Outrageous! Another Bail Out of Fannie Mae???

On the back page of USA Today, in a small article, it is mentioned that Fannie Mae is looking for still another $7.8 billion bail out (USA Today Nov. 9, 2011). This should have been on the front page. This is after Fannie Mae had ALREADY received a $113 billion bail out of taxpayer money. Fannie Mae has operated as a quasi government agency with the purpose "to expand the secondary mortgage market by securitizing mortgages in the form of mortgage backed securities." This became a major contributor to the crisis of the U.S. economy by offering home mortgages to people who obviously could not afford them. Default on mortgages leading to a financial crisis was easily predictable.

The Community Reinvestment Act (CRA) was put into effect in 1977 during the Carter administration. The purpose was to require banks to loan money to low income people so that they could purchase a home. The intention sounds good, but this led to the misery of many who purchased homes that they could not afford and ultimately contributed heavily to the financial crisis in America. CRA was placed into high gear during the Clinton administration with actual overt threats to banks in attempts to make these types of loans, and it continued into the Bush administration. Fannie Mae and Freddie Mac became the instruments to make this all happen.

Before we go any further it should be stated that before the pressure of CRA banks used a simple formula of affordability in regard to home mortgages and this worked fine for many years. It should also be stated that many of us lived very comfortably and happily in rented apartments until we were able to afford to buy a home. Still further, you don't help people with low income by encouraging them to buy homes that they cannot afford, placing them in financial stress only to end up in foreclosure.

During this period of time Fannie Mae and Freddie Mac were not only instruments used to make this all happen, they, to this day, are fraught with mismanagement if not outright corruption. Congressional oversight of these two institutions were not only lacking, but actually misleading to the Congress and the American people. To this point here we have Fannie Mae asking for an additional bail out of $7.8 billion while at the same time CEO Michael Williams has received a bonus for his "good work" of $2.4 million! What could be more outrageous? Further demonstrating the outrageousness of the whole situation CEO, Ed Haldeman of Freddie Mac received a recent salary of $900,000 and a bonus of $2.3 million!

What we need to do is shut down both Fannie Mae and Freddie Mac. The government should not be involved in banking and the bundling of securities. Banking should be a private, not a government industry. We should go back to basic simple formulas for the affordability of home mortgages. You don't help people by encouraging them to buy a home that they cannot afford...you hurt them.

Hundreds of millions of taxpayer dollars have gone to those who have mismanaged Fannie Mae and Freddie Mac. These Institutions continually compound our financial crisis. This needs to stop. NOW!