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December 01, 2008
A blast from the past
Russell Roberts
Here is a 1994 article from Business Week on Fannie and Freddie's political fight against getting more involved with low-income lenders. This was very early days. Interesting to see which politicians wanted Fannie and Freddie left alone.
FANNIE MAE'S LINE IN THE SAND
FANNIE MAE, AS savvy politically as it is financially, is fighting a Clinton Administration plan to boost low-income mortgage lending. The Federal National Mortgage Assn., a federally chartered private company that buys mortgages from lenders and bundles them into bonds, has called in a cavalcade of big-time pols to help.
At issue is a program by Fannie to spur lending for affordable housing in urban and rural areas, to low- and moderate-income homebuyers. Fannie chief James Johnson, a former Walter Mondale aide, is upset over pressure from the Housing & Urban Development Dept. to focus on minority and low-income buyers regardless of their location. And HUD has considered making Fannie police bias by lenders, which Johnson sees as unworkable.
Fannie Mae complains that the HUD plan would ignore the urban middle class, potentially prompting their exodus from cities. Johnson has enlisted the mayors of Boston, Chicago, and Oakland as well as Representatives Barney Frank (D-Mass.) and Charles Schumer (D-N.Y.) to lobby against the HUD plan. Their impact has been felt. The word is that HUD thus far has backed off on the idea of Fannie Mae as an antibias enforcer.
Posted by Russell Roberts in Government intervention in housing | Permalink
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Comments
Very interesting. So did Frank and Schumer change their minds later? I've seen Frank deny pressuring FNMA in this direction and claim that the worst excesses of subprime lending sponsored by FNMA ended in 2007 when he took the reigns of the Financial Services Committee. I don't know how true that is, but this article doesn't support the widespread idea that Frank was a cheerleader for loose lending. Apparently, he's very friendly with Ron Paul too.
Posted by: Martin Brock | Dec 1, 2008 10:55:07 AM
I'm suspicious of this. Frank, to this day, defends the Munnell Boston Fed paper that purported to show racial discrimination in home loans. A paper that was blown out of the water by Stan Liebowitz.
Posted by: Patrick R. Sullivan | Dec 1, 2008 11:54:43 AM
Very interesting.
94 is going back pretty far relative to the whole mess, but just judging from Frank and Schumer's own statements 10 years later, obviously their minds changed quite a bit.
Somewhere between 94 and 04, there had to have been a coming together of the political minds.
I wonder what the price was?
This would be a good Amity Schlaes or Michael Lewis book.
Posted by: Ray G | Dec 1, 2008 10:18:14 PM
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