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Part I: Speaker
Article 1:
Obama To Endorse Privatizing Fannie Mae, Freddie Mac
[Rephrase 1]
[Dialog, 4:23]
Source: http://www.npr.org/templates/story/story.php?storyId=209584959
Part II: Speed Article 2:
Obama Outlines Plans for Fannie Mae and Freddie Mac
[Time 2]
President Obama hailed both this city’s and the country’s comeback from the housing bust on Tuesday, and said it was now time to reduce the federal role and risk in the mortgage market “to make sure the kind of crisis we went through never happens again.” He proposed to “wind down” Fannie Mae and Freddie Mac, for the first time outlining his approach to overhauling the two giant mortgage-finance companies that were taken over by the government when they failed nearly five years ago. The companies, which Mr. Obama described in an appearance here as “not really government, but not really private sector,” recently began to repay taxpayers. “For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag,” the president said. “It was ‘heads we win, tails you lose.’ ” Since early 2011, the administration has voiced support for overhauling Fannie Mae and Freddie Mac, which long benefited from an implicit government guarantee. Years ago the companies came to symbolize a self-dealing Washington culture beneficial to both parties, and especially Democrats, but Mr. Obama’s remarks on what comes next were his most specific. For several years, the administration held back from revamping the mortgage-finance system for fear of rattling a weakened market. Mr. Obama on Tuesday endorsed the thrust of bipartisan legislation from a Senate group that would “end Fannie and Freddie as we know them.” The so-called government-sponsored enterprises for decades bought and sold mortgages from financial institutions to provide money for the banks to keep lending to home buyers. [269 words]
[Time 3]
Under Mr. Obama’s principles, which he said were reflected in the Senate bill taking shape, Fannie Mae and Freddie Mac would further shrink their portfolios and lose the implicit guarantee of a federal government bailout. Instead, private investors would be most at risk, with the government a secondary guarantor. “First, private capital should take a bigger role in the mortgage markets. I know that sounds confusing to folks who call me a socialist,” Mr. Obama said, drawing laughs and applause. “I believe that our housing system should operate where there’s a limited government role,” he added, “and private lending should be the backbone of the housing market.” The president said that any measure he signed into law “should preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage.” “That’s something families should be able to rely on when they’re making the most important purchase of their lives,” he said. Senator Mark Warner, Democrat of Virginia who is part of the bipartisan effort on the Senate banking committee, welcomed the president’s endorsement. “It’s good to see additional momentum,” he said in a statement. Brian Gardner, a senior vice president in Washington at Keefe, Bruyette & Woods, wrote to clients that Mr. Obama’s address on mortgage finance was “important because the administration has not discussed it in some time.” Despite the presidential push, he said, Congress is not likely to approve a bill before 2015. Separate legislation in the Republican-controlled House would remove the government from the mortgage market, including from the decision whether to keep providing the 30-year mortgage. But Mr. Gardner wrote that even “many free market proponents acknowledge that the government will play some backstop role in a future system” and be compensated for it. [291 words]
[Time 4]
After years in which the formerly formidable Fannie Mae and Freddie Mac and their Congressional allies blocked proposals requiring some kind of fees or risk premiums, Mr. Obama is calling for an assessment to be paid to the government on the value of mortgage-backed securities. Under his proposals, the revenue from an assessment would help finance aid for borrowers and the construction of houses and rental properties that lower-income Americans could afford. Mr. Obama’s focus was homeownership. But he emphasized the need for more affordable rental housing more than he had before. Advocates have called for a “rebalance” of government subsidies, which they say have too long been skewed toward homeownership and mostly benefit the affluent. “In the run-up to the crisis, banks and the government too often made everyone feel like they had to own a home, even if they weren’t ready and didn’t have the payment,” Mr. Obama said. “That’s a mistake we shouldn’t repeat,” he said. “Instead, let’s invest in affordable rental housing.” Mr. Obama purposely spoke in Phoenix, where weeks after taking office he first announced his ideas for providing relief to homeowners and stemming foreclosures. Here, as in much of the nation, home values and sales are up, and foreclosures are down. Before arriving at a high school gym packed with an enthusiastic crowd, he visited a housing construction company that has quintupled its work force since the bust. But as he often does, Mr. Obama tempered his celebration of better times, and his administration’s role in helping to reach them, with acknowledgment that the recovery was not complete. “The truth is, it’s been a long, slow process,” he conceded. “But during that time we’ve helped millions of Americans save an average of $3,000 each year by refinancing at lower rates. We’ve helped millions of responsible homeowners stay in their homes, which was good for their neighbors because you don’t want a bunch of foreclosure signs in your neighborhood.” [326 words]
