{"id":10321,"date":"2015-07-23T05:48:00","date_gmt":"2015-07-23T10:48:00","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10321"},"modified":"2015-07-23T05:48:00","modified_gmt":"2015-07-23T10:48:00","slug":"new-york-times-reports-fannie-and-freddie-are-back-bigger-and-badder-than-ever","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10321","title":{"rendered":"New York Times Reports \u2013 \u201cFannie and Freddie are Back, Bigger and Badder Than Ever\u201d"},"content":{"rendered":"

New York Times Reports \u2013 \u201cFannie and Freddie are Back, Bigger and Badder Than Ever\u201d<\/a><\/h3>\n

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Just in case you still harbored any doubt that absolutely zero lessons were learned from the cataclysmic financial collapse of 2008\/09. We learn\u00a0from the\u00a0New York Times<\/em>\u00a0<\/a>that:<\/p>\n

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AFTER the financial crisis of 2008, there was one thing that almost everyone agreed on. The government-sponsored mortgage giants,\u00a0Fannie Mae<\/a>\u00a0and\u00a0Freddie Mac<\/a>, had to go. While shareholders and executives reaped the profits from Fannie and Freddie in good times, taxpayers were stuck with the bill in a crisis. President Obama described their dysfunctional business model as \u201cHeads we win, tails you lose.\u201d\u00a0But here we are, seven years after the crisis, and nothing has changed.<\/strong><\/em><\/p>\n

In the 2008 crisis, when it looked as if Fannie and Freddie might go bankrupt,\u00a0Henry M. Paulson Jr.<\/a>, then the\u00a0Treasury<\/a>\u00a0secretary, argued that their fall would cause economic catastrophe. Foreign investors, stuck with their securities, would panic, and the mortgage market would shut down. So Fannie and Freddie were put into something called conservatorship, and are now government controlled, supported by a line of credit from the Treasury.<\/em><\/p>\n

Conservatorship was supposed to be temporary \u2014 a \u201ctime out,\u201d according to Mr. Paulson. We were going to stabilize the companies\u2019 finances, reduce their importance to the mortgage market, and figure out a better system. But nothing happened. In fact, the situation has gotten even more precarious. In the years since the crisis, private lenders, for the most part, have been willing to make mortgages if they can immediately sell them to government agencies, mainly Fannie and Freddie. In other words, without Fannie and Freddie, there wouldn\u2019t be much of a mortgage market.<\/em><\/p>\n

To make things worse, the government decided to \u201csweep\u201d almost all the duo\u2019s profits into its own coffers, to be used as a slush fund for general government expenses.<\/strong>\u00a0As Treasury Secretary Jacob J. Lew said in congressional testimony this spring, \u201cAs a practical matter it\u2019s what has helped us reduce our overall deficit.\u201d\u00a0If there is another downturn in the real estate market and Fannie and Freddie suffer losses on their some $5 trillion in outstanding securities, taxpayers will again have to foot the bill.\u00a0<\/strong><\/em><\/p>\n<\/blockquote>\n

What do you expect to happen when the people responsible for running the economy into the ground are rewarded with bailouts and deemed \u201cToo Big to Jail?\u201d<\/span><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

New York Times Reports \u2013 \u201cFannie and Freddie are Back, Bigger and Badder Than Ever\u201d Just in case you still harbored any doubt that absolutely zero lessons were learned from the cataclysmic financial collapse of 2008\/09. We learn\u00a0from the\u00a0New York Times\u00a0that: AFTER the financial crisis of 2008, there was one thing that almost everyone agreed […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1361,7486,7487,312,7488,4285,6174,584],"class_list":["post-10321","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bankruptcy","tag-fannie-and-freddie","tag-fannie-mae","tag-financial-crisis","tag-freddie-mac","tag-liberty-blitzkrieg","tag-michael-krieger","tag-obama"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10321","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10321"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10321\/revisions"}],"predecessor-version":[{"id":10322,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10321\/revisions\/10322"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10321"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10321"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}