Nobody wants to talk about Wall Street today?

[Roscoe]

Fannie was a very profitable entity at least until 1996,as Fannie had 10 consecutive years of record profits up to 1996.So,what happened between 1996 and now that brought Fannie to her knees?

Let me first plot a timeline of events and we'll see if we can spot where the Fannie hit the fan.

Fannie was created in 1938 and operated for close to 50 years within the guidelines as mandated by Congress. In 1983 Fannie was pushed by HUD to enter the multi-family market and Fannie became a landlord. I remember hearing through the years about apartments that the rent was based on your earnings and this must have been Fannie in action. I had one rental property and I swore I would never rent anything else. I doubt Fannie fared much better.

In 1991 a program called"Opening the Doors to Affordable Housing" was started and by 1993 more than $10 billion in mortgages had been originated in this program. In 1994 a new program started and it was called "The Trillion Dollar Commitment" for affordable housing. By 1998 this program had originated half a trillion dollars in low income mortgages. Mr. Fleckenstein stated that Greenspan didn't have anything or didn't want anything to do with Fannie. Greenspan made at least one decision on Fannie and that was to loosen lending regulations and this led to one of the main reasons we got to this point. He let the banks get by with fewer appraisals. I think this is as dangerous as not verifying employment or income. How can you make a loan on some property when you have no clue what it's worth. So,later we went from no appraisal to not verifying employment to not verifying income and I read tonight not to discriminate against people that already owed to much money. So,from March 1994 Fannie has gone from making qualified loans based on sane lending to no appraisal,no income or employment verification and don't worry if you already owe more than you could ever hope to repay,your just the type of person were looking for.

A couple of more interesting points., In 1994 Fannie bought back $634 million "risky securities" which I assume was Fannie paper from Orange County,Ca for $577 million and I bet Fannie lost on this transaction. March,10,1994 Clinton visits Fannie as he has called for Fannie to relax their lending policy so more poor and lower-middle class can qualify for loans. In 2001 HUD pushed Fannie for more multi-family and subprime loans to be approved.

This Raines worked at Fannie once before he returned in 1998. Raines worked in the Clinton cabinet and was appointed by Clinton in 1998 to the Fannie board. The President can appoint 5 people to the board so we have Raines and 4 more appointed by Clinton and this was the beginning of the end. Raines ran amuck from 1998 to 2003 and he was succeeded by Mudd that was already at Fannie. Raines decided his 5 years were worth some $90 million of which an estimated $52 million was gotten frauduantly. Raines,Gorelick and Jim Johnson all played a part in this fraud and Johnson was eying the VP slot with O'Bama until the Fannie hit the Fan!

Y'all remember Gorelick from the 9-11 hearings. She was the asst AG and was responsible for the 'wall' between CIA and FBI.

Roscoe