A post by Pat
This article appeared in the New York Times September 30, 1999. I’m linking to another source for the text since Tammy refrains from direct links to the NYT. You can still access the original online by searching on the title.
Fannie Mae Eases Credit To Aid Mortgage Lending
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
That was nine years ago today. If they could see it coming then why did it have to happen?
{ 8 comments… read them below or add one }
“If they could see it coming then why did it have to happen?”
Because of the four most dangerous and self-serving words in economics: “this time, it’s different.”
Of all people, I just saw Kucinich talking about the Gramm-Leach-Bliley Financial Services Modernization Act in 1999, compliments of Sen Gramm (R) and Rep Leach (R), signed by Clinton (it was a veto-proof bill catering to banking interests), blaming it in part for what we are wrestling with right now. He explained how it essentially repealed most of Glass-Stegall Act (The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services – i.e. conflict of interest…) and why that is so important to note as this unfolds. He was one of the 94 (D) that voted against it. He also intimated that the leadership knew on Friday they wouldn’t have the votes on Monday. He’s often a bit of a kook, but he seemed honest and knowledgeable and offered a few good tidbits of info.
Time to go do some googling of these two acts and the pressure from the Clinton Administration to expand mortgage loans among low and moderate income people with the Fannie pilot program. Seems like 1999 might have been quite a year in the genesis of a perfect storm, eh?
I haven’t received an answer yet, but do pension plan holders, etc., who have lost $$ due to the impact of FM/FM collapse have ANY legal recourse?
Can, for example, Barney Frank be sued for negligence? Derelection of Duty? Conspiracy? etc.?
Daredevilaccordian, Kucinich is a loon as I’m sure you know and opposed the bailout for the diametrical opposite of the right reasons. The repeal of Glass-Steagall is one of the things that has KEPT this crisis from turning into a total meltdown already: if it weren’t for that, Merill Lynch couldn’t have sold itself to Bank of America, and Goldman Sachs and Morgan Stanley couldn’t have saved themselves by turning into commercial banks.
I wonder how many of these bad loans are Islamic no interest loans? No kidding!
http://www.freddiemac.com/news/archives/afford_housing/2005/20050110_devonbank.html
They are approved by Shariah Supervisory Board of America. Isn’t that sweet?
Through Freddie, Devon bank can still get you $5,750,000 in IL, IN, MI, MO and WI, with 10% down and zero points.
http://www.devonbank.com/islamic/home_pricing.html
Thanks Dave – as I said at the bottom of my post, I was going to do some appropriate googling this evening, and I learned pretty much the same thing that you mentioned about Glass Stegall… I make sure that I do as much of my own research as I can as I am never too inclined to believe anything I learn from the MSM and what the lousy legislators tell us. It is so fantastic to have found a dependable source for knowledge here on Tammy’s site. I hope things go our way on NOV 4, but if not it’s nice to have a support group to commiserate with for the next 4 years.
Let’s see, under Clinton’s watch Osama and Al Qaida grew strong while banks were encouraged to take on risky loans.
Almost ten years later we’ve spent billions fighting terrorism and need to spend billions more to bail out failing banks. Can you believe the gall of the democrats to blame the present mess on Bush??????? And they say we need a Democrat in office to solve these problems when they were the very ones to create them?!
Democrats have no shame. In Japan, to save face, they all would have committed hari kari by now. But here instead they are lauded and celebrated by the MSM and Hollywood as saviors. This country is @#$% up!
Anyone, is Tammy going to have anoher chat for this one debate? Thanks…i used to listen to the “replay” but it’s ((((gone)))) Thank you.
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