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Delinquency rates on nontraditional mortgages

Dissenting Statement by Peter J. Wallison
Peter J. Wallison
Arthur F. Burns
Financial Crisis Inquiry Commission
January 2011

"Table 3 shows the delinquency rates of the NTMs [non-traditional mortgages] that were outstanding on June 30, 2008. The grayed area contains virtually all the NTMs. The contrast in quality, based on delinquency rates, between these loans and Fannie and Freddie prime loans in lines 9 and 10 is clear."

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Library Topic: 2007-2009 Recession: Boom, Bust, and Beyond
Library Topic: Fannie Mae & Freddie Mac: History and the Housing Bubble

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Commentary or Blog Post

"Fannie Mae and Freddie Mac are in trouble. That much even the occasional reader of newspaper headlines knows. But who are they, exactly, and what have they done to prompt the federal government to announce it was standing by with a possible multibillion-dollar bailout?"

"The process of eliminating Fannie and Freddie is going to be complicated and hotly debated. They cannot be shut down right now because virtually the entire mortgage market is dependent on them as a wastebasket for toxic mortgage debt. But a long-term strategy for dissolving Fannie Mae and Freddie Mac can and should be created now. The ideal plan would break them...

"Fannie Mae and Freddie Mac and other government-sponsored mortgage companies have become the backbone of the troubled US mortgage market as purely private sources of finance have all but dried up.

Fannie, Freddie and the Federal Home Loan Banks, a network of bank co-operatives founded during the Great Depression, provided 90 per...

In this commentary, Pressman takes on the politicians who blame Fannie and Freddie for the housing bubble and sub-prime loan meltdown. He uses a Federal Reserve report to conclude that there were five reasons for the meltdown:  convoluted loans; credit ratings that did not sufficiently highlight risk; lack of incentives for institutional investors to do their...

"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York...

"The bailout of mortgage giants Fannie Mae and Freddie Mac has already cost taxpayers $135 billion, but that price tag is expected to grow. On Thursday, the Federal Housing Finance Agency, which regulates the firms, released projections that show the additional bill over the next three years could be $90 billion or much more than that if the economy falls back...

"And now we’ve reached the next stage of our seemingly never-ending financial crisis. This time Fannie Mae and Freddie Mac are in the headlines, with dire warnings of imminent collapse. How worried should we be?

Well, I’m going to take a contrarian position: the storm over these particular lenders is overblown. Fannie and Freddie...

"Fannie Mae and Freddie Mac defended their role in the foreclosure crisis in prepared testimony to Congress on Wednesday, while at least one federal regulator said the mortgage giants had contributed to the problem."

In this piece Westley claims that the U.S. is following in the footsteps of Japan circa 1990 with the bust of their over-inflated banking system. Westley believes the U.S. is on a long and painful recovery back from the bailout of Fannie and Freddie, one that could come to a more swift and less destructive end if the institutions were allowed to fail.

"I'm still not sure how important Fannie and Freddie were to the housing calamity but I continue to do some research. Some say they were not involved in subprime at all, but we now know that was untrue, it's only a question of how much. The amounts were relatively small through 2002, but the real explosion in subprime securitization took place later. The following...

"In other words, Fannie and Freddie created the explosion in subprime securities by publically guaranteeing there would be government sponsored entity demand for them. The Center for American Progress has written about the subprime crisis numerous times, always with the same talking point: Fannie and Freddie are not to blame since they did not issue the majority of...

[Henry] Paulson has said downsizing the giants is the one thing that the next administration and Congress must do.

Feulner attacks the Obama administration for their lack of efforts to reform Fannie Mae and Freddie Mac. He hits on the recent 1,300 page bill that was passed to prevent banking meltdowns by creating a new federal bureau, noting that it fails to address the government sponsored enterprises, Fannie and Freddie, that helped inflate the housing bubble. Feulner calls...

"The GSE structure is a classic case of a special legislative benefit that its recipients will fight to the death to maintain. Congress should immediately revoke all the benefits of government sponsorship: clearly, Freddie and Fannie can be profitable without them. Eliminating special privileges will force mortgage markets to be truly competitive and will eliminate...

"Government-controlled mortgage buyer Freddie Mac managed a narrower loss of $4.1 billion for the third quarter and asked for an additional $100 million in federal aid - far less than the $1.8 billion it sought in the second quarter.

But while the slimmer loss, and recent glimmerings such as a slowing rate of new soured loans...

