Why is Everybody Missing the Real Problem with Fannie and Freddie??

OK..Correct me if I'm wrong (and I am sure you will).

When I was much younger and living in an entirely different world, I applied for a mortgage. As a newly minted member of the legal profession, I had no credit, no references and a small mountain of debt. My earnest and cloying "mortgage facilitator" suggested that I obtain a co-signer or guarantor. Even as a novice barrister, I didn't understand what that entailed. I learned very quickly and, after a chorus of "no", I signed a lease for a most comfortable apartment.

So, do I digress? Perhaps, but I think not. Fast forward to the Fannie Mae and Freddie Mac crisis. What is it really about. Here's what I think.

The folks in Congress, and out front with Barney Frank, decided that I --and you and the rest of us -- were going to guarantee a bunch of mortgages. They set it up so that the Federal Government, in the name of stability, would stand behind the mortgages that FM/FM would "acquire". Now, I am not immediately and unalterably opposed to the feds creating vehicles to stabilize a market -- the bankruptcy courts come to mind. Bankruptcy Courts work because the rules are on the table, published and agreed so that the credit markets and those extending credit know the consequences of a bad debt and can plan accordingly.

Here is where it gets seriously wrong...and I mean wrong. The Feds decided that everyone gets a house...."affordable housing". The banks are strong-armed into rules that demand "100%" lending and then the Feds decide, without asking me, that I will be a guarantor of a bad loan. You say..it is not me that is guaranteeing the loan..it is the government. I have two things to say to that. First, do you think that the 40-60% of value you have lost on the biggest investment of your life -- your residence -- is a sufficient guarantee for that bad loan? Second, the federal government is YOU.

When Barney Frank and his minions vote, they are voting for you. We all forget that Washington is us. And when they pledge our guarantee to FM/FM they pledge each of our names just as if it was the mortgage I looked for in a time when I couldn't get one ....if only I had been on the market thirty years later.

Understand folks..they don't think of you and me...it is an abstract notion when they create rules that ultimately come back to hurt you and me. You cannot create a system in which the government guarantees loans that were guaranteed to be bad loans from their initial application without completely divorcing yourself from the people and from their voice. If you cannot hear the people, their voice is meaningless...

In this two-party system, if the Democrats are deaf and morally bankrupt after having put us on the verge of bankruptcy, then the GOP is the only voice of meaning for the people. It must be the mission of the GOP to give a controlling role to the voice of the people....be it new, be it different...it is still the people's voice.

I could be wrong; I have been before..