Sunday, March 15, 2009


Our Source Was the New York Times

From a prescient NYT editorial in 1999:

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenominal (sic) growth in profits.
“Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing downpayment requirements,” said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. “Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market."
In moving, even tentatively into this new [subprime] area of lending, Fannie Mae is taking on significantly more risk, which may not pose difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.

(h/t Cheat Seeking Missiles)


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