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View Full Version : Bailouts: Flashback 2008: "Stimulus Plan A Scam To Benefit the Rich"




jmdrake
11-09-2011, 06:12 PM
Please ignore the "class warfare" like title and look at the information in the article. This is one of the best explanations of how the government caused the financial crisis while claiming to be trying to avoid it.

http://articles.sfgate.com/2008-02-03/opinion/20870511_1_fannie-and-freddie-fannie-mae-freddie-mac
Stimulus Plan A Scam To Benefit The Rich
Higher loan limits will lead to Fannie Mae, Freddie Mac bailout
February 03, 2008|By Sean Olender

Congress is about to sell us the biggest fraud in American history.

It's been highly touted as an economic stimulus bill that will help millions of Americans - and has the backing of both President Bush and House Speaker Nancy Pelosi. In the coming year, individuals would receive rebates of up to $600 and families up to $1,200. There are other goodies, too, including tax write-offs for small businesses and an expansion of the child tax credit.

But, as the old adage goes, nothing comes for free. As part of the bill, Congress is set to rush through an increase in the mortgage loan limits for Fannie Mae and Freddie Mac (and Federal Housing Administration insurance, too) - from $417,000 to $729,750 - the first step toward a massive financial disaster in which taxpayers will end up paying through the nose.
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Here's how we got to this point. Domestic and international investors hold hundreds of billions of dollars in bad debt, because U.S. investment houses sold them junk securities based on often fraudulent mortgages. Many of these mortgages were sold to unqualified buyers under terms that made widespread foreclosures a certainty once the housing market began to fall.

Investment banks and bond rating agencies sat down and tried to figure out how to describe Americans with insufficient incomes and little for a down payment as great credit risks on loans too big for their incomes. The new rules focused on credit scores, because it was a good excuse to avoid looking at income and down payment, factors that would have restricted this moneymaking fiasco.

Now, thanks to Congress, junk bond investors will be able to pawn off their bad debt to Fannie and Freddie, instead of suing the big investment houses for ripping them off. This shift will certainly doom Fannie Mae and Freddie Mac, so don't be surprised if we, the taxpayers, have to bail out poor Fannie and Freddie - to the tune of more than $1 trillion.

jmdrake
11-10-2011, 12:37 PM
bump

Blueskies
11-10-2011, 07:43 PM
"No one could have foreseen this."