"Ludwig von Mises had a theory about interventionism:

It doesn't accomplish its stated ends. Instead it distorts the market. That distortion cries out for a fix. The fix can consist in pulling back and freeing the market or taking further steps toward intervention. The State nearly always chooses the latter course, unless forced...

"Fannie Mae and Freddie Mac have worked for decades to help more Americans become homeowners. Now one former Freddie Mac employee has asked us for the opportunity to apologize for doing such a good job of fulfilling that mission."

"The Obama administration got what it was looking for Tuesday at its summit on the future of housing finance: big ideas that ranged from a government-sponsored refinancing of millions of mortgages to blowing up the structure that has backstopped mortgage lending for decades."

In this piece, Block argues that there is no difference between housing and any other good or service, and thus no need for the extensive government intervention currently plaguing our system. He critiques the current system and concludes by drawing a comparison from government interference in housing in the U.S. to socialism.

"The fallout from the recession has cut deeply into the housing security, employment and income of many Americans. But some parts of the country are clearly faring better than others. Here, three interactive maps show foreclosure and jobless rates as well as household income by county."

"Paul Krugman has a new column on Fannie and Freddie which I think is important. I'm going to take issue with a fair amount of it, but not with the basic argument that the uproar over the GSEs is 'overblown.' That, I think is a point worth making.

...

Timiraos answers five common questions about future of Fannie and Freddie: "Why doesn't the financial overhaul bill address Fannie and Freddie? Why are Fannie and Freddie still losing money? Why is the government still putting money into the companies? What would the mortgage market look like today without government support? What will ultimately happen to Fannie...

This piece argues that the government financial support of GSEs distorts the flow of capital in an unconstitutional and even immoral way. This, in turn, leads to isolating the GSEs from market discipline, which is why Fannie and Freddie did not have investors demanding they follow standard managing and accounting procedures and subsequently had to be bailed out.

"The Financial Crisis Inquiry Commission has started its work with a highly publicized two-day hearing in Washington, D.C. The Commission is supposed to find out what caused the financial crisis, but it seems like they are trying to enact Hamlet without the Prince of Denmark. Among all the bankers and regulators on stage during the hearings,...

"When the mortgage giant Fannie Mae recruited Daniel H. Mudd, he told a friend he wanted to work for an altruistic business. Already a decorated marine and a successful executive, he wanted to be a role model to his four children — just as his father, the television journalist Roger Mudd, had been to him.

Fannie, a government-...

This article covers the 2009 bailout of Fannie Mae and Freddie Mac under the Obama administration. The bailout, open-ended in nature, came after the institutions had already received $111 billion in assistance. Goldfarb argues that this was done so the government could maintain its control over the housing market.

"There is no mystery where the Occupy Wall Street movement came from: It is an offspring of the same false narrative about the causes of the financial crisis that exculpated the government and brought us the Dodd-Frank Act. According to this story, the financial crisis and ensuing deep recession was caused by a reckless private sector driven by greed and insufficiently regulated. It is no...

"There is a lot more that can be written about Fannie's and Freddie's mistakes and their corrupt symbiotic relationship with the political class, but there's only so much that can be said given space limitations.

The key question is what should be done now that Fannie and Freddie are on life support. If there is any common sense...

Chart or Graph

This growth of Fannie and Freddie is depicted in Figure 1-1 below. The left-hand side provides the total dollar value of Fannie and Freddie’s commitments to the mortgage market through their portfolios and their net MBS issuances, while the righthand side represents their share of the mortgage market.

This chart shows the change in values for existing homes from 1890 to 2010 and projected beyond, using the year 1890 as a benchmark.

The business model at Fannie and Freddie was very simple. Because of the government guarantee, they could borrow money cheaply. They could then earn money by buying mortgages that paid a higher rate of interest than the rate Fannie and Freddie had to pay to their lenders. It was a money machine that was incredibly profitable.

Table 3 shows the delinquency rates of the NTMs [non-traditional mortgages] that were outstanding on June 30, 2008. The grayed area contains virtually all the NTMs. The contrast in quality, based on delinquency rates, between these loans and Fannie and Freddie prime loans in lines 9 and 10 is clear.

A timeline describing Fannie Mae's establishment in 1938, Freddie Mac's establishment in 1970, and the respective changes that accompanied these two companies.

According to the Mortgage Bankers Association, foreclosure starts were at an all time record high of 1.42% in the third quarter of 2009, suggesting that foreclosure proceedings were initiated on over 750,000 homeowners between July and September. According to the Hope Now Alliance, roughly 2 million foreclosures have been completed since July 2007.

Figure 3-1 graphs the tremendous growth in the mortgage market (solid line, plotted against the right axis), and the fraction of residential mortgage originations each year that were securitized by the GSEs or private-label firms, as well as the amount not securitized (dashed lines plotted against the left axis).

In the crucial years of housing-price appreciation, between 1997 and 2006 [sic], the number of loans bought by Fannie and Freddie expanded dramatically. Figure 5 shows the number of home-purchase loans bought by Fannie and Freddie. Home-purchase loans are loans used by borrowers to purchase homes (rather than to refinance homes).

This is one explanation for the explosive growth of mortgage securitization—no one thought housing prices would go down. (See figure 3.) That could be. Yet, historically, nobody made loans where the borrower put little or no money down.

To document the leverage of the GSEs, Figure 1-2 below graphs the ratio of total assets on the balance sheet divided by the shareholder equity of the combined Fannie and Freddie (dashed line).

The First American CoreLogic LoanPerformance Home Price Index reflects a broad range of mortgages nationally. According to this index, home prices have fallen 30% from their peak in 2006. Notably, home prices have shown signs of stabilization in the recent data, according to this and other home price series.

Fannie Mae greatly increased its business in riskier loans. From 2005 to 2007, it guaranteed payments on almost three times as many loans as it had in all earlier years combined, effectively insuring them against defaults.

Table 1 shows which agencies or firms were holding the credit risk of these mortgages- -or had distributed it to investors through mortgage-backed securities (MBS)-- immediately before the financial crisis began.

Between 1998 and 2003, the absolute number of loans purchased by Fannie and Freddie with less than 5 percent down more than quadrupled. (See figure 8.) Also by 2003, 714,000 loans—28 percent of Fannie and Freddie’s total volume of home purchase loans—were loans with less than 10 percent down.

Real Estate Bubble: Root Causes—Government Home Ownership Push + Declining Interest & Savings Rates + Aggressive Borrowing and Lending Led to 10+ Years of Rising Home Ownership.

The close relationship between low downpayments and delinquencies and defaults on mortgages is shown in Figure 5, which compares the increase in FHA 97 percent (or greater) CLTV [combined loan-to-value] or LTV [loan-to-value] mortgages to the increase in the foreclosure start rate on all loans published by the Mortgage Bankers Association.

This chart shows the rise and fall of housing pricing over the past 20 years.

"Figure 6-1 shows the evolution of the Federal Reserve’s balance sheet."

"Figure 2 illustrates clearly that the 1997-2007 bubble was built on a foundation of 27 million subprime and Alt-A mortgages...."

With the encouragement of politicians from both parties, Fannie and Freddie relaxed their underwriting standards, the requirements they placed on originators before they would buy a loan. They called it being more 'flexible.'

Figure 5-1 illustrates the increasing indebtedness of U.S. households and the erosion in the fraction of housing that they own free and clear. Corresponding to the rise in mortgage debt, home equity fell from 62% to 35% of aggregate housing wealth from 2005.Q3 to 2009.

The rising prices of houses created the opportunity for subprime securitization and the financing of riskier mortgages generally. According to Inside Mortgage Finance, the subprime market grew steadily from $100 billion in 2000 to over $600 billion in 2006.

Analysis Report White Paper

In this article Congressman Frank refutes the idea that the fall of Fannie Mae and Freddie Mac was the fault of deregulation due to the Democrats. Frank argues that for twelve years of Republican rule no bills were passed to help regulate Fannie and Freddie.

This paper discusses the current economic crisis, how we got here and what can be done about it. Habraken approaches the problem from a self-proclaimed laissez-faire or Austrian school of economics viewpoint, favoring the free market over government intervention. Fannie Mae and Freddie Mac is merely one of the issues.

"The special governmental links that apply to Fannie Mae and Freddie Mac yield little that is socially beneficial, while creating significant potential social costs. The best policy would be to privatize them completely—that is, to sever all governmental links and convert them to truly 'normal' corporations...."

"Regulators should contemplate freezing the mortgage purchase activities of the GSEs while at the same time loosening the capital requirements for banks to hold low-risk mortgages. The result would almost surely be an industry much less concentrated than the current duopoly."

"The unfolding story involving Freddie Mac provides ample evidence that GSEs are a perversion of free enterprise and actually work to undercut the very essence of what a free market should be."

"In this paper, I argue that public-policy decisions have perverted the incentives that naturally create stability in financial markets and the market for housing. Over the last three decades, government policy has coddled creditors, reducing the risk they face from financing bad investments."

"The financial collapse of Fannie Mae and Freddie Mac in 2008 led to one of the most sweeping government interventions in private financial markets in history. The bailout has already cost American taxpayers close to $150 billion, and substantially more will be needed."

"The currently fashionable 'flexible' underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the 'beneficiaries' of these policies."

This article depicts how Fannie and Freddie could soon be nationalized as they continue to hold more and more of the nation's mortgages. If they were to fail, Mayer predicts the taxpayers would have to fund their bailout.

"In the face of this de facto nationalization of the residential mortgage markets, Wallison and Ely point out several options for policymakers."

"Whereas most members of Congress are intimidated by Fed officials, Paul's confrontations with Greenspan are documented here word for word. In addition, he reveals the social and economic effects of loose credit, and shows the ill-effects of bailouts."

In this book, the authors answer the who, what, when, where and why of privatizing Fannie and Freddie. They believe that removing Fannie and Freddie from government control would provide an improved housing finance system and eliminate the risk Fannie and Freddie are posing to taxpayers.

"Because two disparate, almost diametrically opposite clients demand loyalty from Fannie Mae and Freddie Mac, these government-sponsored entities must fulfill two ultimately irreconcilable roles."

"In the past few months, Fannie Mae and Freddie Mac seem to have lost control of the one risk they really must control--their political risk. As a consequence, their once impregnable position with investors has weakened substantially; now they are confronted with ugly choices that…it did not seem likely they would ever have to make."

In this piece Thornton explains the housing bubble and how it led to the current housing and economic crisis. He shows that what was started by the government to improve prospects for home ownership through accessible loans, through such organizations as Fannie and Freddie, soon had unforseen consequences that financially harmed many Americans.

"Because of their quasi-governmental status, there is a market perception that Fannie Mae and Freddie Mac mortgage-backed securities and debt carry an implicit federal guarantee against default....GSEs expose the federal taxpayer to an ever-increasing potential contingent liability that could ultimately cost tens of billions of dollars to rectify."

This report looks at the federal government as if it were a business, with the goal of informing the debate about our nation's financial situation and outlook. In it, we examine USA Inc.'s income statement and balance sheet. We aim to interpret the underlying data and facts and illustrate patterns and trends in easy-to-understand ways.

This article explains the history of Fannie Mae and Freddie Mac, tracing them from their origins under FDR as government enterprises, to the presidency of Lyndon Johnson when they were privatized, to the Twenty-First Century when they are once again under government control and in need of government bailouts.

Video/Podcast/Media

"The two mortgage giants -- Fannie Mae and Freddie Mac -- could end up costing taxpayers billions more over the next three years, according to a new government report."

"'Financial Shock' author Mark Zandi discusses how Fannie Mae and Freddie Mac got into trouble, and what their future prospects are. He explores their impact on the housing and mortgage market and the reasons for this severe financial situation."

Speaker Doug French talks about the current housing boom, foreclosures, and the their relation to Fannie Mae. He shows how the current desparate economic situation stems from FDR and the changes he made in the economic system and in the American mindset.

"Fannie Mae and Freddie Mac are long past due for reform, but what emerges out of the fix may send the two beasts back to wreak havoc in the housing market, with taxpayers footing the bill.  Mark Calabria, Director of Financial Regulation Studies at the Cato Institute, comments."

"Freddie Mac and Fannie Mae, the two largest holders of mortgages in the United States, are in the process of a government takeover, with a potential cost to taxpayers of hundreds of billions of dollars.  What's the appropriate next step for federal regulators now charged with managing a significant chunk of the U.S. economy?  Arnold Kling, professor of...

"As Fannie Mae and Freddie Mac face perhaps more scrutiny than ever before, just how did the relationship between the Feds and these two companies become so close? Cato Institute Senior Fellow Peter Van Doren, editor of 'Regulation' magazine, tells us."

"Arnold Kling of EconLog talks with host Russ Roberts about the economics of the housing market with a focus on the role of Fannie Mae and Freddie Mac. The conversation closes with a postscript on the current financial crisis."

"Arnold Kling of EconLog talks with host Russ Roberts about the economics of the housing market with a focus on the role of Fannie Mae and Freddie Mac. The conversation closes with a postscript on the current financial crisis."

Jim Rogers argues that Fannie and Freddie should be left to go bankrupt, stating that the government had no right to use taxpayer money to bailout the two institutions. Furthermore, he argues that more bailouts will lead to inflation and ultimately a devalued dollar.

Peter Schiff posits his beliefs on the role of Freddie Mac and Fannie Mae in the mortgage market.

"Part of the federal response to the bursting of the housing bubble and resulting financial crisis was the federal rescue of the government-sponsored housing-finance enterprises, Fannie Mae and Freddie Mac. Given both the enormous cost of bailing out Fannie Mae and Freddie Mac, which could run to over $200 billion, along with the central role they played in...

"In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the...

"Former officials from Federal Housing Enterprise Oversight (OFHEO) and its successor agency in 2008, the Federal Housing Finance Agency (FHFA), talked about their oversight of Fannie Mae. Armando Falcon in his opening statement said that there was failure of leadership at Fannie Mae and Freddie Mac, leading to the housing market collapse. Commissioners asked about...

Chairman of the House Financial Services Committee answers questions regarding his views on Fannie Mae and Freddie Mac as well as other topics.

"Participants talked about government sponsored enterprise. In particular they focused on stock practices of these companies and hidden subsidies forced on taxpayers. They stated that some of these practices are illegal and that denials and cover-ups are common. Solutions discussed were increased federal regulation and taxpayer lawsuits."

An easy-to-understand introduction to mortgage-backed securities. Parts two, three, and four can be found here.

"Financial experts and consumer advocates talked about effective means of government regulation of the housing loan industry. Among the issues they addressed were the power that government-sponsored enterprises were able to yield, the ability of Congress to perform oversight functions, and how these enterprises spent their earnings. After their remarks they...

"Sen. Chris Dodd (D-CT) chaired a Senate Banking Committee hearing on the state of the home mortgage holding companies Fannie Mae and Freddie Mac."

Primary Document

"We initiated this review under the Comptroller General’s authority to provide Congress with information on the roles, benefits, and risks associated with the enterprises’ activities in housing finance over the years and to help inform the forthcoming deliberation on their future structure. Specifically, this report (1) discusses how the enterprises’ roles,...

"This report on the desirability and feasibility of privatizing the two largest government-sponsored enterprises (GSEs)--the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac)--satisfies part of section 1355 of the Federal Housing Enterprise Safety and Soundness Act of 1992. That statute directed the...

"After the U.S. government assumed control in 2008 of Fannie Mae and Freddie Mac—two federally chartered institutions that provide credit guarantees for almost half of the outstanding residential mortgages in the United States—the Congressional Budget Office (CBO) concluded that the institutions had effectively become government entities whose operations should be...

"After the U.S. government assumed control in 2008 of Fannie Mae and Freddie Mac—two federally chartered institutions that provide credit guarantees for almost half of the outstanding residential mortgages in the United States—the Congressional Budget...

"This publication offers a program for financial institutions seeking to apply their mortgage lending standards in accordance with equal opportunity goals and to expand their activity in underserved minority markets. Banks, mortgage companies, and other lenders subject to the Home Mortgage Disclosure Act (HMDA) are referred to as 'financial institutions' or '...

"As you requested, the Congressional Budget Office (CBO) has estimated the budgetary impact of the activities of Fannie Mae and Freddie Mac (two government-sponsored enterprises, or GSEs, that provide credit guarantees for more than half of the outstanding residential mortgages in the United States) using the methodology specified in the Federal Credit Reform Act...

This link contains several documents regarding the conservatorship under which Fannie Mae and Freddie Mac were placed in September 2008.

This bill sought, "To reform the financial regulatory system of the United States, and for other purposes."

"This dissenting statement is organized as follows: Part I summarizes the main points of the dissent. Part II describes how the failure of subprime and other high risk mortgages drove the growth of the bubble and weakened financial institutions around the world when these mortgages began to default. Part III outlines in detail the housing policies of the U.S....

"We have identified ten causes that are essential to explaining the crisis. In this dissenting view:

  • We explain how our approach differs from others’;
  • We briefly describe the stages of the crisis;
  • We list the ten essential causes of the crisis; and
  • We walk through each cause in a bit more detail....

"In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, calling for action to help responsible borrowers and support a housing market recovery. While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are...

"On September 7, 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that play a critical role in the U.S. home mortgage market, in conservatorship. As conservator, the FHFA has full powers to control the assets and operations of the firms. Dividends to common and preferred shareholders are...

The original charter of Fannie Mae shows how Fannie was founded in 1938 as one of several economic measures taken by Roosevelt during the Great Depression. It then explains, legally, the transformation Fannie took in 1954 when it was declared to be under mixed-ownership, "it's preferred stock to be held by the government and its common stock to be privately held."...

