Most Popular Choices
Share on Facebook 19 Printer Friendly Page More Sharing
OpEdNews Op Eds    H2'ed 9/12/08

The Real Reasons for the Fannie Mae/Freddi Mac Takeover

By       (Page 1 of 2 pages)   2 comments

Fannie Mae and Freddie Mac, the twin giants of the home mortgage industry, own or guarantee assets of $5.3 trillion, almost half of the $12 trillion housing market in the U.S. These assets have been disappearing in value due to the collapse of the housing bubble.

Fannie and Freddie are government-chartered corporations. They are shareholder-owned companies required by their charters to provide low-cost capital to the mortgage industry, supposedly to further the American dream of home ownership. In recent years, as the housing bubble inflated and the mortgage industry extended more and more credit to marginal purchasers through the use of "exotic" lending instruments, Fannie and Freddie followed suit.

Many in Congress were skeptical they were overextending themselves. So they hired lobbyists. According to a September 9 report by Allan Chernoff, CNN senior correspondent, they spent $174 million in the last ten years lobbying Congress "to ensure the political climate would remain friendly." That averages out at $297,435 per senator and representative. No wonder Greg Palast titled one of his books, The Best Democracy Money Can Buy.

Under the takeover being engineered by Secretary of the Treasury Henry Paulson, the government will oversee operations through a "conservatorship." It's a fancy name for bankruptcy. Taxpayer money will be used to inject new capital into Fannie and Freddie's operations, since, having lost so much on bad loans, they are broke.

How will it work? According to the Washington Post's Steven Pearlstein:

"Under the deal they could not refuse, Fannie and Freddie directors and top executives will lose their jobs. Shareholders will lose their dividends, voting rights, and most of their ownership stake, while agreeing to pay dearly for the government's money and backing. Left unharmed will be holders of trillions of dollars in Fannie and Freddie debt -- or securities backed by mortgages that Fannie and Freddie have insured against default -- who will get all their money back, with interest."
Protection of debt holders is the key, because this includes foreign governments like China, as well as sovereignty funds, mutual funds, and pension funds worldwide. If these international investment sources dry up, the U.S. could no longer finance its enormous fiscal and trade deficits. It's the Armageddon scenario. 

 

Thus within the overall context of the debt-based financial system run by the Federal Reserve, Fannie Mae and Freddie Mac are the most important business entities in the U.S.-more so than Exxon-Mobil, Microsoft, General Motors, GE, or IBM.

Big companies like Exxon-Mobil at least have tangible assets they use to produce real goods and services. But the financial industry-including Fannie and Freddie-have only pieces of paper that represent someone's ability to make payments in an economy going downhill, with thousands of people losing their jobs daily.

For the last decade, the U.S. economy has been built on a foundation of housing debt as its financial engine. It's a foundation of sand. The lunacy has been a long time coming, though the "rest of the story" is little known, even to experts.

You see, decades ago, the international financial elite which runs the Western world decided that the U.S. would no longer be allowed to maintain its status as the world's greatest industrial democracy.

Because the planners have always worked in secrecy through such groups as the Council on Foreign Relations, The Trilateral Commission, and the Bilderberg Group, sources are sketchy. But the information is there if you look.

The roots of the plan go back to post-World War I days, when the U.S. was making money hand-over-fist by collecting on loans made to the European World War I combatants. The financial elite, including the American Rockefellers, financed the Bolshevik Revolution in Russia. They also began to lay plans to eventually merge the U.S. with the Soviet Union in a one-world communist government.

To prepare the American mind, such non-profit groups as the Carnegie Institute, the Rockefeller Foundation, the Ford Foundation, and the Guggenheim Foundation sought to influence the U.S. educational system in favor of collectivist ideals rather than those based on the Declaration of Independence and the U.S. Constitution. The blueprint for dumbing down the masses through collectivist propaganda was provided by the Tavistock Institute of Great Britain.

Necessary for the changes in store for mankind was an environment of perpetual warfare as the only way people would accept state terrorism as "normal." In other words, there always had to be an enemy to frighten people into voluntarily giving up their rights and accepting the legitimacy of a slave society. Key to slavery was a financial system based on debt, because, after all, it was the financiers who were the architects and expected beneficiaries of the planned system.

During the 1930s and 1940s, in order to defeat Nazi Germany in World War II, the United States built an economic powerhouse that resulted in full employment and a high standard of living. But by the 1960s and 1970s, the industrial economy was being dismantled.

The 1970s was the critical decade. The financial elite, working through the OPEC nations as their instruments of change, wildly inflated the worldwide price of oil, driving the U.S. economy into stagflation. To combat the stagflation which they themselves had created, the elite, working through the Federal Reserve and its chairman, Paul Volcker, raised interest rates through the roof, causing the economy to crash.

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

Richard C. Cook Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on (more...)
 
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Real Reasons for the Fannie Mae/Freddi Mac Takeover

Does the Bailout Bill Mark the End of America As We Know It?

Obama Economic Program Increases America's Bondage to Wall Street Billionaires

They Did It on Purpose: The Housing Bubble and Its Crash

Democrats Should Skip a Party and Read the American Monetary Act

"Change" Part I: Has the West Reached Its Limits?

To View Comments or Join the Conversation:

Tell A Friend