One of the biggest frauds ever committed against the American people that has gone largely unnoticed by the victimized public was the failure of Fannie Mae and Freddie Mac. While most Americans are very upset that their housing values have plummeted and can personally feel how the housing crash has affected them, they cannot wrap their heads around a billion dollar scam. I will admit, I have trouble myself.
Let’s face it, most Americans seem to be more interested in whatever trouble Lindsey Lohan is in this week than in the inner workings of the financial markets. Eyes tend to glaze over at the mere mention of the mortgage giants, and images of chocolate delights swim past the frontal lobe when the words Fannie Mae (or Fannie May, famous Chicago chocolates) are mentioned.
But it’s actually quite simple. A bunch of high powered government types found a casino at which they could not lose. Fannie Mae and Freddie Mac provide loans backed by the government, so if you’re on the board or the president of the company, you can make any type of risky, hair-brained investment and fail (epic-style) and walk away with millions. Not only can you get rich but you could become the most influential staffer in the White House or… the president.
The scam at Fannie and Freddie consisted of fudging the earnings numbers to meet the stated goals so the executives could collect their bonuses. Then, with highly influential and political players on the board, they would run interference with congress and any attempts to regulate the empire. At the same time, they encouraged more and more legislation to make non-credit-worthy people homeowners, guaranteeing they would default on their loans.
Some think the constant push by Democrats to give “fair housing” to people who can’t pay mortgages is about the polls. They are always looking for “lifers” in the voting booth. There is some merit to that theory, but overall, I believe the strategy was more sinister. The more loans they took on, the bigger they got, the more indispensable they became, enabling them to say to legislators, “Look how much the country needs us,” while they pilfered the loot. Fannie and Freddie became a giant slush fund, with which to pay off congress and retire early. When the looters raided it to the bone, the government swept in and gave them 200 (now climbing to 400) billion dollars in bailout funds to continue the madness. The American taxpayer, as usual, was left with the mess.
The following individuals are the worst offenders who profited off of the mortgage crisis that led to the housing crash. Not only did they get away with it but they are some of the most powerful people in the world.