Fannie Mae Note: Fill & Download for Free

We have a few contemporary examples:The US Government (G W Bush, Prop.) took over AIG in 2008: U.S. to Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries UpThe UK Government bought some banks: Northern Rock - WikipediaThe US Government (G W Bush, Prop.) took over FannieMae and FreddieMac in 2008 (note that these were already quasi-government): Federal takeover of Fannie Mae and Freddie Mac - WikipediaThe US government took over all railroads in 1950: Truman orders army to seize control of railroads - Aug 25, 1950 - HISTORY.com

Those who don’t remember history are doomed to repeat it. It was this exact line of thinking that caused the last housing crash.Under Bill Clinton’s Housing and Urban development, the Community Reinvestment Act urged banks to loosen lending restrictions in order to empower more minorities to buy homes. The taxpayer-backed Freddie Mac and Fannie Mae were ordered to expand their quotas of risky loans from 30% of their portfolio to 50%. Under federal directive, they reduced the down payment requirement, reduced the documentation requirements, created the “interest only” and variable rate mortgage, and the Fed kept up its end of the deal by keeping the interest rates artificially low.Initially this was supposed to only be for minorities, but several State attorneys pushed back, indicating that making such loans accessible only in predominantly-minority neighborhoods was effectively lending discrimination — which it was. Along with those State attorneys, both the NAACP and the ACLU filed lawsuits, and the end result was that eventually these loan programs became available to everyone.And of course, you know what happened next; banks started writing more low doc subprime mortgages than ever before, because they knew Fannie and Freddie had to buy them. The banks would keep the ones they figured were the least risky, and sell off the rest.For a while the plan worked. The rates stayed low, which let participants refinance out of their interest-only or variable rate loans into traditional mortgages after they had built up some equity and credit. Some foreclosures happened, but they were largely offset by the rise in property values, which mitigated the risk to both F&F and the banks that were holding their own notes.But that led to a different problem — with so many eligible buyers competing for housing, housing prices rose and eventually the median home price was too high for the median buyer. And then, when Greenspan finally raised the interest rates, the house of cards came crashing down and millions of Americans suddenly couldn’t afford the house they were living in.At the end of the day, well-intentioned but ultimately bad federal policy was the catalyst of the housing crash. The banks never would have written those loans in the first place if the government hadn’t encouraged it, hadn’t kept the interest rates artificially low, and hadn’t forced Fannie and Freddie to buy them.And now here we are in 2019, talking about starting over with the same mistake that started it all. The road to hell is paved with good intentions — whenever government interferes with the markets, it always ends badly for the participants.

No.It doesn't cover either the responsibility or culpability of Congress (that subject is glossed over in presumption of congressmen being "paid off" by Wall Street in the form of campaign contributions) in writing the laws, and in approving the the government officers who ran (or didn't run) the regulatory agencies. SeeWhy are Americans so angry at the government for the 2008 Financial Crisis?Were mistakes by bankers in the financial meltdown of 2008 a product of irrationality or game-theoretic conundrums?And then there's the whole mess at the Government Sponsored Enterprises: Fannie Mae and Freddie Mac, which is clearly Congress' fault. SeeHow were Fannie Mae & Freddie Mac responsible for the flawed underwriting practices of bank & non-bank lenders?The documentary also lets the investors pretty much totally off the hook, despite what idiots they all obviously were for not doing their own due diligence and investing in the crap that Wall Street was selling, i.e., Mortgage-backed Securities (MBS) constructed out of sub-prime mortgages. SeeHow, when and why, did no income, no job, mortgages become legal?It is important to note that some investors were sober & clear-eyed enough to see the disaster looming, and bet accordingly - some of that is documented in Michael Lewis' book The Big Short, and in the subsequent feature film The Big Short (2015 movie).Further, the shorts, after they had placed their bets, were not shy about telling everyone that the whole system was rotten and about to come down around our ears, but basically no one believed them (and some were confident enough to be counterparties to the shorts’ positions!) ... until it happened.So, Inside Job is interesting, but hardly comprehensive or fair. Given its structure, and that "call to arms" coda, it's more of an anti-Wall Street polemic.See also Why do some of the same people who hate investment banks revere the millions of people who lied to get mortgages, and borrowed money with no intention of every paying it back?