Source: http://www.nytimes.com/2013/08/07/us/politics/obama-fannie-mae-freddie-mac.html
Article 3:
Fannieand Freddie Should Pay Dividends to You and Me
[Time 5]
In the days before the housing crash and the financial crisis, Fannie Mae and Freddie Mac—two private companies existing under government “sponsorship”—played a key role in the country’s housing finance system. By buying up mortgages from banks nationwide and then repackaging them as mortgage-backed securities, they allowed lenders to make more loans. These government-sponsored enterprises, or GSEs, also shaped the nature of the national mortgage market, ensuring the existence of the 30-year fixed-rate mortgage that’s standard in the United States but rare elsewhere. In the meantime the companies made lots of money for shareholders. The implicit federal seal of approval gave them access to low-cost debt, which made it easier to make money by buying up home loans. That meant hefty salaries for executives and nice returns for shareholders. A good time was had by all, until the mortgage market came crashing down in 2008 and Fannie and Freddie found themselves in need of more than $100 billion in bailout money. This textbook example of privatized profits and socialized losses has outraged normal people from the moment it was announced. But the Fannie/Freddie bailout was handled differently from the bailouts of major banks: Fannie and Freddie are now owned by the United States government. As the housing market has turned around, they’re once again earning profits—profits that are paid to the Treasury as dividends. Big dividends. So far the Treasury has gotten more than $146 billion from the GSEs; later this year the total amount of dividends paid will exceed the $187.5 billion they’ve gotten from the government. The investment, in other words, is actually looking pretty smart over and above the economic benefits of keeping the mortgage market going. [283 words]
[Time 6]
The only problem is that this gusher of federal revenue is actually an economic disaster. In normal times, government coffers filled with dividends would be good because they could be put to some use. The government could spend that money on building Hyperloops or repairing schools or vaccinating children. Alternatively, the government could do the exact same things it was doing before, but reduce taxes and put more money in working peoples’ hands. But that would require a functioning political system. Today’s gridlocked Congress isn’t doing anything with the money. Still, under ordinary circumstances the reduced government borrowing that results from a dividend windfall could be useful. A smaller deficit often allows the Federal Reserve to run lower interest rates without sparking inflation. That makes it easier for people to buy houses or for firms to invest in new production. Today, though, the Fed’s preferred measure of inflation is running at its second-lowest level on record, even though short-term interest rates have been at zero for years now. So the Treasury is earning tons of Fannie/Freddie money. But the profits aren’t letting us spend more, they aren’t letting us tax less, and they aren’t freeing up private investment capital either. They’re doing nothing. It’s as if the money were sitting around as cash in a storage locker somewhere. What’s more, the money is very likely to keep piling up for quite some time. Essentially everyone in Congress agrees that the current situation, in which Fannie and Freddie are government-owned and dominate the mortgage market, should end as soon as possible. But they disagree about what, specifically, should happen next. Back on Aug. 6, the White House tried to put housing finance reform on the agenda with a speech endorsing legislation by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., that largely tries to restore the pre-crisis status quo while drastically reducing the odds that the federal government will have to step in with bailout money in the future. But in the House of Representatives, Financial Services Committee Chairman Jeb Hensarling, R-Texas, steered a much more radical bill through committee that would eliminate Fannie and Freddie and replace them with nothing at all, leaving the mortgage market without the government backing it’s enjoyed since the Great Depression. This is a fundamental clash of visions that’s hard to compromise away. What’s more, even though everyone says they want to end government ownership of the GSEs, there’s no particular deadline for getting it done. That means the issue is likely to stay on the back burner than get resolved. [376 words]
