Does Anyone Know What Greenspan Is Saying/Doing Here?

[Demeter]

http://www.marketwatch.com/news/yhoo/story.asp?guid={7EDC84A1-6477-412C-9B7D-5557F60321DB}&siteid=myyahoo&dist=myyahoo

It has to do with Fannie Mae and Freddie Mac.

[LiberalEsto]

1. My husband works at Fannie Mae but not in policy

The Republican Congress wants to regulate Fannie (which to some extent has been a Democratic stronghold) and Freddie more tightly. But Greenspan's saying the proposed legislation does not regulate Fannie or Freddy enough. In the past, I believe HUD oversaw Fannie, but I don't know about Freddie.

Oversight of these two GSEs (government-sponsored enterprises) has definitely been very lax. Evidence of this is the huge accounting scandal at Fannie (I know almost nothing about Freddie) in which they overstated their earnings by huge amounts of money. They are working feverishly to re-state their earnings now. Their stock dropped considerably since this came to light.

Fannie, Freddie, etc. are quasi-governmental organizations -- which means they were started with the federal government's help, for special purposes, but are not federal agencies. My husband is not a federal worker. In Fannie's case their purpose is buying up mortgages from lending institutions, repackaging them and selling them to investors. The revenue from this gives lenders more money to provide mortgages, and takes away some of their risk of bad loans.

Some critics say Fannie isn't doing enough to help low-income borrowers get mortgage loans. I am not really clear on what Greenspan's criticism is, other than that he wants more oversight. Fannie handles a lot of money, and I suppose if it has problems it can affect the economy in a huge way.

But I personally wouldn't be surprised if the Misadministration is also trying to find ways to get its greasy paws on some of Fannie's money.

Hope this helps a bit.