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Cracker Squire

THE MUSINGS OF A TRADITIONAL SOUTHERN DEMOCRAT

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Location: Douglas, Coffee Co., The Other Georgia, United States

Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Sunday, October 05, 2008

Pressured to Take More Risk, Fannie Hit a Tipping Point

Today's New York Times has an excellent article recounting how Fannie Mae’s new chief executive, under pressure from Wall Street firms, Congress and company shareholders, took additional risks that pushed his company, and, in turn, a large part of the nation’s financial health, to the brink.

Quotes such as the following from the article show (1) the reason for the title of the previous post in that the White House, Wall Street and Capitol Hill were all complicit in this mess, and (2) in part why -- other than the increase in the FDIC insurance as noted in my 10-2-08 post -- I do not like the $700 billion Wall Street bailout legislation:

“I’m not worried about Fannie and Freddie’s health [in the context of Fannie and Freddie having their lending standards adjusted by the White House so they could purchase as much as $40 billion in new subprime loans], I’m worried that they won’t do enough to help out the economy,” the chairman of the House Financial Services Committee, Barney Frank, Democrat of Massachusetts, said at the time. “That’s why I’ve supported them all these years — so that they can help at a time like this.”

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