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Posts Tagged ‘Barney Frank and rolling the dice’

Barack and Barney Look to Further Plunder Freddie and Fannie

Posted by Larry Doyle on June 22nd, 2009 2:31 PM |

When a homeowner goes out without locking his doors and leaving some lights on, he is inviting trouble.

In a similar fashion, the American public should prepare itself for a continued plundering of the portfolios and balance sheets of Freddie Mac and Fannie Mae by our leading housing finance gurus, Barack Obama and Barney Frank.

The scene is already set for our dynamic duo to pile an ever increasing amount of risk onto these “wards of the state.” How so?

1. While Freddie and Fannie are very much the responsibility of Uncle Sam, their balance sheets are not technically on Uncle Sam’s roll. That ‘cover’ provides a convenient disguise, but the fact is these ‘foster children’ are now nothing more than receptacles for more of Uncle Sam’s risky undertakings.

2. Neither the media nor the political opposition truly call them on these financial charades.

We learn today that both Barack and Barney have grand visions to add more high risk loans at mispriced rates onto Freddie and Fannie’s books. The Wall Street Journal offers,  Changes Urged to Rules on Condo Loans:

Two Democratic lawmakers are calling on Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.

In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won’t purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.

In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold “may be too onerous” and could lead condo buyers to shun new developments. The legislators asked the companies to “make appropriate adjustments” to their underwriting standards for condos.

What does Barney Frank truly know about housing finance? This assessment is an elongated statement similar in style to Frank’s now famous approach to sub-prime lending back in September, 2003. Barney proposed, “I want to roll the dice.”  America crapped out on that roll. Now in the height of hypocrisy, Barney is still providing insights and recommendations on mortgage topics. What’s wrong with this picture? (more…)






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