From The RampartsJunious Ricardo StantonThe Criminality and Fraud Continues“Fannie and Freddie Shares Slide, Dragging Down Markets Fannie Mae and Freddie Mac shares plummeted again on Friday — and the broader stock market followed suit — as concern mounted that the government will be forced to take over the beleaguered mortgage finance companies, which some investors fear are at risk of default. Even after a week of unprecedented losses, the companies’ declines on Friday were the sharpest yet: Freddie Mac shares were down 24 percent from Thursday’s closing price, to $6.08 a share, and Fannie Mae stock fell 28 percent to $9.51 a share, in midday trading after opening sharply lower. Less than an hour after the markets opened, Henry M. Paulson, the Treasury secretary, said a government bailout was not an immediate possibility.” Fannie and Freddie Shares Slide, Dragging Down Markets By MICHAEL M. GRYNBAUMhttp://www.nytimes.comA major sting is about to be consummated that would make Danny Ocean and his crew blush with envy. The difference between George Clooney’s fictional character Danny Ocean and the real Wall Street rip off artists is, Ocean picks on the rich, guys who can afford it. While Wall Street targets you dear taxpayer to foot the bills for all the avarice, fraud and criminality that have brought US financial markets and the economy to its knees and threaten a global implosion. The shysters and con men are about to pull off the confidence game of the young century. Henry Paulson the Secretary of Treasury who is a former Goldman Sachs executive, is about to save his investment banking buddies the ignominy of being totally wiped out; thereby escaping the consequences of their larceny. The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac are in deep financial difficulty/trouble. They are the designated patsies that will take the fall for the Wall Street bankers.Freddie Mac and Fannie Mae are two privately owned but government created and guaranteed mortgage finance lending entities. Fannie Mae was created in the 1930's to help struggling families secure mortgages following the depression. It provided federal money to local banks so families could secure mortgages during a time when most banks were strapped for cash and were extremely reluctant to lend money for homes. The creation of Fannie Mae helped stimulate home ownership and invigorate the housing market. “Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This lead to the development of what is now known as the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge.” What Are the Origins of Freddie Mac and Fannie Mae? By Rob Alford http://hnn.us/articles/1849.htmlToday Fannie Mae and Freddie Mac are the major players in the “secondary mortgage market”, meaning they don’t make loans to people directly. They borrow money from investors (mostly overseas) and then lend the money to banks so these banks can lend the money to folks for mortgages. Freddie Mac with its’ government guarantees takes these loans, repackages them and sells them to investors who think the loans are safe due to government guarantee. However both agencies experienced problems in 2004. Scandal rocked Fannie Mae when its’ CEO Franklin Raines, (a brother who thought he could do what the white boys routinely get away with) was forced to resign and pay back several millions in a civil suit brought against the agency’s executives. Freddie Mac was also caught in an accounting scandal in 2004. Accounting scandals like those practiced by Enron, Worldcom and Freddie Mac are just the tip of the iceberg. Accounting fraud is at the heart of the current mortgage crisis. Most banks kept the shaky subprime loans off their balance sheets so their investors wouldn’t know they were in financial difficulty.The current mortgage and credit meltdowns are the result of massive fraud on the part of the US government, Wall Street bankers, the mortgage companies, brokers, the media and Government Sponsored Enterprises such as Fannie Mae and Freddie Mac. Until recently Freddie Mac and Fannie Mae didn’t even have to report to the Securities and Exchange Commission (a paper tiger enforcer of US laws to protect investors and the public) if they were having any difficulties. “Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. In the event that there was some sort of financial collapse within either of these companies, U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debts. A recent investigation by the Justice Department and the SEC into the accounting practices at Freddie Mac revealed accounting errors in the amount of 4.5 to 4.7 billion dollars and resulted in the termination of three of the company's top executives. Ongoing investigations by Congress, particular the House Finance Services subcommittee that oversees the activity of GSEs, will determine the future role of Fannie Mae and Freddie Mac and the secondary mortgage market that they dominate.” What Are the Origins of Freddie Mac and Fannie Mae? By Rob Alford . http://hnn.us/articles/1849.htmlThe scandals go deeper than this but suffice it to say as with most white collar crimes in which elected officials and government agencies are in collusion, the public is rarely told the real deal. This is what makes the current situation of Freddie Mac and Fannie Mae so precarious. If they go under, the taxpayers will have to bail them out. Currently both Freddie Mac and Fannie Mae are in a huge hole. But up until recently their financial problems were under the radar. Freddie Mac, Fannie Mae and the FHA are the agencies the crooks, shysters and con men on Wall street will use to cover their behinds in the mortgage, credit and banking implosion. Paulson and Fed chairman Ben Bernanke are running interference for the bankers, hedge fund CEOs and all the other shadow economy players. They can’t wait to get the Congress to pass legislation which on the surface purports to help home owners facing foreclosure but is really a mechanism to dump the high risk, shaky bank mortgages onto Freddie Mac and Fannie Mae. This will mean the US taxpayers will bail out giant Wall Street investment firms like Lehman Brothers, CITIGroup and Bank of America that are on the verge of collapse.The Fed can’t print enough money out of thin air to save both Wall Street and the commercial banks without creating hyperinflation. So a taxpayer bailout is the remedy of choice for the con men. ““Senior Bush administration officials are already considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, according to people briefed about the plan. Under a conservatorship, shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers. The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt.” Fannie and Freddie Shares Slide, Dragging Down Markets By MICHAEL M. GRYNBAUM http://www.nytimes.com/2008/07/12/businessThe corporate media is preparing the masses for another shafting. The New York Times, the organ of record for the AmeriKKKan oligarchy is spinning this like none of the government officials want to dump this on Joe and Jane Sixpack (the taxpayers). By now you know that is exactly what they will do. It’s all part of the scam, the sting, it’s a humongous confidence game. The corporate media is in on it, they are doing the bidding of their masters, the ruling elites who own them. Their job is to keep us distracted or to feed us disinformation so we don’t wake up to what is really going on.Look for the financial elites to prop up Freddie Mac and Fannie Mae or blatantly lie about their solvency so they look healthy enough on paper to absorb all the loses the bankers and hedge funds and derivatives are experiencing. Kep in mind the accounting practices at both Fannie Mae and Freddie Mac are on the order of Enron and Worldcom. Look what happened to Franklin Raines, the former CEO of Fannie Mae, the Wall Streeters who helped loot Enron in the ‘90's and the Savings and Loan fiasco twenty years ago, not one of these crooks spent a day in jail. Obviously white collar crimes pays, and pays extremely well. But it is the taxpayers who foot the bill.-30-
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