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Fannie Mae and Freddie Mac; The Illusion of Public Interest?

It's Your Money

Are stricter regulations required for Fannie Mae and Freddie Mac? Should the public be concerned about who they do business with and who they exclude from the round table? Some calculate the Fannie and Freddie bailout to come in at $317 billion but I beg to differ. If the public take into consideration the numerous assistance these organizations received over the years, their secret dealings at the FED discount window and any other Department of Treasury deals lurking out there this bailout could be close to a trillion.

The public should be disgusted by the numerous changes in CEOs and there have been no new announcements about how the agency plans on moving forward (a different way of doing business). There are an abundance of nonperforming properties sitting on their balance sheets; properties that can benefit the public in a free market process yet all we hear is the business as usual rhetoric of turning to Wall Street for answers. To many in these circles innovation and the entrepreneurial spirit ran out the door a long time ago; today it is about making undisclosed deals that further pad the pockets of the people who brought our latest crisis. Improvements are needed but it can only come with executives that have a moral and entrepreneurial compass. I am hoping that the new CEOs of both Fannie and Freddie fit this description.

Grab the money and run

The people who have orchestrated our most recent financial disaster are being invited to the table to reap the benefits of their destruction. Basically it's cash grabbing. It is true that Wall Street does have the money to absorb a lot of these properties but Fannie and Freddie owe local communities and small businesses gratitude for the numerous times that they have come to the assistance of these organizations. Also, what about the people that are going to be sold these homes that are being bought; what type of financing products will be offered? Private equity and hedge funds are probably going to devise financing products with heavy fees and high interest just as a thank you for the bail out.

Where is the small business involvement? Where is the nonprofit involvement? The public will never see justice from these two agencies (I say agencies because they function with government assistance) until they hire civic minded entrepreneurs with the capability and the innovation to involve institutions that will help them make money.

Fannie and Freddie’s business model isolates them from Main Street to the point that they do not know how to make money there. There business model have too many buffers that prevent them from creating the relationships and products that will benefit them and Main Street. This is also the mind set of Wall Street and that is what allows these brilliant minded executives to develop and promote a financial product to people with no affordability. Secondly they are financing more and hire priced real estate when all of the facts show that middle class income is decreasing. How smart is that; a two year old can function better at a lemonade stand.

We must be diligent to discourage these exclusive agreements where great discounts will be awarded to the wrong organizations. I am challenging the public to voice their opinions about this type of behavior. You the public have the power to make the change and I know you will. Ten years from now I hope we are not comparing this crisis to the next one.



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