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|The Truth Behind The Mortgage Crisis||10/03/2008|
The CEO of Fannie Mae made
The CEO of Fannie Mae made
Here are the opening paragraphs of an article entitled "Fannie Mae Eases Credit To Aid Mortgage Lending" published in the New York Times on September 30, 1999.
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders....
It seems pretty obvious that all the ingredients were here a decade ago to create an economic disaster. Home ownership, which is a natural desire for every American, was pushed to the breaking point. Because of the impact these risky loans would have on minorities, anyone opposing them was simply labeled "racist" or "discriminatory." Sound principles were thrown out the window, perhaps to buy votes or perhaps out of real compassion. But the result was anything but compassionate. People who could not afford to pay back their loans were put in a losing position. I cannot imagine the pressure these people have been under because of misguided governmental activism and private greed.
I have friends in the real estate business who have been watching this charade go on for years as unqualified buyers were given substantial loans because the banks feared the consequences of upholding their sound financial standards. Nobody wants to discourage the "American dream," but the nightmare of foreclosure is worse than renting until you can afford to buy a home.
Even more troubling is the fact that the problem goes beyond mismanagement. There is a video on YouTube that documents a hearing in 2004 where Republicans called Fannie Mae into question and specifically addressed the hundreds of thousands of dollars that were going toward executive bonuses. For years, the director of Fannie Mae cooked the books in order to earn millions of dollars in extra payouts. When he was called out, his defenders accused his critics of a "lynching." No action was taken, most likely because so many in Congress were receiving millions of dollars in campaign contributions from these "Government Sponsored Entities" (GSE's).
Two years later, some sensible senators (including John McCain) cosponsored legislation to clean up GSE's and specifically mentioned Fannie Mae and Freddie Mac. They warned:
"Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were 'illusions deliberately and systematically created' by the company's senior management, which resulted in a $10.6 billion accounting scandal.
Again, nothing was done. During a highly charged presidential race, it can be difficult to discern the facts, but the record is clear. Foolish government regulation, manipulation and greed put our country in a dangerous position. And now many of the very people who caused the problem are telling us that they will fix the problem.
Now more than ever, we need truth and accountability, not fear, panic and cover-up. Beware of all who say they will now correct the problems they so often created. A return to sound financial principles is necessary. Remember, although we are told that this new "bailout" bill means that every American owes thousands of dollars to cover it, the only ones who will actually pay are the very ones who earn enough to create jobs, encourage productivity, consume goods and strengthen the economy. If government weakens high wage earners through more foolish taxation, everyone will suffer. Beware, be careful and be prayerful!
Author: James Robison
Word Count: 906
About the author: James Robison is the founder and president of LIFE Outreach International, a Christian media ministry and mission relief organization. He and his wife, Betty, host of the television program Life Today; He has authored numerous books, including The Soul of a Nation, The Absolutes: Freedom's Only Hope and True Prosperity.
Media Contact: Randy Robison, editor at jamesrobison.net . Photo available upon request. Reprint rights granted with attribution for complete, unedited article. Revisions allowed only with approval.