Amazing!! Just when I thought we would never find the cause of the financial disaster that rattled the world’s financial markets, as long as President Obama remained in office, and when I thought I had heard of ALL the schemes perpetrated on the American people, along comes OBAMA ‘s OWN SECURITY AND EXCHANGE COMMISSION (SEC) to uncover it all !
Why am I skeptical when “the inmates are investigating the institution”? Especially when, for years, we have been told that the Wall Street Bankers and not Fannie and Freddie caused this disaster !!
Only time will tell !!
But first, what’s going on ?
To start with, 6 Executives, including the CEO’s of Fannie Mae and Freddie Mac have been accused by the SEC, in a civil complaint (not criminal which would then have jail consequences), of defrauding investors by issuing misleading statements about their exposure to subprime loans!
Furthermore, the Administration’s Affordable Housing Mandate knowingly gave loans to people who they KNEW could not afford them and NEVER would pay them back. WOW!!
The suit demonstrated how Fannie AND Angello Mozilo’s Countrywide Home Loans formed a partnership” called Fast and Easy” , giving loans to these unqualified clients!
In order to get more and more subprime loans, Fannie had to and did lower the underwriting standards to get eligible clients for these loans, all the while
- Using taxpayers money
- LYING about the exposure to subprime loans – the complete total was hundreds of Billions of dollars while they claimed $8 billion dollars!!
- They issued financial statements which said that ” only 11% were involved — it actually was 23% – a 341 billion dollar difference!!
- They even tried to calm investors by telling them they had nothing to worry about! (remember Barney Frank saying that they were great investments!!)
Amazing , isn’t it!!
And now, as it ALWAYS happens, THE COVERUP!
Speaker Nancy Pelosi started the ” Congressional Financial Inquiry Commission (an 18 month study!!).
Guess what their conclusion was? You are right ! ” It WAS the private bankers fault and ..” the Speaker was right (isn’t she fabulous??).
In February, Chief Risk Officer , Enrico Dallavecchia, told investigators that Fannie’s subprime exposure was IMMATERIAL!
At a March 2007 Congressional hearing CEO Mudd TESTIFIED that his mission was to make these loans to people who “didn’t have perfect credit scores AND his subprime exposure was relatively minimal!! The SEC lawsuit seems to me to show that Fannie and Freddie not only were intimately involved in the core of this disaster, but it COULD NOT HAVE OCCURRED WITHOUT THEM!!
Sure, there were many other partners in this “conspiracy” (Congress, Banks, clients etc.) But, ” to get off the ground” you NEEDED Fannie and Fredie’s complicity and billions of dollars of taxpayer funds to subsidize the scheme! I know that all are innocent until proven guilty. But the only way we can get to the cause of this crime is if the SEC DOES NOT ALLOW A PLEA BARGAIN and goes to trial, only then can we get to the etiology of the crimes that resulted in this worldwide disaster.
P S. Do you think that this indictment has anything to do with the fact that Barney Frank just “decided” NOT to run for another term! – probably a coincidence ? Yea right !!)