Back in 1999, the New York Times reported on Fannie Mae’s bonehead move (pressured from Bubba Clinton himself) to ease credit requirements in order to aid mortgage lenders in providing more loans to those borrowers who otherwise would not have the met the standard credit requirements for a loan. Oh, and here’s the definition of subprime mortgage in case you’re still not convinced this is what you’re reading about.  Subprime home loan: A mortgage granted to a borrower considered subprime, that is, a person with a less-than-perfect credit report.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

Oh, and just in case you were wondering, yes, those “phenomenal growth in profits” referred to above are the same “profits” that turned out to be FRAUDLENT accounting practices under Franklin Raines, CEO of Fannie Mae and former Clinton advisor. Raines as you may or may not know resigned in 2004 when it was found out that Fannie Mae had cooked the books under his reign from 1998 – 2004 (and speculated to be more likely back to 1993 under Jim Johnson). No worries though, Raines was able to walk away with a $25 million golden parachute package, and a $5 million home in upper New York under his “Friends of Angelo” VIP home mortgage program like Chris “Nothing to See Here, Folks” Dodd.  That’s right, no jail time and no freezing of assets for fraudulent activity.  Gotta love being a liberal.

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 Oh, and if you read more in the article, you’ll REALLY looooooooooove it because of course there were several critics of this move by the Clinton’s Administration and Fannie Mae. But I guess they were just being party poopers!

 

But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.  ”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

crosseyedDoes that sound familiar – “if they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

So the next time you hear opposition to a “to good to be true” strategy, like Obama’s unicorns and fairies porkulus plan, think twice before repeating the administration’s talking points.

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