass roots level.

I agree. However as the days and months roll by it is becoming abundantly clear, neither is BO.