Kexel Opposes Fannie Mae and Freddie Mac Bailout
Joseph Kexel claims the mortgage bailout rewards irresponsible behavior. "This just confirms to private firms that the best way to get a bailout is too make the biggest mess you can!", said Kexel.
"The US taxpayer gets it on the chin, once again.", explained Kexel. Kexel sees the bailout as just another in a series of bailouts of the mortgage industry. Kexel feels it rewards the poor lending practices of the banks and mortgage houses.
Kexel continued, "Fannie Mae and Freddie Mac are both corporations created by Congress to create a secondary mortgage market to add liquidity for traditional lenders. This leads to one serious problem, the disconnect between the original lender and the risk of that loan."
Kexel said that Fannie Mae and Freddie Mac were critical components to the sub-prime mortgage mess. "When a bank or mortgage house is sure they can sell off a loan to another investor, it makes it easier to write up a loan to a high risk borrower. The very existence of such a secondary market allowed the sub-prime market grow to a dangerous level which could not be maintained and it collapsed.", Kexel offered.
"Another angle is the false belief that the quasi-government nature of Fannie Mae and Freddie Mac promoted the image of less risk for those buying up the worthless loans.", said Kexel.
Kexel sees the malinvestment as a hidden penalty of these government promoted corporations. Kexel offered, "Although few speak of it, it is clear many of the houses we built up during the boom may not have been needed. I know of a half dozen vacant homes within 2 blocks of my home. It begs the question, where would all the investors money have gone to, if not for the booming housing market fueled by Fannie Mae and Freddie Mac?"
"Instead of new industries and technologies, we have empty homes. It was a poor investment made more likely by government intervention into our economy.", said Kexel.