Lest we forget about about the real cause of the housing crisis.

The beat goes on:

"A group led by Tishman Speyer Properties has decided to give up the sprawling Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to its creditors in the collapse of one of the most high-profile deals of the real-estate boom.

The decision comes after the venture between Tishman and BlackRock Inc. defaulted on the $4.4 billion debt used to help finance the deal. The venture acquired the 56-building, 11,000-unit property for $5.4 billion in 2006—the most ever paid for a single residential property in the U.S. The venture had been struggling for months to restructure the debt but capitulated facing a massive debt load and a weak New York City economy that has undercut rents and demand for high-priced apartments." WSJ





American Thinker
January 24, 2010
Barney Frank's flip flop on Fannie and Freddie oversight
Ethel C. Fenig

That was then:

Six years ago, in September 2003, when then President George W. Bush (R) proposed placing Fannie Mae and Freddie Mac under the supervision of a new agency within the Treasury Department because of deep concern whether its $1.5 trillion mortgage debt was properly run and because of charges of accounting irregularities, Rep Barney Frank (D-MA), head of the House Financial Services Committee, which oversees these two government backed agencies, retorted, as reported by the NY Times:

''These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

This is now:

Less then a week after Senator elect Scott Brown (R-MA) overturned politics in Massachusetts (yes, even I can spell it without spell check although I don't live in the state and am not running for office there), including capturing Barney Frank's district , Jordan Fabian of The Hill informs us that Frank now proposes:

"I believe this committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," he said at a committee hearing. "That's the approach, rather than the piecemeal one."

As Fabian so delicately explains:

Frank's words cast doubt on the future of two two (sic) mortgage giants, which have received over $110 billion in government assistance after they nearly failed during the flood of defaulted mortgages during the housing crisis.
The Massachusetts Democrat earlier this month said that Fannie and Freddie are now serving as a public policy arm of the government.

Is that Bush's fault also?

Grab those tea bags and tea party on! The revolution has begun!
Change so many of us can really believe in.

McCain on Offense Over Freddie and Fannie?

This ad is a start, but is too timid. Crank it up.

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A Federal Probe of Fannie and Freddie
The mortgage giants have received grand-jury subpoenas on accounting and governance matters as the FBI widens its financial investigation

by Keith Epstein

BW EXCLUSIVES

There's nothing quite like a crisis to draw investigators looking for criminal action.

So it is now for the latest targets of various investigations: Fannie Mae (FNM) and Freddie Mac (FRE), the residential financing powerhouses whose accounting and disclosure records are being examined by a federal grand jury in New York. They join a corporate who's who of players swept up in the cascading economic crisis that also find themselves the subject of scrutiny by the FBI and others, from Lehman Brothers and insurer American International Group (AIG) to failed IndyMac Bancorp and mortgage lender Countrywide Financial.

In Freddie's case, the grand jury is focusing on "accounting, disclosure, and corporate governance matters" since January 2007, the McLean (Va.)-based company confirmed Sept. 30. Freddie said it received a subpoena on Sept. 26 from the U.S. Attorney's Office in Manhattan, as well as a notice from the Securities and Exchange Commission informing it of a separate inquiry. In both instances, the company was asked to preserve documents.

MASKING LOSSES?
"Freddie Mac will cooperate fully," the company said in a statement. Fannie disclosed it had received a subpoena as well, in filings with the SEC.

Altogether, in the past year, some 26 companies with roles in the financial crisis have come under investigation, often because of suspected fraud. The SEC and Justice Dept. have declined to comment on the investigations. The FBI appears to have expanded its investigations not only to mortgage lenders but also investment banks, especially those that bundled home loans into securities. Among the current cases is one involving Bear Stearns; two former managers were arrested in June on securities fraud and other charges.

As long as 10 months ago, press reports suggested that Fannie masked potential losses on bad loans by using new accounting procedures. Both Fannie and Freddie have had to restate earnings in past years, following discoveries by federal regulators of irregularities on the companies' books.

POSSIBLE CRIMINAL CHARGES
A number of members of Congress, including several on the Senate Judiciary Committee, have urged the FBI to be more aggressive in pursuing possible criminal charges against major players in the crisis. "If people were cooking the books, manipulating, doing things they were not supposed to do, then I want people held responsible," said Senator Patrick Leahy (D-Vt.), the committee's chairman, at a Sept. 17 oversight hearing on the FBI. "And I suspect every American taxpayer—I don't care what their political background is—would like them held responsible."

Presidential candidate John McCain is doing his part to leverage what he considers Democrats' responsibility for the failure of Fannie and Freddie. In a new national TV ad, McCain blames Democratic rival Barack Obama for failing to take action as the companies floundered. "John McCain fought to rein in Fannie and Freddie," the ad states. "Obama was notably silent."

The ad makes no mention of the McCain campaign's own connections to Freddie and Fannie. The lobbying firm of McCain's campaign chairman, Rick Davis, received more than $2 million since 2000 from Freddie; starting in late 2005 or early 2006, Freddie paid $15,000 a month. Both Freddie and Fannie paid Davis some $30,000 monthly from 2000 to 2005 for running an organization promoting homeownership.

The Tectonic Plates of Freddie and Fannie

Did he make it? 

UPDATE: Shares of US mortgage finance giants Fannie Mae and Freddie Mac were in a freefall Friday on heightened concerns the trillion-dollar firms may face insolvency or a government takeover.

Freddie Mac plunged 48 percent to 4.10 dollars at the Wall Street open following a 22 percent slide on Thursday and Fannie Mae lost 46 percent to 7.07 dollars after a 14 percent drop in the prior session.

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Washington dithered. The doctrinairia pontificated. Confidence withered and now a problem that could have been resolved with billions will cost trillions.

Articulation matters.

One well argued sentence from a smart politician can rally opinion and save an empire. It did not come.

Back in March, Federal Reserve Chairman Ben Bernanke called for additional relief and urged lenders to help distressed owners by lowering the amount of their loans.

"This situation calls for a vigorous response," Bernanke said in a speech to a banking group meeting in Orlando, Fla.

Derisive howls came from the "let them take their medicine" crowd.

A cacophony of shallow men shouted down the messenger. No point in naming names now, but they won the day. Now we all will take our medicine.

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U.S. mulls take over of troubled mortgage giants
By Chris Oliver
Last update: 2:47 a.m. EDT July 11, 2008

HONG KONG (MarketWatch) -- Senior Bush administration officials are considering a plan that would see the U.S. government take over mortgage finance companies Fannie Mae if they continue to deteriorate, according to a published report in the New York Times Friday, which cited people briefed about the plan. The plan, which could see the government take over one or both mortgage companies, would entail placing the companies under a conservatorship if their financial health worsens. If that were to happen, the shares of the two companies would be worth little or nothing and any losses on mortgages they own or guarantee would be paid by the U.S. government. The Bush officials are also considering a plan that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies, the Times reported. The report cited officials as saying no action was imminent and neither mortgage company is in a crisis situation.