Ending the public subsidy to Fannie Mae and Freddie Mac

[sweetheart]

These companies are listed on NYSE, yet they are semi-public and YOU, the taxpayer are insuring that these companies don't go bust. Given that moral hazard, they don't have to keep much of a capital cushion, and "we" all benefit from cheap mortgages.... so lets call a spade a spade.

The taxpayer is subsidizing the mortgage industry and housing lending for those who use it... That is not free markets, it is just another big business subsidy for an unregulated monopoly... that is turning out to be much more american than free markets. Did you vote for this? Was there any vote to extend taxpayer subsidies to this area of big business... and who has a right to any profits from these subsidized companies?

What does an anti-corporate-welfare democrat see as a reform for these bloated pseudo-public companies?

[radwriter0555]

1. Nah, let's make sure that home ownership is only for the RICH,

instead of maintaining this vehicle so that others may have the opportunity to own real estate, a piece of the American Pie.

I gotta little story. I'm a single mom, used to work my butt off, we did ok, worked hard to get by.

A couple years ago, I managed to buy a steal of a deal house, using a Fannie Mae program. Who else was going to stake me? Single mom, one income. Long term job, decent credit, sure. Not a lot of income though. Fannie Mae was willing to back my butt up with a federally insured program that made sure my bank was going to get their money in case I defaulted.

I didn't. But I bought that house for 150K. Refinanced it a while down the road, paid off ALL my debts. Sold it a couple years later for 390K. I walked away with over 100K in profits. I put it into an income property and some other stuff, and thanks to Fannie Mae's willingness to back me, I RETIRED. Age 40.

Get rid of Tax-payer backed mortgage & insurance programs? NO. Government is for the people and by the people. I'm PERFECTLY happy to let my share of taxes help someone else out too.

[duid12]

3. great

So the purpose of the government funded and backed agency is to allow people to get rich and retire at the age of 40 using the taxpayers as a backstop for failure? I don't think so...you make a compelling arguement for why the government should NOT be making these loans...by all means, work hard, save and get rich...but the government should not be the ones on the hook if it doesn't work out for you.

Also, got news for you...if you are 40 and retired...look in the mirror if you want to see a rich person.

[radwriter0555]

4. rich? nah, comfy and well invested. I watch every DIME. And fannie mae

helped me attain the american dream.

So what? Why not? I should work the rest of my life? Why? I made my money work for me... Other people should be able to do that too.

Why deprive others of the opportunity for prosperity? Most people don't have the hutzpa to do what I did. Most people just pay their mortgages off and live in the same house forever. That's THEIR version of prosperity.

Buy some stock in Fannie Mae then. YOu can share in the profits as well. Stop grousing.

[duid12]

6. translation

>>and thanks to Fannie ...I RETIRED. Age 40.

Transalation: corporate welfare is bad except when I personally benefit from it.

[WhoCountsTheVotes]

2. No, they are not backed by the government

The Wall Street Journal has been hitting Fannie and Freddie lately. They keep talking about the "implicit" guarentee - but Freddie nor Fannie haven't had to be bailed out yet. Remember, it's Long Term Capital Management that got bailed out. It's the banks that get bailed out every time a country defaults on its debt. Let's not forget that FDIC provides the stable banking system too. Freddie and Fannie don't have any more guarentee as "too big to fail" than Citibank does.

Republicans just hate it when democracy and regulation works much MUCH better than their "free market" utopian schemes ever did.

[radwriter0555]

5. Thank you for clearing that up, I was unclear on that concept and what you

say makes a LOT more sense than the old spin that taxpayers are tossing money at them.

Maybe we should stop and think how reagan's banking deregulation cost us taxpayers some 80 billion bucks when Neil Bush's Silverado went bust.

[WhoCountsTheVotes]

7. propaganda campaign, run by the Wall Street Journal editorial page

for at least the last year. I'm not sure why. I assume they want to break up Fannie and Freddie in some type of "privitization" scheme.

