Thursday, March 24, 2011

Former Clinton Official Paid $26 Million by Fannie Mae Before Taxpayer Bailout Now on Obama Shortlist to Run FBI |

Previously, I have offered some explanations for the financial melt-down, primarily the corruption and incompetence at Freddie Mac & Fannie Mae in failing to see the predictable consequences of their irresponsible behavior.  Some on this List have doubted that the government could possibly act so irresponsibly, including myself at one time, or that Congress actually authorized offering loans to people who could not afford homes.  So for your edification, rather droll amusement, and general information, here is Ms. Gorelick's official explanation of what Congress and Fannie were up to, and how they justified their irresponsible actions:
In 2001, Gorelick announced that Fannie was buying subprime loans encouraged by the Community Reinvestment Act (CRA) and bundling them as securitized financial instruments. Securities made from bundles of guaranteed mortgages were to contribute to the banking crisis later in the decade.

"Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination; and we'll create customized CRA-targeted securities," she said in 2001. "This expanded approach has improved liquidity in the secondary market for CRA product, and has helped our lenders leverage even more CRA lending. Lenders now have the flexibility to use their own, customized loan products."

In remarks before the American Bankers Association on Oct. 30, 2000, Gorelick explicitly how the procress would work and what Fannie Mae would do to make it feasible for banks to lend to low-income applicants.

"We will take CRA loans off your hands--we will buy them from your portfolios, or package them into securities--so you have fresh cash to make more CRA loans," she said. "Some people have assumed we don't buy tough loans. Let me correct that misimpression right now. We want your CRA loans because they help us meet our housing goals."

Now, who do you supposed provided Fannie with its "housing goals"?  Yes, if you said Congress, then you score 100% on the test.  What more can I say?  These people convict themselves out of their own mouths.  Incidentally, instead of being put into jail, Ms. Gorelick happens to be on the Anointed One's "short list" for FBI Director.  Isn't that just the perfect place for her!  I couldn't make this shit up it's so far-fetched.  Unfortunately, it is the reality of the current administration and of the one just preceding it.