Where is the US economy headed?

The reality is that Fannie and Freddie are involved in about half of all home loans, cyclops, and you incredibly claim they are innocent bystanders!

You claim that the banks and mortgage originators were innocent bystanders, and they were involved with 100% of all home loans!

Fannie and Freddie made many bad choices, in the same way that the banks did. But the worst choice they made was to believe the banks weren't defrauding them. There is a huge amount of evidence now that they were in fact defrauded by the banks, to a massive degree. I have a lot of writing and evidence of this on the 'The real foreclosure crisis is just beginning' thread; I suggest you read it, because the fact is that the banks and mortgage servicers weren't checking any paperwork at all, even though they were guaranteeing in writing that they had. A lot of people got sold a bill of goods by the banks and the lawsuits are just now beginning, and it's going to lead to another financial crisis later this year.

Cycloptichorn

Where have I ever claimed that? I don't think so, cyclops. I think they were to blame as well, but my belief is that Fannie and Freddie were the most guilty and they set the standard for bad loan practices. They were the enablers for the whole house of cards. If they had never existed, I do not think anything approaching what has happened would have happened, especially if they knew the government would not bail them out.

And there is huge evidence that the books were being cooked at Fannie and or Freddie, and nothing, absolutely nothing has been done.
If there is fraud, let the fireworks begin and let the people go to jail, starting with Fannie and Freddie. Are you on board? Our best hope for that is a Republican landslide, cyclops.

Obviously you have not bothered to read the financial fraud ballooning after GWB's Home Nothing like hiding behind innocents to cast blame on others.

Well ****, this is the first I've heard of that! Where is your opprobrium towards the banks? Where are your loud and repeated denunciations of them? Non-existent.

Be specific - what is it you believe the banks were responsible for?



Totally false, mostly because F/F don't give loans. They don't set standards for ANY loan practices - at all. They weren't even invovled in the subprime market until 2004. This is just totally divorced from reality.



Tell us - how did the 'massive fraud' that F/F engaged in, lead to the crisis? Please be specific! Your entire case rests on this argument, but I can't understand the logic behind it. Maybe you can clarify for me.

Not only that, but am I to understand that you believe Fannie and Freddie were not punished for engaging in fraudulent activities? Are you sure about that? I only ask, because that's 100% incorrect, and I want to get you to confirm what you wrote before I post the evidence showing how wrong you were.

Cycloptichorn

Your comprehension of this issue is so clouded by your partisanship that you have lost all your credibility, cyclops.
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/23/AR2006052300184.html

"Fannie Mae engaged in "extensive financial fraud" over six years by doctoring earnings so executives could collect hundreds of millions of dollars in bonuses, federal officials said yesterday in a report that portrayed a company determined to play by its own rules."

And since when is Pakistan located in Afghanistan or Sudan?

The statement was made that Obama started the drone attacks in Pakistan which is false. Bringing up Clinton and Afghanistan doesn't make it true nor does it make the statement that Bush authorized the first drone attacks in Pakistan false.

I guess if we had only followed the GOP lead and done NOTHING then we wouldn't have 729,000 kicked out of the program. We would have 1,369,300 not in the program. And I wonder how that would have been good for the economy.

So Fannie doctored their books to show earnings, that doesn't show they were involved in making subprime loans. In fact, it could well point to them NOT making the subprime loans. They doctored their books because they weren't making as much money as other institutions were that WERE making subprime loans. The subprime loan debacle didn't start to fall apart until late 2006.

Fannie didn't have to let subprime loans itself. Instead by buying them en masse and securitizing them, it continuously replenished the capital of lenders who did issue such loans. Its principal role in the housing market was to direct the flow of capital to it through the securitization of loans. This was the main source of fuel for the bubble ... until it burst.

http://www.youtube.com/watch?v=bTAh7OPNC20&p=E7E3A573D0AFAECD&index=2&playnext=2

Yes.. AND..


This is what Cyc has been saying. Those originators LIED about the quality of the loans when they sold them to Fannie and Freddie. The problem was the fraud by the loaning banks.

This originally appeared at RobertReich.org

Even if it’s now on the fringe, the Tea Party won’t be for long. By fueling the Republican surge in the midterm elections, the Tea Party has become the single most powerful force in the GOP. It’s backing at least 14 Senate candidates, both challengers and incumbents, and is playing a significant role in scores of House races. It has already shaken the GOP to its core, defeating establishment Senators Lisa Murkowski in Alaska and Bob Bennett in Utah, and is exerting a strong gravitational pull on many other Republicans, such as Arizona’s John McCain. It will be a force in the run-up to the 2012 presidential election. Presidential aspirant Newt Gingrich has already declared his fealty, and Sarah Palin has become its grande dame.

Beyond fiscal rectitude and less spending, Tea Party candidates are targeting the central institutions of American government. The GOP Senate candidate from Kentucky, Rand Paul, is among several who want to abolish the Federal Reserve. They blame the Fed for creating the Great Recession and believe that the economy would be better off without a single institution in Washington setting monetary policy. Even Maine’s stolid Republican Party, now under Tea Party sway, has called for eliminating the Fed. In a Bloomberg poll a few weeks ago, 60 percent of Tea Party adherents wanted to overhaul or abolish the Fed (compared with 45 percent of all likely voters).

Another Tea Party target is the Internal Revenue Service. South Carolina Sen. Jim DeMint, who has emerged as the Senate’s leading Tea Party incumbent, says that his "main goal in the Senate will not only be to cut taxes, but to get rid of the IRS." Mr. DeMint’s goal is echoed by many Tea Party candidates, including Arkansas Rep. John Boozman, now running for Senate.

At the least, business leaders who complain about uncertainties caused by Mr. Obama’s policies might be concerned. John Castellani, the former head of the Business Roundtable who is now running the Pharmaceutical Research and Manufacturers of America, told Bloomberg Businessweek this month, with remarkable understatement, "This kind of extremism makes it much harder to plan from a business perspective."

GE’s Jeffrey Immelt may be unhappy with President Obama, but he’ll be far unhappier if the Tea Party takes over the GOP. Tom Borelli, director of the Free Enterprise Project of the National Center for Public Policy Research, a conservative think tank and vocal supporter of the Tea Party movement, has demanded Mr. Immelt’s resignation, calling GE an "opportunistic parasite feeding on the expansion of government." Among Mr. Immelt’s alleged sins: taking federal subsidies for clean energy. In a press release last week, the National Center for Public Policy Research stated clearly: "Liberal CEOs are the next target for Tea Party activism."

Presumably, business leaders should also be uncomfortable with the Tea Party’s nativism. At the first national convention of the "Tea Party Nation" last February in Nashville, Tom Tancredo, former Colorado congressman and now Tea-Party-sponsored candidate for governor (as an independent), brought the crowd to its feet by denouncing the "cult of multiculturalism" and accusing immigrants of threatening America’s Judeo-Christian values. "This is our country," he declared to wild cheers. "Take it back!"

More than half of Tea Party backers say they’d be more likely to vote for a candidate who supports changing the 14th Amendment to prevent the children of noncitizens born in the U.S. from automatically becoming citizens. And Tea Partiers strongly support Arizona’s recent immigration law making failure to carrying immigration documents a crime and giving police broad powers to detain anyone suspected of being in the country illegally. "We’re all Arizonans now," says former Alaskan Gov. Sarah Palin.

Many Tea Partiers similarly recoil from global institutions and agreements. Minnesota Representative Michele Bachmann, leader of the House’s Tea Party caucus, calls the Group of 20 summit "one short step" away from "one world government," and suggests America withdraw from international economic organizations. "I don’t want the U.S. to be in a global economy where our economic future is bound to that of Zimbabwe," she says. And a higher proportion of Tea Partiers oppose free trade than does the American population in general. In a recent WSJ/NBC poll, 61 percent of respondents who characterized themselves as Tea Partiers thought trade was bad for America.

Under normal times ideas like these wouldn’t gain much public traction. Why are they now? Because of the continuing effects of the Great Recession. History has shown that people threatened by losses of jobs, wages, homes and savings are easy prey for demagogues who turn those fears into anger directed at major institutions of a society, as well as individuals and minorities who become easy scapegoats -- immigrants, foreign traders, particular religious groups. Were it not for their ongoing economic stresses, Americans wouldn’t be receptive to abolishing the Federal Reserve and the IRS, or believe government and big business were conspiring against them, or turn nativist and isolationist.

Business leaders should be standing up to the Tea Party. And they should be actively supporting policies to relieve the economic stresses that fuel it. Their silence in both regards is not only bad for business; it threatens the stability of our economic and political system.

Robert Reich, a professor of public policy at the University of California at Berkeley, was secretary of labor during the Clinton administration. He is also a blogger and the author of "Aftershock: The Next Economy and America's Future." More Robert Reich

Yep, and fannie/Freddie dropped the requirement for documents, told the nation that home ownership was a blessing that should be promoted at all costs, and told the people who were writing the loans to pump up the volume by any legal means possible. F&F's hands are very dirty too.

Fannie and Freddie did not, as your post implied, originate the idea that "home ownership was a blessing."

And do you have a source for that?

Our governments meddling with the housing market can be traced back to a democrat president... Jimmy Carter.
Back in 1981 President Carter issued an executive order in a move designed to strengthen the Government's ability to administer its fair housing programs. This opened the gates for both sides to take advantage of the masses with democrats doing the most damage.

I suggest you read Paper Money by George Goodman, who wrote under the pseudonym Adam Smith.

I suggest you take a look at American history and pay particular attention to Slobbering Barney Frank.

This agrees with what I have been trying to tell cyclops, that they were the enablers to this entire house of cards. Kind of like telling an alcoholic that it is okay to go get drunk and all would be just fine.