---------- Forwarded message ----------
From: Jim Willis <[EMAIL PROTECTED]>
Date: Tue, Sep 9, 2008 at 7:08 PM
Subject: Fannie Mae and Freddie Mac for Dummies
To: PoliticalForum <[email protected]>
Here's all you need to know. This is an excrement sandwich and we're
all going to have to take a bite. Some of us will be forced to go back
for seconds. Fannie Mae was foisted upon the American people in 1938
thanks to the socialist policies of the new deal, thanks Frankie D.
Freddie Mac is Fannie Mae's evil twin. Not that Fannie is as pure as
the driven snow; quite the opposite.
Those of you suffering from ADD or ADHT might want to double up on
your Ritalin and take notes.
Fannie and Freddie are the largest secondary mortgage buyers in the
country. They are responsible for 50% of all outstanding mortgages
nation wide. Here's how it works. Let's say you go to your local bank
for a loan. Most small banks cannot set on your paper for thirty
years. They don't have that much liquidity, think cash. So, they
bundle your loan with several others and sell them to hedge fund
managers, larger banks or investment houses. Now, these larger
institutions are buying a lot of bundled loans from all over the
country. Here's where Freddie and Fannie come in. They will buy these
super bundles of mortgages and, "in a bullish housing market" slices
and dices these bundles and sprinkles them throughout the investment
community thereby adding liquidity to he mortgage market, think cash.
What happened? Democrats have been fighting any reform at Freddie or
Fannie. Both quasi private/public companies are overseen by a house
committee. Yet, in 2004 President Bush's SEC, "securities and exchange
commission" swarmed both companies with federal regulators and found
they were inflating assets to reach bonus targets for their
executives. Not surprisingly both companies were infested with Clinton
cronies cooking the books and setting up enormous golden parachutes
for themselves.
Knowing they were to big to fail and having the backing of the federal
government, "our money" Freddie and Fannie stopped slicing and dicing
mortgages for sale as and investment mainly because investors knew a
great deal of that paper was worthless. Still, both companies hyped
their assets and kept buying. After all, we, as in we the people
guaranteed they could not fail.
As the bottom fell out of the housing bubble Freddie and Fannie saw
their assets plummet. Yet, you have to understand how this incestuous
relationship works. Most of the money Freddie and Fannie accrued to
buy these bundled mortgages they borrowed from banks at short term
rates. Now those notes are due and these companies haven't the
liquidity, "think cash" to pay the piper. And, a great deal of that
paper they are setting on is worthless.
So, here we are. If Fannie and Freddie can't meet their debt we'll
wake up one Monday morning and see two or three hundred banks fail. It
will only get worse. The FDIC, "Federal Deposit Insurance Company" is
insolvent, "think broke". Then it's 1929 all over again, yet worse. We
are no longer an agricultural people for the most part. We have
urbanized and become technologically dependent.
What we can do. We don't have a lot of good choices; between the two
giants they hold 6 TRILLION dollars in mortgage paper. Our current
national budget is 3.1 trillion dollars, that's perspective. Yes, they
are too big to fail but we can make damn sure this doesn't happen
again. John Mcpalin has said he would privatize Freddie Mac and Fannie
Mae by slicing them up into a lot of smaller companies and let them
compete with each other without government assurances. As you might
guess, the investment giants aren't happy with this. Again, if you're
an investment firm, holding risky paper, you can always dump it on
Fannie or Freddie. That's why the investment community is the second
highest contributor to Obama behind the trial lawyers. Obama has
received contributions from; Goldman Sachs $653, 030, JPMorgan Chase &
Co $414,760, Citigroup Inc $408,299, UBS AG $389,294, Lehman Brothers
$361,482 and Morgan Stanley $307,221.
And yes, he has accepted donations from Freddie and Fannie.
The answer to this dilemma is as clear as Oprah's bias against
conservative women. Anything government touches it destroys. And,
America has had enough. I don't know what it's going to take but I do
read my e-mails and people are mad as hell. Maybe this is the tipping
point but just in case I'm buying a new pitchfork and cleaning my
musket.
Conservative Springfield 09SEP08
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