On Sept 7,2008, U.S. Secretary of the Treasury Henry Paulson looked into the television camera and said: "I support the director's [James B. Lockhart, director of the newly created Federal Housing Finance Agency (FHFA)] decision as necessary and appropriate, and had advised him that conservatorship was the only form in which I would commit taxpayer money to the GSEs [government-sponsored enterprises]." Paulson went on to say, "I have long said that the housing correction poses the biggest risk to our economy. It is a drag on our economic growth, and at the heart of the turmoil and stress for our financial markets and financial institutions." He added, "The new Congress and the next administration must decide what role government in general, and these entities in particular, should play in the housing market." And with those words, the campaign to elect the 44th president of the United States of America took a dramatic turn to squarely face the $5 trillion issue of GSE mortgage guarantees. On Sept. 8, 2008, during a town hall meeting speech at North Farmington High School in Farmington Hills, Michigan, Sen. Barack Obama (D-Illinois) called on Paulson and Lockhart to address "what steps are being taken to ensure that the [conservatorship] agreement is responsible and that Fannie and Freddie can continue to fulfill their important missions without wasting taxpayer dollars or rewarding poor leadership."
"I would expect an Obama administration to focus on consumer-protection and affordable-housing issues, with a more activist role for the federal government. The future of Fannie Mae and Freddie Mac will be at the center of this debate. The Mortgage Bankers Association [MBA] will seek to find common ground with whoever wins the presidential election so that workable policy solutions can be advanced to help the mortgage markets," says Steve O'Connor, MBA's senior vice president of government affairs.
The GSE question was not prominent in the first presidential debate, which focused largely on foreign policy when it occurred in late September at the University of Mississippi in Oxford, Mississippi. We will learn much by the time this magazine hits the desks of mortgage executives across the country in early October.
For now, we simply know that a conservatorship has been established. Over the long term, the next administration and Congress will decide whether it is a bailout, a takeover, a seizure, a nationalization, a privatization or a rescue.
If voters spoke with their pocketbook--it's an Obama machine
What a revolution we are witnessing in this political season as far as the diversity of candidates and the dollars that are flowing to one in particular. The Obama campaign announced on Sept. 14, 2008, that in the month of August it had raised $66 million--a new monthly high for both Obama and the record books.
Emerging from a long primary season and a galvanizing Democratic National Convention in Denver, Obama is poised to maintain his sprint to the Nov. 4 election finish line for the U.S. presidency.
Obama's charisma and appeal to voters across the country have drawn huge crowds and record fundraising dollars, all the while inspiring a new generation of voters who chant, "Yes, we can change Washington."
History in the making
Obama is the first-ever African American to become the presidential nominee for a major U.S. political party. On June 3, 2008, he gained enough delegates to be nominated by the Democratic Party at its national convention in August.
Obama's mother, Ann Dunham, grew up in Wichita, Kansas. Her father (Obama's grandfather) worked on oil rigs during the Depression. After the Japanese attack on Pearl Harbor, Obama's maternal grandfather signed up for service in World War II and marched across Europe in Patton's army. Dunham's mother went to work on a bomber assembly line. After the war, Obama's grandparents studied on the G. …