Bernanke couldn’t say so publicly, but he agreed with some of the critics. For years, the Fed had warned that Fannie and Freddie were squeezing out competitors and engaging in risky mortgage-lending practices. Bernanke would have liked to combine a rescue package with extensive reforms, but he realized that an overhaul of the companies was not politically feasible. Despite their financial problems, Fannie and Freddie still had many powerful allies in Congress [DEMOCRATS!], and Bernanke was determined that the plan be approved quickly, in order to restore confidence in the markets.THE GOP, BUSH, GREENSPAN, SNOW AND MCCAIN WARNED CONGRESS THAT FANNIE MAE MIGHT COLLAPSE IF FANNIE MAE WASNLT REFORMED - AND THAT THIS WOULD CASUE A FINANCIAL MELTDOWN.
... Like the Wall Street firms, Fannie and Freddie had suffered big losses on their vast loan portfolios, and many Wall Street analysts believed that the companies were on the verge of insolvency—an alarming prospect for the U.S. government.
In order to finance their purchases of mortgages and mortgage bonds, Fannie and Freddie had issued $5.2 trillion in debt, and although they were technically private companies, their debt traded as if the government had guaranteed it. If the companies defaulted, the creditworthiness of the entire government would be called into question.
- THE DEMOCRATS BLOCKED REFORM OF FANNIE MAE AND THAT'S WHY THE FINANCIAL SYSTEM HAS MELTED DOWN.
- THE ROOT CAUSE WASN'T DEREGULATION OF THE BANKS - WHICH OCCURED IN 1998. IT WAS THE LACK OF REGULATION AND OVERSIGHT ON FANNIE MAE, AND THE SOCIALISTIC HUD POLICIES DATING FROM 1998.
- THE ULTIMATE REMEDY ISN'T MORE SOCIALISM.