On Tuesday, the Obama Administration will be hosting a conference of real estate, banking, and mortgage industry leaders to begin to determine what to do with the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.
These, you will recall, are the $5.5 trillion mortgage giants who, with the help of the Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD), and the Federal Reserve, facilitated the catastrophic housing bubble that has left the U.S. economy lost at sea.
Specifically, it was HUD that imposed so-called “affordable housing goals” on Fannie and Freddie, which rose from 30 percent in 1993 to 56 percent by 2008. Also, the FHA helped to weaken lending standards, expanding government-held loans with down payments of 3 percent or less from $7 billion 1991 to over $174 billion in 2007, $160 billion of which were held by the GSEs. The Federal Reserve provided the capital needed to fuel the bubble.
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