While the last meltdown is technically past, there has been little attempt to change the institutional behaviors that led to the crisis in the first place.
A QUICK LOOK AT THE PAST
An idealistic effort begun by the Clinton Administration to promote a large increase in home ownership quickly got out of control. What followed was a vast web of under-regulated partnerships of government agencies with banks, thrifts, mortgage brokers, appraisers, loan servicers, builders and sales agents.
Inevitably, the combination of easy money, institutional backscratching, inflated property values, dubious accounting and outright fraud all caused the meltdown in the first place.
While millions of Americans lost their homes and even their retirement savings, many executives in banks and government-sponsored enterprises made millions of dollars from the crisis.
Today nearly nine out of ten mortgages are still insured or guaranteed by these government-sponsored mortgage giants. Yet Congress, regulators and the public have little understanding of what went wrong, let alone how to prevent it happening again.
IS THE DANGER REALLY PAST?
There is the distinct possibility that Fannie Mae and Freddie Mac could be misused again to create another sub-prime market if the U.S. does not focus attention and fix the legislative loopholes and lax oversight so prevalent in the last crisis. A major part of the risk of another mortgage market meltdown lies in recognizing that those being appointed to positions of power at Fannie Mae and Freddie Mac do not understand the economic fundamentals of the organization they lead.
MY PLANS IN 2015
I will be traveling to the U.S. in 2015 and would be happy to speak on the following topics:
- Why the 2008 financial crisis still matters in 2015 and beyond
- How helping more Americans achieve the American Dream of home ownership turned into a nightmare for so many
- What the U.S. needs to do now to avoid another financial crisis
I am also currently working with a major publishing house in the U.S. We’ll be revealing the topic and title of my next book this summer 2015. Please follow me on Twitter (https://twitter.com/oonaghmcdonald2) for breaking news and announcements.
Watch for additional blogs from me, here on www.OonaghMcDonald.com, in 2015. I’ll be doing new research on what is going on with Freddie Mac and Fannie Mae now. One of the initial points I’ll touch on is how the regulators and authorities are imposing huge fines on large banks who are buying Fannie and Freddie, where the money goes and who is being rewarded.
SPEAKING AND INTERVIEW REQUESTS
If you are planning a meeting and would welcome a thorough discussion on the U.S. mortgage meltdown – not just what happened and why but what is happening now, I would be delighted to explore possible opportunities with you. My contact information can be found on this site.
If you are a journalist interested in the banking crisis, I am available for radio and telephone interviews. Please contact my publicist to schedule a time to speak.
Dr. Oonagh McDonald, CBE