As far as I know, NO tax money goes into Freddie and Fannie, and there is NO guarentee that they will get bailed out if there is a problem. They have been harping on the "implicit" guarentee, Greenspan's "moral hazard" - but that applies to the big banks and industrial corporations as much as it does Freddie or Fannie - the so called "too big to fail" problem.

I also saw a hatchet job against Fannie last week on some MSNBC news show. The CEO of Fannie did a *great* job shooting down the host who was outright lying - saying there was a subsidy when there wasn't. Outright lying, I was shocked.

This is nothing more than a campaign to privitize and deregulate. I assume the DLC will side with the Republicans on this issue, as usual.

[blondeatlast]

9. Thank you; I thought something smelled funny around here.

Like I said, a government/corporate alliance that actually benefits every single one of us. No wonder the Old Boy Network hates it.

Do you have any links to any particularly good articles?

[blondeatlast]

8. They allow average people like me to be able to buy homes.

In the end, we all benefit from this in the form of property taxes, stability, etc. Keep in mind that for people like me, our home is the biggest and ONLY investment we have.

So another poster managed to do extremely well. IMHO, good for her. I'm not gonna be able to retire early (I'm 44); but I have a stable home and an investment that is actually earning money for my family. I think a little research is called for here--I bet radwriter and I are not the only people on DU who bought homes from FM squared.

Fannie Mae and Freddie Mac are one of the few corporate-government alliances that work exactly the way it's supposed to.

How was your home financed? Are you sure it wasn't underwritten?

[sweetheart]

10. underwritten with cash, "capital adequacy"

I din't use a mortgage myself. If they are to stand alone without implicit public oversight, then they should be forced to maintain the same capital cushion that all other financial institutions have... instead they get special treatment.

When Mae and Mac are complying with Basle-II CAD, i'll believe the public bailout is not presumed for the moral hazard of its execs. As it stands, they do not have to keep the capital cushion that a bank or other such institution uses... and this is so we can bail them out in the future, like all good democratic taxpayers like to do.

Capital adequacy rules are designed that financial institutions must keep enough resources in liquid reserve to cover for losses unexpected and expected.... when an institution gets a free ride in this respect, i have to wonder who holds the bill.?

There are other ways to get you a cheap mortgage, and i don't understand why i should have to put ANY tax money aside at all to finance your house buying or the home construction industry... private free competition is not big federal agencies... i'm sure that homes are cheaper in a communist state... perhaps we should just have big federal monopolies underwrite houses for all americans and get over with the ruse that any american capitalism is authentic.

[blondeatlast]

11. I'm happy for you.

You're a better person than I am, I guess.

[sweetheart]

12. nonsequitor?

The issue is not how i bought my house after 20 years of hard labour... rather how the american public is mislead into supporting unconstitutional corporatism as a "solution" to public housing.

If housing is the issue, there are ways to remedy this using true free market capitalism rather than subsidizing large corporations... better tax breaks and direct subsidy to home buyers than giving a free pass to a large corporation to circumvent proper capital adequacy reguation... especially a private corp which is spoken of (even in this thread) as a great savior of the disenfranchised... yea yea... if we are to subsidize single mothers in buying a home, then lets call it socialism and do it above the board, rather than corporatist welfare off the books.

I am all for a healthy homes market and affordable housing for alllllll... that is a good way to end poverty... just how the US government turns that into a corporate welfare programme, however cloaqued in pretty colours, is beyond me... plutocracy has perverted the most basic services of government... probably kucinich is the only candidate with the wherewithal to even question this blind corporatism, but i don't know his actual stance.

We are both human beings with bodies that die... that makes us equal... best fortune to your blondness.. ;-)

[twilight]

13. Both of these companies are in trouble too

I just read today that many of the countries overseas (Europe mostly) are not going to continue with their investments in Freddie or Fannie because of the recent scandal surrounding both of them.

Most people here in the USA that have investments in them are via the bond route. The bonds I had were invested in both of these companies in part (mutual bond funds) and wow have they ever taken a dump since the news of the scandal(s) broke.

I sold this investment before I lost a lot on them. Its not a pretty picture right now on any level.

:dem: