Competitors were snatching lucrative parts of its business.
Now that, if it was the only fact we had, would tend to support your interpretation of things - that bad government regulations and policies weren't the originating cause of the mortgage mess and a lack of government oversight and regulation was.
But its not the only fact. The very next sentence in that article is:
Congress was demanding that Mr. Mudd help steer more loans to low-income borrowers.
And later in the article, we read:
Lawmakers, particularly Democrats, leaned on Fannie and Freddie to buy and hold those troubled debts, hoping that removing them from the system would help the economy recover. The companies, eager to regain market share and buy what they thought were undervalued loans, rushed to comply.
The White House also pitched in. James B. Lockhart, the chief regulator of Fannie and Freddie, adjusted the companies’ lending standards so they could purchase as much as $40 billion in new subprime loans. Some in Congress praised the move.
“I’m not worried about Fannie and Freddie’s health, I’m worried that they won’t do enough to help out the economy,” the chairman of the House Financial Services Committee, Barney Frank, Democrat of Massachusetts,said at the time. “That’s why I’ve supported them all these years — so that they can help at a time like this.”
.....
The same year he took the top position, regulators sharply increased Fannie’s affordable-housing goals. Democratic lawmakers demanded that the company buy more loans that had been made to low-income and minority homebuyers.
“When homes are doubling in price in every six years and incomes are increasing by a mere one percent per year, Fannie’s mission is of paramount importance,” Senator Jack Reed, a Rhode Island Democrat, lectured Mr. Mudd at a Congressional hearing in 2006. “In fact, Fannie and Freddie can do more, a lot more.”
And that information directly contradicts the interpretation you want to advance. It explicitly shows political figures and government regulators were demanding FMN / FRE loosen standards and buy more subprime loans.
And let's remember this article is about Daniel Mudd, the last guy to head Fannie Mae before it blew up. He was in from 2005-2008. Before him there was James Johnson (who got his start working for Carter and Mondale - and now an Obama advisor and VP selecter - who ran FMN from 1991-98) and Franklin Raines (Clinton's budget director, who ran FMN from 1999 - 2004 -
and is another Obama advisor). The debasement of FMN was already in process before Mudd showed up. He merely continued and extended it.
Summing up, the mortgage mess wasn't a result of no government oversight and regulation, a failure of the free unregulated market. It was a result of bad regulation and political oversight. The overseers and regulators were hands on pushing for more risk, not fiscal prudence.
So thanks for posting an article that continues to support my argument. I realize you want to ignore the parts I highlighted above but this is part of the record and pretending it isn't is just wrong. |
