reckless-endangerment-by-gretchen-morgenson

The amendment had not attracted much attention before

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and insurance companies. The amendment had not attracted much attention before or after the bill was passed. Todd discovered that the change had been quietly inserted late in the legislative process by Christopher Dodd, the Connecticut senator whose constituents include most of the nation’s large insurance companies.2 During a debate about the bill on the Senate floor, Dodd said that his provision would give “the Federal Reserve greater flexibility to respond in instances in which the overall financial system threatens to collapse. Morgenson, Gretchen (2011). Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon (pp. 40-41). Times Books. Kindle Edition.
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RECKLESS ENDANGERMENT by Gretchen Morgenson Page 11 of 66 CHAPTER THREE . . . Getting approved on a home mortgage seemed so difficult for those who were unfamiliar with the financial world that it was simply not worth attempting. With weak or no credit histories and little to no savings to put toward a down payment, borrowers figured they were shut out of homeownership. Although banks were careful to make only those loans to people they felt certain would be “money good,” in Wall Street parlance, or able to repay their loans, these institutions did not always hold on to the mortgages they made. If the bank made a loan that it thought Fannie Mae, Freddie Mac, or the government’s Federal Housing Authority programs would buy, then the bank could sell it to one of those entities and free up that money to make another loan. Fannie and Freddie would then turn around and bundle thousands of these loans into mortgage-backed securities that income-seeking investors would buy. But if the bank could not convince Fannie or Freddie to buy a loan, it had to hold on to it and hope the borrower would pay it off. Banks did not create pools of loans and sell them to investors like Fannie and Freddie did. They either sold them to the government or kept them. All this changed, however, in June 1993 when United Companies Financial, a publicly traded mortgage lender based in Baton Rouge, Louisiana, cobbled together its first mortgage pool. The company, founded in 1946, had been originating loans, bundling them into pools of mortgages, and selling them to affiliates and government agencies for almost a decade. Morgenson, Gretchen (2011). Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon (pp. 48-49). Times Books. Kindle Edition.
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RECKLESS ENDANGERMENT by Gretchen Morgenson Page 12 of 66 CHAPTER FOUR In March 1994, Johnson announced Fannie Mae’s Trillion Dollar Commitment, a program that earmarked $1 trillion to be spent on affordable housing between 1994 and 2000. The money would finance “more than 10 million homes for low -income families, minorities and new immigrants, families who live in central cities and other underserved communities, and people with special housing needs,” the company said. Setting aside these funds meant that “Fannie Mae will transform the nation’s housing finance system by working with other
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