April 9, 2011

Fannie, Freddie, Ginnie and Their Pimps

By Jack Curtis
Too much Fed credit encouraged too much building, so prices ballooned past their economic values on the effluvium of degenerating derivatives.  Now, we have foreclosures, upside-down homeowners, devalued and disappeared  mortgage-makers, failed and failing banks, and a cesspool of phony investment values camouflaged by a carpet of Federal fun dollars now owed by the taxpayers.  How come?Because Congress pimped out the home mortgage industry and the Fed financed the business.  First, Congress; we'll leave Fed credit faucet Greenspan's enabling for another time.  Go back to 1977 and see passage of the Community Reinvestment Act (CRA) by compassionate legislators using other people's money to help poor folks who couldn't afford to buy homes. Go way back in 1950, and people thought lenders were entitled to repayment and shouldn't lend to folks who couldn't repay.  Mortgage lenders demanded good credit for loans in slums where credit was risky and property...(Read Full Article)