Buying and Selling: The Fall of Fannie

AlterNet has a fascinating post that digs deep into the craziness of the Fannie Mae scandal. It's a good look at why there needs to be absolute transparency and rigid oversight of any "institution," particularly one that has expanded so far beyond its intended purpose as Fannie (and her sibling Freddie) has. The comments are well worth reading in particular:

Let's imagine a world without Fannie Mae, which functions as a final guarantor, as it were. Getting a home loan would be a lot harder for most people. In fact, the huge expansion of homeowners after WWII would probably not have occurred at all. And foreclosures would be more common now.

Why do we care? Well, there's the economic security that owning a home provides (as a source of equity). Many people would still be renting and that would concentrate power in rural areas especially. We'd probably have a system more like many countries where a few landowners own huge tracts since smaller landowners wouldn't be able to finance a purchase, or borrow against the home in hard times.

It makes me wonder why Bush and his cronies are so dead set on privatizing Fannie, for if history is clearly any indication, we're hardly going to get more in the way of clear oversight and honest accounting from these jokers.

Still, as suspicious as I am of the motives involved in this investigation, I can't deny that the level of greed, arrogance, and downright shadiness involved in this mess absolutely needs to go. There's an absolutely brutal takedown of Fannie's practices courtesy of the Affordable Housing Institute:

If you were large governmentally-advantaged institutions, often accused of being a duopoly, each under heavy political fire for massive accounting restatements, risky financial practices, dubious internal procedures, extravagant executive bonuses, and questionable historic payment policies, now trying to demonstrate contrition, would you use two individuals from the same lobbying firm?

Ouch. :)

What we need to do is strip down the practice to its absolute basics and let government do what it's built to do: provide basic services for those in need and grant them a "starting point" to go the distance in terms of lending, borrowing, and buying for a home. That Fannie and Freddie are unworkable in their current configurations is beyond dispute, but that we need something to offer affordable housing to those who would otherwise be "renters for life" is equally so. (Tip o' the derby to Housing Finance for the link.)

Posted at May 27, 2006 02:44 PM

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AlterNet has a fascinating post that digs deep into the craziness of the Fannie Mae scandal. It's a good look at why there needs to be absolute transparency and rigid oversight of any "institution," particularly one that has expanded so far beyond its intended purpose as Fannie (and her sibling Freddie) has. The comments are well worth reading in particular: Let's imagine a world without Fannie Mae, which functions as a final guarantor, as it were. Getting a home loan would be a lot harder for most people. In fact, the huge expansion of homeowners after WWII would probably not have occurred at all. And foreclosures would be more common now. Why do we care? Well, there's the economic security that owning a home provides (as a source of equity). Many people would still be renting and that would concentrate power in rural areas especially. We'd probably have a system more like many countries where a few landowners own huge tracts since smaller landowners wouldn't be able to finance a purchase, or borrow against the home in hard times. It makes me wonder why Bush and his cronies are so dead set on privatizing Fannie, for if history is clearly any indication, we're hardly going to get more in the way of clear oversight and honest accounting from these jokers. Still, as suspicious as I am of the motives involved in this investigation, I can't deny that the level of greed, arrogance, and downright shadiness involved in this mess absolutely needs to go. There's an absolutely brutal takedown of Fannie's practices courtesy of the Affordable Housing Institute: If you were large governmentally-advantaged institutions, often accused of being a duopoly, each under heavy political fire for massive accounting restatements, risky financial practices, dubious internal procedures, extravagant executive bonuses, and questionable historic payment policies, now trying to demonstrate contrition, would you use two individuals from the same lobbying firm? Ouch. :) What we need to do is strip down the practice to its absolute basics and let government do what it's built to do: provide basic services for those in need and grant them a "starting point" to go the distance in terms of lending, borrowing, and buying for a home. That Fannie and Freddie are unworkable in their current configurations is beyond dispute, but that we need something to offer affordable housing to those who would otherwise be "renters for life" is equally so. (Tip o' the derby to Housing Finance for the link.)