Wall Street Banks suffered a huge 20.3% loss on private-label mortgage securities compared to just 3.7% for Fannie Mae & Freddie Mac, according to a recent Moody's report. (see table below)
Fannie Mae and Freddie Mac were triumphant in 3 recent lawsuits, with 14 more pending, against these same banks, for the banks' negligent misrepresentation on $200 billion in mortgage-backed securities, which they sold to Fannie and Freddie during the years leading up to the 2008 crisis. These institutions sent our country's financial system into a free fall by selling extremely complex and toxic paper, backed by subprime, Alt-A, option ARMs, and jumbo mortgages – misrepresenting these investment products as AAA paper. A large portion of Fannie Mae and Freddie Mac's losses were due to this bank-perpetrated fraud. Fortunately, for Fannie, Freddie, and American taxpayers, they have recently recouped $12 Billion from settlements; however, roughly $180 Billion remains to be recouped. Anyone would need a bailout after experiencing this magnitude of fraud (see document below).
Why are members in congress promoting the idea that we should eliminate the very institutions (Fannie & Freddie), which helped recover the world markets from the 2008 financial crisis? Why would they want to empower the players (Wall Street Banks) that caused this mess and then disappeared from it (the mortgage market), just when they (private capital) were needed the most? (See documents & charts below)
It is not simply a coincidence, that since congress has devised the bright idea of punishing the victims (Fannie Mae, Freddie Mac, and the tax paying employees and shareholders of these companies, as well as homeowners, and the American middle class), while crowning the criminals (Wall Street Banks), that their approval rating is at an all time low; nearly 6 in 10 Americans are seeking to replace their member's of Congress in the upcoming 2014 elections.
Do you like this post?