Fannie Mae
Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae was well regulated and made certain that home mortage market operated properly. It held a virtual monopoly on the secondary mortgage market in the United States, and there were some greedy guts who wanted to get in on this.
In 1968 the politicians in Washington pulled a fast one. Just like the con artists at Enron, they wanted to play some little dishonest games so that they would still be in control, but the debt of Fannie Mae would no longer be on balance sheet, i.e., a part of the national debt.
So Fannie Mae was converted over to a so called Government Sponsored Enterprise. This is like socialism, where the government centrally controls the means of production, but pretends that it is a private corporation. But now that the hard times have come, other private companies are unable to bail out Fannie Mae because it is not a true private corporation. And it is generally accepted that it is too big to let fail.
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Just to understand how much of an Enron the politicians in Washington, D.C. have been pulling, if the government does have to bail out Fannie Mae and Freddie Mac, the national debt will double. Do I need to put that in all capitals or put a lot of explanation marks after it?
The problem here is that deregulation became a good word, just like liberal became a bad word. Deregulation of the home mortgage market put the robber barons and criminals in charge, with the government abdicating their responsibilities and not controlling or regulating their activities one bit.
In 1968 the politicians in Washington pulled a fast one. Just like the con artists at Enron, they wanted to play some little dishonest games so that they would still be in control, but the debt of Fannie Mae would no longer be on balance sheet, i.e., a part of the national debt.
So Fannie Mae was converted over to a so called Government Sponsored Enterprise. This is like socialism, where the government centrally controls the means of production, but pretends that it is a private corporation. But now that the hard times have come, other private companies are unable to bail out Fannie Mae because it is not a true private corporation. And it is generally accepted that it is too big to let fail.
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Just to understand how much of an Enron the politicians in Washington, D.C. have been pulling, if the government does have to bail out Fannie Mae and Freddie Mac, the national debt will double. Do I need to put that in all capitals or put a lot of explanation marks after it?
The problem here is that deregulation became a good word, just like liberal became a bad word. Deregulation of the home mortgage market put the robber barons and criminals in charge, with the government abdicating their responsibilities and not controlling or regulating their activities one bit.
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The well paid government officials who were supposed to watching over this should be punished severely. In China they would be executed. In communist Russia they would be exiled to Siberia. But in Bush's America nothing at all will happen to them. Not good.
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