[The Rest]
Under the circumstances, it’s worth wondering if there isn’t something more economically constructive we can do with Fannie and Freddie while waiting for Congress to figure out the long-term picture. Rather than paying dividends to the Treasury, the GSEs should pay dividends to the American people—writing checks to you and me. That way, conservatives can stop grousing that the reverse bailout is an Obama plot to make the deficit look small. More importantly, the profits can recirculate through the economy rather than sitting inert in the vault. People with more cash in their pockets will buy more goods and services. Firms facing increased demand will boost production and hiring. The increased tax revenue and decreased social service payments associated with a greater level of economic activity will partially offset the lost money to the Treasury. As long as we’re stuck with the government owning two big companies nobody thinks it should own, we might as well let John and Joan Q. Public in on a little fun. [218 words]
Source: http://www.slate.com/articles/business/moneybox/2013/08/fannie_mae_and_freddie_mac_dividends_pay_to_the_public_not_the_treasury.html
Part III: Obstacle
Article 4: “Capture”of Regulators by Fannie Mae and Freddie Mac-Becker
[Paraphrase 7]
Political economists describe the process whereby government officials end up being the servants rather than the masters of the firms they are regulating as the “capture” by the industry of their regulators. When regulators are captured, much of what they do is motivated, consciously or not, by a desire to help the companies they are regulating, even when the social goals that the regulators should pursue are very different. A famous illustration of capture is given by the way airlines were regulated under the Civil Aeronautics Board (CAB) from 1940 to 1978. Large airlines of those times, like American and Delta, naturally had a strong incentive to try to keep new airlines from entering the industry. As a compliant ally of the airline industry, the CAB did not approve one new interstate airline during this almost 40-year period. Many airlines entered the industry when President Carter abolished the CAB, and some of the old standbys, such as Pan Am and Eastern, ceased operations because they could not adjust to a competitive environment. An economically disastrous example of the capture theory is provided by the disgraceful regulation of the two mortgages housing behemoths, Fannie Mae and Freddie Mac, before and leading up to the financial crisis. In their fascinating recent book, Reckless Endangerment, Gretchen Morgenson and Joshua Rosner explore in great detail how Fannie Mae used political connections and intimidation of anyone who stood in their way to gain a highly dominant position in the residential mortgage market. The authors’ show that various government officials, including congressmen and presidential cabinet members, closed their eyes to what these two government-supported enterprises (GSE) were doing. They allowed them to take on enormous risks, while publicly defending their behavior as not being highly risky. Fannie Mae was created in 1938 as a government enterprise that purchased mortgages from banks that loaned money to homebuyers. It eventually became a private investment company regulated by the government, where investors expected that the government would help out if these companies got into trouble. By the beginning of the crisis in 2008, Fannie and Freddie held or guaranteed about half of the United States’ $12 trillion of assets in the residential mortgage market. In September 2008, both Fannie and Freddie were taken over by the federal government when they became insolvent. The loss to taxpayers is likely to be in the hundreds of billions of dollars because many of the mortgages are subprime and of little value. Reckless Endangerment shows how the chief executive officers of Fannie Mae furthered the reach and reduced the regulatory control over their company by assiduously courting congressmen, Fed officials, the Congressional Budget Office, high-level officials of the U.S. Treasury, the Secretary of Housing and Urban Development, and major economists. The prominent and well informed congressman, Barney Frank, gets especially sharp criticism for his continual support of Fannie and Freddie while he was initially a member, and later chairman, of the House Financial Services Committee, the powerful committee charged with oversight of the housing and financial sectors. Barney Frank remained an unwavering supporter of Fannie and Freddie until 2010, when he admitted that they should have been more closely regulated. In a bit of irony, he is a principal author of the 2010 Dodd-Frank act that attempts to reform the financial sector mainly by giving even greater discretion to the regulators. Fannie and Freddie had so much money and political power at their disposal that it became risky for