It seems to me that there are exceedingly few government entities that actually do what they were set up to do. Whether through the law of unintended consequences, politically motivated 'drift', or just plain failing management, these agencies pervert their 'jobs' on a regular basis. For a case in point I give you the Fannie Mae "who we are" write-up. Emphasis is mine; my snide comments are in blue italics.
Fannie Mae provides stability, liquidity, and affordability to the nation's housing finance system under all economic conditions. Well, thank god we have the GSE's to provide "stability, liquidity and affordable houses". Without them we may find ourselves in a housing/credit crisis, too few homes on the market (sarcasm), and expensive (yet declining) houses. We are a shareholder-owned company with a public mission. "We privatize the profits, and socialize the risk just as Moussilini would have wanted." We exist to expand affordable housing (unless congressional pressure tells us we can't let house prices fall) and bring global capital to local communities that give the most money to congress in order to
serve the U.S. housing markethelp incumbents get re-elected.
Fannie Mae has a federal charter and operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. Seeing as how we had more money flowing into the RE sector than we knew what to do with (that's how you get a bubble), at rates too low to compensate for the riskiness of loans, what problem did this solve again? Our job is to help those who house America.
Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. This line should read "we now have the honor of being the first of the
SocialistNew Deal programs to fail, but you should expect the others to follow suit shortly. Go us!"
The government established Fannie Mae in order to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. HAHA! "at all times, under all economic conditions" Well, it seems like the GSE's lent when the private market was functional and lending, but now, when we "theoretically" (open to debate) need the new loans for stability FNM and FRE are unable to provide them. Phew, what would we do without all their help.
In 1968, Fannie Mae was re-chartered by Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Unless they need my capital.
Fannie Mae has a unique duty to the public it serves -- and the private investors that fuel its service -- to be a model company focused on service, reliability, and value. No comment.
Like all who participate in the housing market, Fannie Mae has a responsibility to help home buyers, homeowners, and communities through market challenges. We believe in the long term health of America's housing market. The nation is growing and that growth will bring a renewed demand for housing and for responsible, sustainable mortgage lending. Fannie Mae will be there to help meet America's changing housing needs. We'll see, won't we.
It's also important to note that, by definition, to provide "low cost" loans means providing loans that are not expensive enough to cover their risks. If the loan rate was enough to cover those risks and a profit margin they loans would cost exactly what the market charged. Suffice it to say, the GSEs are performing EXACTLY AS SHOULD HAVE BEEN EXPECTED.