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mortgage crisis ramblings

The subprime mortgage crisis is one of the more interesting topics I've been following. Hank Paulson and the Bush administration have taken what some consider 'drastic' steps to ease the situation. Here's a few things I've learnt:

Hank Paulson is of course, the current US Treasury Secretary. He was sworn in on 2006 and succeeded John Snow.

In July 2008 he announced a plan to help bail out Fannie Mae and Freddie Mac.

Interestingly these are 'formal nicknames'. They are also officially known as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) respectively.

Both corporations are in fact, GSEs - or government sponsored enterprises.

Fannie Mae was created as part of FDR's (a Democrat) New Deal program in 1938. It served to create the secondary mortgage market.

In 1968, LBJ (again, a Democrat) privatised part of Fannie Mae. In 1970 this became Freddie Mac.

As GSEs they have access to a line of credit from the Treasury, are protected by the Government and are exempt from some oversight and local taxes.

Just recently Hank Paulson announced a plan to bail out the two and put them back in control of the Government.

Paulson's plan created the new FHFA - Federal Housing Finance Agency - with James B Lockwood III as head. The plan puts Freddie Mac and Fannie Mae in a conservatorship under the the FHFA.

An intervening Government is unusual for a Republican administration.

HR 3221 kicked off a number of steps to help relieve the mortgage crisis. One of these was the creation of the FHFA.

HR 3221 appears to have been voted along party lines.

HR 3221 was sponsored by Nancy Pelosi, Speaker of the House. It passed Congress 241-172.

It passed in the Senate 48-46.

Clinton, Obama, McCain all appear to have not voted for the measure - at the time of voting we can assume they were caught up in the Presidential Primaries.