Fannie Mae Is Not Partying Like It_s 1999 Any More

I love to go back and look at old news stories. They can often be instructive. A reader of mine tipped me off to an old New York Times story from September 30, 1999. The story detailed Fannie Mae’s plan to ease credit requirements so that more people could get into a home. And Fannie wasn’t the only entity thinking like this. Fannie was hoping that others would get in on the act as well (and indeed they did).From the New York Times piece: Fannie Mae Eases Credit To Aid Mortgage Lending Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.And this quote:In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.I think we know how this all ended. Related Articles:Banks That Have Gone Bust Since October 2000The Weekend Roundup (The Week In News)FBI Investigates Four Firms at Heart of the Mess