Today The Hill ran an article about Maxine Waters, who is set to become Chairperson of the House Financial Services Committee, of which she has been a member for years. Not only will she continue her long standing battle for affordable housing, she also will be investigating the President's personal banking history. She might do well to review the history of her efforts to enable affordable housing, particularly as it involved Government Sponsored Enterprises (GSEs) Fannie May and Freddie Mac.
It was not widely reported, but the general consensus on the "sub-prime" mortgage market collapse, which became the mortgage market collapse, which then became the banking system collapse in 2007/2008 originated in Fannie Mae and Freddie Mac, which the private lending institutions ultimately used as virtual keys to the national treasury. Fannie and Freddie kept lowering their lending standards for home mortgages, which enabled them to buy more and more mortgages from private lending institutions, thus providing the those institutions with more and more capital to make more and more home loans. While the official intent was to increase affordable housing, the private institutions knew it was discriminatory (illegal) to have different sets of qualifying requirements based on race. So everyone, including those buying multiple homes as investment properties, were able to get more and larger home loans with virtually none of their own money involved. Then, investment banks began to "securitize" these mortgages, mixing good ones with bad ones, so buyers really didn't know the risk factors of securities they were buying in huge numbers. Eventually, defaults on these home loans began to pile up to the extent that many private institutions, as well as Fannie and Freddie were facing bankruptcy. The entire scheme collapsed.
Although no criminal charges were ever filed, it became clear there was collusion between the private sector and public sector to enable what turned out to be massive fraud which resulted in the financial crash of 2008. In reviewing what happened, it members of both the Bush administration and the Obama administration were involved, as well as senior members of Congress.
In 2004, Maxine Waters was one of several Democrats on the House Financial Services Committee, the Congressional oversight committee for Fannie and Freddie. A regulator from Bush's OFHEO, also charged with regulating Fannie and Freddie, testified before the Congressional oversight committee telling them that Fannie and Freddie were in trouble, in part because of suspected accounting fraud by Fannie CEO Franklin "Frank" Raines. The video link below shows us excerpts from that hearing, in which the Democratic members attacked the regulator, even implying he was a racist (Raines is black). It was also discovered later that Barney Frank, the Democratic Ranking Member, was cohabitating with another Fannie Mae executive, Herb Moses, a serious conflict of interest.
Why no one, of either party, took any serious action for at least 2 years after this hearing is anyone's speculative guess. So much was known, but so little was done. Finally, in 2008, Raines was fined $24.7 million in a civil case, charged with receiving as much as $90 million in fraud based bonus income. The mainstream media gave this entire scandal scant coverage considering the enormous impact it had, not only in the US, but world-wide. Worse, the federal government has never explained to the American people, in simple terms, what caused this financial disaster, nor why no criminal charges against anyone were ever filed. Watch the entire video, it's very revealing.