I want to apologize for what could be construed as my seeming absence from our cause lately. Rest assured that though I may not be overly present here I am always working to achieve our goal.I have been under increasing pressure to essentially end the blog and let the events play out as they may. To those I say I am sympathetic to your concerns but I must remind you of my commitment to share the truth. I believe the truth can be shared in a responsible way as not to be unproductive. Though I may not agree with the exact strategy, I am willing to do my part to help us all achieve our goals. Generally at any given time there are no less than three posts I am contemplating putting up. I must decide what is most productive for our cause at the present moment. Tonight I did not have that problem; tonight’s post is a critical update. The last few days we witnessed a dramatic shift in our situation, another turning point if you will.
The events of the last week again confirm a notable shift in both Mel Watts and the administrations view of the GSEs.I first want to share a paragraph from a strategy paper I distributed on my Oct. 1st trip to DC :
“The elimination of Fannie Mae and Freddie Mac will have disastrous consequences for the U.S. economy, and will wipe out decades of progress that has been made to ensure that the dream of home ownership is accessible to all Americans. The taxpayers rescued the banks and insurance companies, and they recovered and now are enjoying great prosperity. Millions of Americans have benefited greatly by the governments initiatives to keep interest rates low. One group has been left on the curb. In a cruel twist, this very same group that bore the brunt of the predatory practices that lead to the financial crisis have been effectively shut out of the housing market.”
The steps Mel Watt introduced this week to ease some of the extreme measures that were put in place in the years following the crisis were a big step in righting this wrong. These measures though designed to provide added safety to the mortgage markets actually unfairly shut out millions of Americans from the dream of home ownership. For decades leading up to the boom/bust Fannie and Freddie, were able to loan to these folks. The default rate among this group in those years was no worse than the broader mortgage population. We not only saw Mel act this week, but we also saw the joint release by numerous federal agencies concerning risk retention issues. Again they simply restored these to reflect where they stood in the decades leading up to the crisis. Just as we expected these changes brought an immediate chorus of disapproval from our opponents. They claim that the administration and Mel Watt are setting the stage for a new bubble /bust scenario. They couldn’t be anymore wrong.The changes announced this week should not be confused with the predatory high-risk mortgages and practices that private capital unleashed on our country and created the housing crisis and near economic collapse of our nation. What they did than bears no resemblance to what the administration and Mel Watt are doing now.
We need to examine these recent events in a broader context. Mel Watts first moves were to crush everything that Demarco had put in place to shrink and eventually eliminate Fannie and Freddie. We have also witnessed a series of reforms that make Fannie and Freddie far more secure than they ever were before, setting the stage for a responsible release. This week steps clearly show that both Mel Watt and the administration have heard our pleas and will not abandon their true beliefs. They have come to understand the real causes of the housing crisis.They have assured us that they realize the critical role that Fannie and Freddie have played for decades in ensuring that all qualified Americans have equal access to our mortgage market.Right under everyone’s nose they are saving Fannie and Freddie and improving the lives of millions of Americans for generations to come. Keep the Faith