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Claim: E-mail reproduces a 1999 newspaper article warning about potential troubles with Fannie Mae.
Example: [Collected via e-mail, September 2008]
Origins: In any crisis, one of the most common reactions is to ponder the question, "How did we get into this mess?" People begin to search for explanations about who was responsible for bringing about the current state of
On 30 September 1999, the New York Times published an article entitled "Fannie Mae Eases Credit to Aid Mortgage Lending" by
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.Another New York Times article that has attained a significant amount retrospective interest is an
"From the perspective of many people, including me, this is another thrift industry growing up around us," said Peter Wallison a resident fellow at the American Enterprise Institute. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.Of especial interest to current readers were the following paragraphs about Congressional resistance to the Bush administration's regulatory proposal:
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.Last updated: 2 October 2008
"These two entities — Fannie Mae and Freddie
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