anyone to oppose what they wanted: large increases in their holdings of subprime and other mortgages, with no questions asked. Different government agencies that were supposed to either regulate or oversee these GSEs ended up as advocates instead. Well-known economists wrote favorable articles downplaying the riskiness of the holdings of Fannie and Freddie. These articles were sometimes published in journals or other publications sponsored by these companies. A few government officials were brave enough to risk the wrath of Fannie and Freddie. The authors give particular praise to June O’Neill (I am proud to say she is a former student of mine), who was then head of the Congressional Budget Office. A member of her staff wrote a report that was critical of the degree of risk to taxpayers from the assets held by Fannie and Freddie. These companies tried to get June to suppress the report- she refused- and then a few members of the House of Representatives in cahoots with Fannie and Freddie subjected her to vicious attacks when she steadfastly defended the report in testimony before Congress. The Fed also comes in for sharp criticism by the authors. One example discussed was a Boston Fed publication in October 1992 claiming that minorities were widely discriminated against in gaining access to mortgage credit. The media, many regulators, and some economists widely praised this study as offering definitive evidence of extensive discrimination against minorities in the credit market. Fannie Mae’s head, the politically astute James A. Johnson, seized on this reaction to promote a large increase in mortgages to poor residents of African-American and Hispanic communities with bad credit histories. Since I had written a book on discrimination against minorities in the economy, I was curious to see how the authors reached such definite conclusions about mortgage discrimination. I became convinced after reading their study that it was deeply flawed, and failed to show what they claimed about discrimination in the market for mortgages. The theory of discrimination against minorities implies that minority applicants for mortgages would need to have better credit records and higher employment stability than comparable whites in order to obtain mortgages. This suggests that default rates would be lower and profitability higher on loans to minorities. The study’s authors presented no evidence to support these implications of discrimination theory. All the circumstantial evidence, and some real evidence, showed just the opposite. I published my criticisms in a column for Business Week in 1993 (reprinted on pp. 119-120 in The Economics of Life, a collection of my Business Week articles). The Boston Fed and their supporters tried defending this article against my attack and those by others, but their arguments were weak. Nevertheless, the view persisted that the Fed had “proved” widespread discrimination in the credit market against minorities, and this helped justify an expansion of mortgage loans to families with low incomes and poor employment records. The Fannie and Freddie story does not demonstrate that government officials, congressmen, economists, and others who sang their praises were corrupt, although undoubtedly some were. But rather that powerful companies and industries can bring massive resources to bear in promoting their interests through lobbying, congressional testimony, financial support to help political candidates win elections, attacks on critics, hiring experts to promote their views, and in many other ways. The result is, as Simon Newcomb, an outstanding American economist and astronomer of the 19th century, said a long time ago, “one cent per year out of each inhabitant would make an annual income of $500,000. By expending a fraction of {their} profit, the proposers of policy A could make the country respond with appeals in their favor…Thus year after year every man in public life would hear what would seem to be the unanimous voice of public opinion on the side opposed to the public interests” (p. 459 of his 1885 Principles of Political Economy). I am not claiming that the reckless behavior of Fannie Mae and Freddie Mac was solely, or even mainly, responsible for the financial crisis. Enormous blame must go to the commercial and investment bankers who took on vastly excessive risks that endangered their companies and the economy. Nevertheless, that officials charged with overseeing Fannie and Freddie protected the interests of the companies instead of the interests of taxpayers and the general public does not only offer resounding support for the capture theory. For this capture of regulators also inflicted great harm on taxpayers, the American and world economies, and many of the families who exposed their life savings to undue risks in the mortgage market. [1336 words]
Source: http://www.becker-posner-blog.com/2011/06/capture-of-regulators-by-fannie-mae-and-freddie-mac-becker.html | 
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发表于 2013-8-22 00:03:33
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