"The Financial Crisis Inquiry Commission has been called upon to examine the financial and economic crisis that has gripped our country and explain its causes to the American people. We are keenly aware of the significance of our charge, given the economic damage that America has suffered in the wake of the greatest financial crisis since the Great Depression....

"Short Title and Statement of Purpose

(a) This title may be cited as the 'Federal Home Loan Mortgage Corporation Act.'

(b) It is the purpose of the Federal Home Loan Mortgage Corporation—

(1) to provide stability in the secondary market for residential...

This piece summarizes the nature of government-sponsored enterprises, or GSEs, the technical definition of Fannie and Freddie by describing, "their mixed governmental-private nature, the differences between GSEs and government agencies, and concerns about and supporting arguments for GSEs."

According to the FDIC, this document "[e]stablished regulatory structure for government-sponsored enterprises (GSEs), combated...

"The purpose of this report is to provide the public with information on possible future Treasury draws by Fannie Mae and Freddie Mac (the ‘Enterprises’) under specified scenarios, using consistent assumptions for both Enterprises.  FHFA will periodically update and refine these projections and will report such updates as part of its Conservator’s Report."

In this hearing, Treasury Secretary Hank Paulson, Jr., Federal Reserve Chairman Ben Bernanke and SEC Chairman Christopher Cox testified about their request to give the Treasury the authority to make an unspecified line of credit available to Fannie Mae and Freddie Mac as well as the ability to purchase equity in either of these government-sponsored enterprises.

"Mr. Chairman, Senator Sarbanes, and Members of the Committee, thank you for again inviting me to discuss the role of housing-related government-sponsored enterprises (GSEs) in our economy. As I described at length last year, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (hereafter Fannie and Freddie) have contributed...

"My thoughts today are intended to inform the necessary debate over the future structure of the housing GSEs. By allowing the GSE structural ambiguities to persist for too long, U.S. policymakers have created an untenable situation. Today, Fannie Mae and Freddie Mac are in a temporary form that, while stable, cannot efficiently serve their Congressionally-chartered...

"Summary of the Report

  • Fannie Mae senior management promoted an image of the Enterprise as one of the lowest-risk financial institutions in the world and as 'best in class' in terms of risk management, financial reporting, internal control, and corporate governance. The findings in this report show that...

In this speech before the Financial Services Committee Ron Paul argues that Fannie Mae and Freddie Mac distort the housing market. Paul points out that to date the GSEs have received 13.6 billion dollars in federal funding and create a housing boom. To provide a solution to the problems, Paul introduces his bill, the Free Housing Market Enhancement Act....

This is a compilation of economic data from the financial, labor, housing and business sectors leading up to and surrounding the time of the crisis.

Paulson describes the crisis facing the housing industry and the housing related GSEs. As a result of the issues Paulson was called to take action. "Since this difficult period for the GSEs began, I have clearly stated three critical objectives: providing stability to financial markets, supporting the availability of mortgage finance, and protecting...

“I was Fannie Mae’s chief credit officer from 1987 to 1989 and head of marketing and product management for 3 years before that.  I left the company in 1989 and since then I have specialized in providing mortgage finance related consulting services.  Since leaving Fannie Mae, I have followed the GSEs closely.

[...]...

"The Federal Housing Finance Agency (FHFA) just completed its 14th month of existence, Fannie Mae and Freddie Mac (the Enterprises) have been in conservatorship for 13 months, and I have just completed my first month as FHFA’s Acting Director. During its short existence, FHFA has been involved in many of the federal government’s efforts to respond to the crisis in...

Paulson supports his plan to strengthen the financial system and reform GSEs:

"First, as a liquidity backstop, the plan includes an 18-month temporary increase in Treasury's existing authority to make credit available for the GSEs. Given the difficulty in determining the appropriate size of the credit line we are not proposing a...

"I fully support your important mission, and I hope that my testimony today can assist it. I will start by giving my views on the fundamental causes of the financial crisis, and then turn to the specific topic of today’s hearing—the so-called 'shadow banking' system. My views are based on my long experience in the financial markets, my time as Secretary of the...

"Market stability and support for housing finance are among my highest priorities during this time of stress in our markets. Therefore, after consultations with the Federal Reserve, the Office of Federal Housing Enterprise Oversight (OFHEO), the Securities and Exchange Commission (SEC) and Congressional leaders we are asking Congress, as it completes its work on a...

In his testimony, Director Lockhart described the reasons behind putting Fannie Mae and Freddie Mac into conservatorship.

Books

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