Most Americans know that the root of the current economic crisis is the fact that we were making loans to people who couldn't afford to own a house. Specifically, Fannie Mae and Freddie Mac were pressured to make SUBPRIME LOANS to people without steady income and without down payments. This experiment was an abject failure and let to our current economic downturn. Guess what - they are at it again!
Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers. You read that right. After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development.
Thursday, June 25, 2009
Barney Frank to Fannie and Freddie: "That was fun, let's do it again."
Common Cents has a summary of the request Barney Frank, now the Chairman of the House Financial Service Committee, has made to Fannie Mae and Freddie Mac.