A blast from the past

by Russ Roberts on December 1, 2008

in Government Intervention

Here is a 1994 article from Business Week on Fannie and Freddie’s political fight against getting more involved with low-income lenders. This was very early days. Interesting to see which politicians wanted Fannie and Freddie left alone.


FANNIE MAE, AS savvy politically as it is
financially, is fighting a Clinton Administration plan to boost
low-income mortgage lending. The Federal National Mortgage Assn., a
federally chartered private company that buys mortgages from lenders
and bundles them into bonds, has called in a cavalcade of big-time pols
to help.

At issue is a program by Fannie to spur lending for affordable housing
in urban and rural areas, to low- and moderate-income homebuyers.
Fannie chief James Johnson, a former Walter Mondale aide, is upset over
pressure from the Housing & Urban Development Dept. to focus on
minority and low-income buyers regardless of their location. And HUD
has considered making Fannie police bias by lenders, which Johnson sees
as unworkable.

Fannie Mae complains that the HUD plan would ignore the urban middle
class, potentially prompting their exodus from cities. Johnson has
enlisted the mayors of Boston, Chicago, and Oakland as well as
Representatives Barney Frank (D-Mass.) and Charles Schumer (D-N.Y.) to
lobby against the HUD plan. Their impact has been felt. The word is
that HUD thus far has backed off on the idea of Fannie Mae as an
antibias enforcer.


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