During the last administration, sometime around 2003-04, the president wanted to reform the FMs (Freddie Mac and Fannie Mae), but Rep. Barney Frank said, “They are in good shape,” so nothing happened.
In the Sept. 5 edition of The Joplin Globe, there is an article detailing the history of these two quasi-governmental programs, and it is not pretty.
Created in 1938 after the Great Depression by FDR, they were run by the government to provide money for housing. Thirty years later, another president, Lyndon Johnson, along with his Democratic Congress, privatized the two FMs, in order to hide the deficit and insure a balanced budget in 1969. This started the downfall of these programs, and it only got worse.
In the ’90s, the programs were given more leeway in their transactions, which set in motion their eventual downfall. Bundling mortgages, and then selling them as securities to raise money, backed by the government, was a disaster waiting to happen, and it did. They also were allowed to raise the loan limits, sometimes lending 125 percent of the value, since they assumed property values would always go up. When the crunch came, Freddie and Fannie did not have the reserves to pay off the investors.
This left the government on the hook, and President Bush set up a $200 billion fund to shore up these two programs. President Obama has since doubled the fund to $400 billion, and the American taxpayer is gouged again. So far the government has spent between $160 to $200 billion to shore up, but no one seems to know the exact amount, and it will balloon as the commercial paper comes due in the next year. This will consume most of the remaining $200 billion dollars, and the government will have to shore up these programs again.
It is time to put the blame where it should have been put to begin with, and that is the government, and those in Congress, who are blind. One does not have to be an economist to know you cannot lend 125 percent on anything, especially something as volatile as the housing industry. Freddie and Fannie need to go back to basic loan structure, and Congress needs to support this effort, as that is the only way to make these programs solvent. A borrower must have a down payment, get a loan he can afford, and have a fairly stable work history. If Congress does any less, then Freddie and Fannie will be back in the taxpayers’ pocket for more money to bail them out.
Roy Winans
Joplin
Opinion
Voices: Freddie and Fannie follies
- Opinion
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Our View: Victims should come first
Millions of dollars in donations have poured in from around the world since the May 22, 2011, tornado. Those donations represent money from lemonade stands, charity auctions, corporate gifts and celebrity checks, just to name a few. In fact, one year later donations continue to come to Joplin.
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Beth Meeker, guest columnist: Same-sex marriage battle a quest for equal rights
I would like to take a moment to reply to guest columnist Anson Burlingame’s, “The Marriage Debate” (Globe, May 13).
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Sunday Forum: 2012 graduation speakers key on tornado, mall school and president’s visit
Editor’s note: In addition to speeches by President Barack Obama and Gov. Jay Nixon, Joplin High School’s top students addressed graduates, faculty, parents and other guests packed into the Leggett & Platt Athletic Center on the Missouri Southern State University campus. Following are the text of those speeches.
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Geoff Caldwell, guest columnist: Pack mentality takes truth as a casualty
President Obama’s Joplin graduation speech Monday showed that while there’s the political “right,” there’s also a very active “rabid” political right.
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Your View: ‘Study’ can mean anything
A few evenings ago, I watched a television program on the science of marriage.
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Our View: Support for museum
How can you tell the story of Joplin without the accounts of its mining history?
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Our View: Finding middle ground
The G-8 summit held last week in Camp David ended as expected.
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Anson Burlingame, guest columnist: Class of 2012 upholds character, hope
My oldest granddaughter was part of the class of 2012 from Joplin High School, and I attended the ceremony on Monday night.
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Scott Charton, guest columnist: 'Deadline in Disaster' film a story about storytellers
Local newspapers are at their best when they help their communities confront, understand, endure and overcome shared challenges.
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Our View: Make voting easiser
This year’s ballot will not include a proposed constitutional amendment that photo identification be required at the polls in Missouri. Good.
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