The Conservative Cave
Current Events => Economics => Topic started by: Chris_ on August 12, 2009, 11:28:28 AM
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The Next Fannie Mae
Much to their dismay, Americans learned last year that they “owned†Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.
Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.†Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions†in loan volume?
Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.
Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.
*snip*
The housing lobby, which gets rich off FHA insurance, has long blocked these due-diligence reforms, saying there’s no threat to taxpayers. That’s what they also said about Fan and Fred—$400 billion ago.
Oh my.
MORE (http://online.wsj.com/article/SB10001424052970204908604574334662183078806.html)
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Kinda , maybe sorta puts the lie to the economists that are saying the recession is ending.
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Kinda , maybe sorta puts the lie to the economists that are saying the recession is ending.
Well, this one's ending. The next one's just gearing up.
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I read this last night.
We who forget history are doomed to repeat it.
"Giddy with this phenomenal growth."
I wonder if Joe Murin/Moron would feel the same way if he had a chancre on his ass that was growing that fast.
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Well, this one's ending. The next one's just gearing up.
Only one gear on a trapdoor, sir. And only one way to go once that trapdoor is triggered.
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Only one gear on a trapdoor, sir. And only one way to go once that trapdoor is triggered.
The trap door analogy is good. Sorta reminds me of a flushing terlet.
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The trap door analogy is good. Sorta reminds me of a flushing terlet.
...always seems to spin to the left, don't it?
:uhsure:
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The trap door analogy is good. Sorta reminds me of a flushing terlet.
Yep, nothing like flushing the taxpayer's money down the toilet!