Conservative Talking Points views the government entities of Fannie Mae and Freddie Mac as the root of the financial crash of 2008. These liberal experiments spoiled the whole system which finally came down like a house of cards.
Years after the Housing Crash and things are still bad
· The average American as of 2012 has lost 40% of their net worth mainly due to losses in real estate values putting them back twenty years. (Source: Washington Post – June 11, 2012)
· Existing home sales are back to 1998 levels with new home sales just 1/3 of what it was back in 2006. (Source: NAR – 2012)
It started with Carter and then Clinton (Source: Investor's Business Daily - Sep 2008)
· In 1977 the Community Reinvestment Act (CRA), which forced banks to lend to un-creditworthy borrowers, was signed into the law by President Carter in the first year of his presidency.
· In 1995 President Clinton signed an executive order which penalizes lenders that did not lend a specified quota of dollars to "underserved" communities which were low-income Blacks and Hispanics.
· With the above two changes, the subprime market took off and from a mere $35 billion in loans in 1994 and now Fannie Mae and Freddie Mac own or guarantee almost half of the country's $12 trillion in mortgage debt!
Quotes From Enablers
· "These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," Rep. Barney Frank (Source: New York Times - Sep 2003)
· "Secretary Martinez, if it ain't broke, why do you want to fix it?" Rep. Maxine Waters (Source: WSJ - Oct 2008)
· "I want to roll the dice a little bit more in this situation towards subsidized housing. . . ." Rep. Barney Frank (Source: House Financial Services Committee Hearing - Sep 2003)
· "I, just briefly will say, Mr. Chairman, obviously, like most of us here, this [Fannie Mae] is one of the great success stories of all time." Sen. Christopher Dodd (Source: WSJ - Oct 2008)
· "I think a lot of people are being opportunistic . . . throwing out the baby with the bathwater, saying, "Let's dramatically restructure Fannie and Freddie,' when that is not what's called for as a result of what's happened here. . . ." Sen. Charles Schumer (Schumer Press Release - Jan 2004)
Quotes From Republicans
· "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole." Sen. John McCain (McCain Press Release - May 2006)
· "The notion that the U.S. government would bail out Fannie Mae and Freddie Mac if they ran into financial trouble creates a source of systemic risk for our financial system" Dr. N. Gregory Mankiw - Bush White House Economic Advisor (Source: WhiteHouse.gov - Nov 2003)
· "The size of the two GSEs [Fannie Mae and Freddie Mac] is a potential problem [because] financial trouble of a large GSE could cause strong repercussions in financial markets, affecting federally insured entities and economic activity." Pres. George W. Bush (Source: Fiscal Year 2002 Proposed Budget)
Campaign Contributions
· "Barack Obama got more campaign contributions from Fannie Mae and Freddie Mac than any other member of Congress, except for the Democratic chairmen of the committee that oversees them." John McCain (Source: National Review - Sep 2008)
· Then Senator Barack Obama received $126,349 and Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, got $165,400 from members of Fannie Mae and Freddie Mac from 1989 - 2008. (Source: National Review - Sep 2008)
The Housing Bailout
· Congress wrote a blank check to inject capital into Fannie for $34.2 billion and Freddie for $51.7 billion as of July 2009. (Source: CNN Money - Jul 2009)
· In August of 2009 Fannie Mae asked for yet another $11 billion in new government aid after posting another massive quarterly loss. (Source: Huffington Post - Aug 2009)