Congress Pushed Fannie, Freddie In Wrong Direction During 1990s

BY TERRY JONES
INVESTOR'S BUSINESS DAILY

Posted 9/25/2008

It was October 1992, nearly 15 years before the housing meltdown and subprime crisis.

Republican Rep. Jim Leach of Iowa was on the floor of the House, talking about something that no one at the time seemed to care about: the potential danger that Fannie Mae (FNM) and Freddie Mac (FRE) posed to the economy.

In remarks later reported by the Washington Post, Leach warned that Fannie and Freddie were changing "from being agencies of the public at large to money machines for the stockholding few."

Leach's prescient comments went unheeded — indeed, Congress spent the next decade and a half avoiding the alarms going off around Fannie and Freddie. Until, that is, it was too late.

Led by top Democrats, including Rep. Barney Frank in the House and Sen. Chris Dodd in the Senate, Congress not only did nothing about the growing risks at Fannie and Freddie, it in essence doubled down on their risks.

Congress Pushed Fannie, Freddie In Wrong Direction During 1990s

WBBM-TV: Feds may indict Blagojevich

CHICAGO (UPI) -- U.S. federal agents say they have enough evidence to indict Illinois Gov. Rod Blagojevich for fraud and conspiracy, WBBM-TV, Chicago, reported Thursday.

The CBS-owned station also said an indictment of Blagojevich, the first Democrat elected to Illinois' governorship in 30 years, was "not imminent."

WBBM-TV: Feds may indict Blagojevich

How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable

BY TERRY JONES
INVESTOR'S BUSINESS DAILY

Posted 9/24/2008

One of the most frequently asked questions about the subprime market meltdown and housing crisis is: How did the government get so deeply involved in the housing market?

The answer is: President Clinton wanted it that way.

Fannie Mae (FNM) and Freddie Mac, (FRE) even into the early 1990s, weren't the juggernauts they'd later be.

While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process. After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.

In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.

How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable

'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles

BY TERRY JONES
INVESTOR'S BUSINESS DAILY

Posted 9/22/2008

In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase, and a failure to regulate our markets sufficiently.

Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.

Indeed, Democrats have so effectively mastered crony capitalism as a governing strategy that they've convinced many in the media and the public that they had nothing whatsoever to do with our current financial woes.

'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles