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<blockquote data-quote="av8torntn" data-source="post: 908889" data-attributes="member: 8259"><p><span style="font-family: inherit">Rep. Barney Frank (D-MA) defended the status quo arrangement on the grounds that it enabled Fannie and Freddie to lower mortgage interest rates for borrowers:</span></p><p><span style="font-family: inherit">Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable, both in general through leveraging the mortgage market, and in particular, they have a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing, and that is what I am concerned about here. I believe that we as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. … The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see … the more pressure there is there, then the less I think we see in terms of affordable housing.<a href="http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis#_end13" target="_blank">[SUP]13[/SUP]</a></span></p><p><span style="font-family: inherit">In the very same statement Representative Frank denied that the GSE’s debt had any federal backing:</span></p><p><span style="font-family: inherit">But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own.<a href="http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis#_end14" target="_blank">[SUP]14[/SUP]</a></span></p><p><span style="font-family: inherit">Of course, Frank was thinking wishfully and ignoring the obvious. The very “arrangements which are of some benefit to them,” that is, the arrangements that enabled Fannie Mae and Freddie Mac to borrow at low rates (in exchange for which privileges they were willing to accept affordable-housing mandates), were nothing other than the implicit federal guarantees of their debt.</span></p><p><span style="font-family: inherit"></span></p><p><span style="font-family: inherit"></span></p><p><span style="font-family: inherit"><a href="http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis" target="_blank">LINK</a></span></p></blockquote><p></p>
[QUOTE="av8torntn, post: 908889, member: 8259"] [FONT=inherit]Rep. Barney Frank (D-MA) defended the status quo arrangement on the grounds that it enabled Fannie and Freddie to lower mortgage interest rates for borrowers:[/FONT] [FONT=inherit]Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable, both in general through leveraging the mortgage market, and in particular, they have a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing, and that is what I am concerned about here. I believe that we as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. … The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see … the more pressure there is there, then the less I think we see in terms of affordable housing.[URL="http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis#_end13"][SUP]13[/SUP][/URL][/FONT] [FONT=inherit]In the very same statement Representative Frank denied that the GSE’s debt had any federal backing:[/FONT] [FONT=inherit]But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own.[URL="http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis#_end14"][SUP]14[/SUP][/URL][/FONT] [FONT=inherit]Of course, Frank was thinking wishfully and ignoring the obvious. The very “arrangements which are of some benefit to them,” that is, the arrangements that enabled Fannie Mae and Freddie Mac to borrow at low rates (in exchange for which privileges they were willing to accept affordable-housing mandates), were nothing other than the implicit federal guarantees of their debt. [URL="http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis"]LINK[/URL][/FONT] [/QUOTE]
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