The_Great_Fannie_and_Freddie_Rip-Off

The_Great_Fannie_and_Freddie_Rip-Off - JANUARY 26, 2011 The...

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JANUARY 26, 2011 The Great Fannie and Freddie Rip-Off The GSEs' common shareholders need to organize and make their voices heard in Congress. By RALPH NADER I have long fought against the systemic disempowerment of investors in large public corporations, but the mistreatment of the Fannie Mae and Freddie Mac shareholders, including me, is uniquely reprehensible. For decades Fannie and Freddie behaved like other large, publicly held financial corporations. They were profit-seeking companies, listed on the New York Stock Exchange (NYSE). They displayed an unfettered drive for greater sales, profits, executive bonuses and stock options for the top brass. Their shareholders received dividends and rising stock values. These so-called government sponsored enterprises (GSEs) dominated the secondary mortgage market. The implied government backstop slightly lowered their borrowing costs in return for a poorly enforced obligation to facilitate a mortgage market for lower- income home buyers. Otherwise, the GSE moniker meant little, since everybody knew that, like Citigroup, Goldman Sachs and other Wall Street giants, Washington viewed them as "too big to fail." With the onset of the subprime mortgage collapse, Fannie and Freddie went down with the rest of the financial industry. The federal government moved into high bailout gear during the latter half of 2008 with three distinct rescue models for Wall Street and Detroit. One model provided capital and credit lines to Bank of America, Citigroup, Morgan
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This note was uploaded on 03/18/2011 for the course FIN 615 taught by Professor Yan during the Spring '11 term at New York Institute of Technology-Westbury.

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The_Great_Fannie_and_Freddie_Rip-Off - JANUARY 26, 2011 The...

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