Senator Dodd Shamelessly Shills for Fannie Mae in Press Conference

The dictionary definintion of a “shill” is: a person who publicizes or praises something or someone for reasons of self-interest, personal profit, or friendship or loyalty. Well, if that’s the definition then that is exactly what Presidential hopeful, Senator Dodd did yesterday in his press conference.

Who was he shilling for you ask?

None other than the enormous campaign contributing mortgage giant, Fannie Mae..I say.

The same Fannie Mae mortgage insurer that has grown unchecked for decades under the protection of folks like Senator Dodd allowing their so-called “government backing” to reap huge profits while endangering the mortgage banking system as much as the subprime lenders.

Mark my words: The meltdown we see when the true risky nature of what FNMA has done over the last decade unravels, will make the subprime debacle look like a day in the park!

Their mandate from their charter was never to “hold the mortgages”, but simply to insure them to create confidence so other financial institutions could take on the risk of “holding” the mortgages. But the sad truth is Fannie Mae got greedy since it is after all a Wall Street traded firm and started retaining the mortgages to earn the returns. The same way Bear Sterns was holding their subprime mortgages in the 2 hedge funds that recently went bankrupt.

Well after a whole bunch of executive pay scandals, 2400% stock price appreciation, and unstated derivative loss on their balance sheet, analysts dubbed them “Fanron” indicating their belief this company was headed for a big fall. Shortly after that the regulators decided they couldn’t be trusted with taking on more risk capping their portfolio size (and their profit potential simultaneously)…and they have been chewing at that bit ever since.

Fast forward to the market today, with many subprime borrowers needing “take-out money”, FNMA hopes to rides in to save the day. They’ll just need that cap lifted…okay…thankyouverymuch!

So they send Senator Dodd out in the press conference below to make their case. He hopes you’ll believe he cares about Americans losing their homes. In reality, he doesn’t care whether 3 million folks lose their homes when their rate adjusts. He’s using their unfortunate circumstance to blackmail Congress, the Bush administration (who actually happen to be right opposing Dodd on this one), and FNMA regulator into lifting the cap.

How utterly shameless he is. With this background on FNMA, mortgage insurers gone wild…now watch the video…

Play Video

Sen. Dodd Comments on Market Volatility (Part 1)

Bloomberg-Clip - (BLOOM-Clip)

Aug. 21, 2007. 11:00 AM EST

Live! From Washington: Sen. Christopher Dodd (D) of Connecticut Holds News Conference: Fed and Treasury Need to Use All Tools to Help Market

With mortgage insurance companies that don’t have “government backing” struggling like MGIC and Radian, it’s not long before FNMA tanks too. Of course, if they had a breath of fresh revenue, they could keep the balls in the air for another year or two.

Author: Rob K. Blake
Published August 22, 2007