Busted: Bankers and The Global Economy

March 31, 2008

Senators Admit Mortgage Debacle Last Summer

Filed under: banking, credit, federal reserve, money — Tags: , , , , , , , — digitaleconomy @ 1:28 am

Busted Bankers has detailed extensively the attempted cover up of the subprime banking crisis by the United States government. Unfortunately, news articles on the topic are virtually non-existent. We have recently located an article published by Reuters UK which indicates that an effort headed by New York Senator Schumer was made to cover the subprime mess by having federal banking corporations Freddie Mac and Fannie Mae ready to refinance failing subprime loans. The companies were under orders from their federal regulator to freeze mortgage holdings at about $1.4 trillion. Schumer, the head of the Senate banking committee, introduced a bill before September 10, 2007 to allow a refinancing move of $145 billion for refinancing subprime loans.

The regulator for Fannie and Freddie, the Office of Federal Housing Enterprise Oversight, put a limit on the companies’ holdings in the wake of accounting scandals that forced the companies to restate years’ worth of past earnings.

“This common-sense measure will deliver a shot in the arm that could make refinancings possible for tens of thousands of Americans trapped in the subprime mess,” Schumer said.

According to the article, both the U.S. Treasury Department and Federal Reserve argued that allowing the investment holding to grow would not help stabilize the mortgage market that has been embroiled in recent months by an increase of loan failures.

In a letter Senator Barney Frank of Massachusetts told Federal Reserve chairman Ben Bernanke that he was wrong to argue that the companies were fully able to stabilize the mortgage market without lifting the investment limits.

This is the first news proof at this early stage of the banking mortgage crisis that we have been able to locate. The news article supports the supposition that in September 2007 the mortgage crisis was well developed with full involvement of government officials. The surprised expression of near panic by President Bush was staged.

from UK Reuters article dated September 10, 2007
“Sen. Schumer offers bill to raise GSE investment caps”

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