Johan Norberg, Author of "Financial Fiasco", on Fannie Mae and Freddie Mac

The Mysterious Ways Of Fannie And Freddie

Johan Norberg, 01.15.10, 05:10 PM EST (re-printed from Forbes.com)

Why aren't any of the companies' agents at the Financial Crisis Inquiry Commission?

The Financial Crisis Inquiry Commission has started its work with a highly publicized two-day hearing in Washington, D.C. The Commission is supposed to find out what caused the financial crisis, but it seems like they are trying to enact Hamlet without the Prince of Denmark. Among all the bankers and regulators on stage during the hearings, there was not a single representative of the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which were major causes of the housing bubble.

The reason for the omission is disturbingly obvious. When Congress created the Commission they wanted a crisis narrative of greedy bankers and passive regulators. In other words, they wanted to put the blame somewhere else. Fannie Mae ( FNM - news - people ) and Freddie Mac ( FRE - news - people ) are creatures of Congress and it was Congress that pushed them to undermine underwriting standards and increase lending to low-income households while stalling reform.

Fannie and Freddie regularly let members of Congress announce large housing developments for low-income earners in exchange for political and financial support; over the past decade the two GSEs spent almost $200 million on lobbying and contributions to both parties, but most of all to Democrats, the present majority. Politicians wanted scapegoats on stage--Fannie and Freddie representatives would have functioned as a mirror.

Fannie and Freddie had an implicit government guarantee that made it possible for them to borrow cheaper than other financial institutions, and with those thousands of billions of dollars they bought mortgages from primary lenders, so that these got their money back and could lend even more to other prospective homebuyers.

In 2004, almost at the peak of the bubble, the Bush administration increased the ambitious targets for GSE lending of the Clinton Administration. It said that within four years, 56% of Fannie's and Freddie's mortgages should go to low-income households and 28% of the mortgages to those with a "very-low income." In plain English this means households that could not afford that mortgage the moment the interest rate returned to a more realistic level. The only thing we ever heard from Congress were demands to increase lending even more aggressively.

Fannie Mae and Freddie Mac pioneered securitization of mortgages, whereby they re-packaged loans and sold them to investors. Increased political pressure to serve low-income households meant that they soon began to buy mortgage-backed securities on an enormous scale themselves. After 2004 the market could make almost any kind of loans, knowing that the government-sponsored enterprises would buy them. About 40% of the loans were junk. "We didn't really know what we were buying," admits a former director at Fannie Mae.

Investment bankers have been publicly scolded by the Commission for taking on so much risk, with leverage ratios around 30 to 1. Shouldn't they ask how Fannie Mae and Freddie Mac ended up with a leverage ratio closer to 60 to 1?

As a result of their losses, Fannie and Freddie blew up in September 2008 and were in effect nationalized. The Treasury Department implemented $200 billion caps on government aid to each company, which have just been removed. The worst consequence of removing caps is not potential cost of hundreds of billions to taxpayer, but the effect on the rest of the market. The GSEs showed Wall Street that subprime lending was encouraged by the government; they made it profitable for lenders to make bad loans to sell them; and they pushed up house prices by opening up the market for owning homes to people who had previously rented.

The Financial Crisis Inquiry Commission couldn't care less. Granted, government-sponsored enterprises are mentioned in the 21st of 22 areas of inquiry for the Commission, but even there it is an afterthought: "financial institutions" in general is the object of study in No 21. And, as previously mentioned, no representative from Fannie or Freddie was invited to the hearing.

Today, former executives at the two GSEs say that the firms made so many bad loans because Congress constantly leaned on them to buy more mortgages from low-income borrowers. It is no surprise that Congress does not want anyone to hear that message. But it makes a mockery of their pretention to examine all possible causes of the crisis in an even-handed and objective way.

A former GSE employee recently said, self-critically: "It didn't take a lot of sophistication to notice what was happening to the quality of the loans. Anybody could have seen it. But nobody on the outside was even questioning us about it."

Apparently the outside world still isn't.

Johan Norberg is a senior fellow at the Cato Institute and author of Financial Fiasco: How America's Infatuation with Home Ownership and Easy Money Created the Economic Crisis.

Director Kevin Tomlinson talks about his film "Back to the Garden"

Back in 1988 I took a road trip that led me on a strange journey. By chance, I saw a funky poster advertising a Healing Gathering in rural Washington State. Curious to meet this community of backcountry hippies twenty years after Woodstock, I decided to go.

Upon arrival, I felt transported, finding myself among magic buses and tepees in a meadow filled with beaded flower children communing with nature. I shot hours of dancing, drumming, singing and celebration. I recorded extensive interviews with some of the most genuine, sincere beings I’d ever met.

With no plans for the material at the time and skeptical how it would be received during the Reagan/Bush years, the project was shelved. But it didn’t sit quietly. The images wouldn’t let go. 18 years later I asked myself, where have all the “flowers” gone?

So I began a new journey, a journey to find what had happened to all the dreams of getting back to the land, setting one’s soul free and environmental utopia. How had they survived living off-grid and below the poverty level for years? Had anyone changed course and gone mainstream? What had become of their dreams of self-reliance, simplicity, and freedom? And how did their children (now in their twenties) feel about their own “Hippie Kid” upbringings?

Not so long ago, those “Hippie” communities and their values were considered way too radical and fringe by the mainstream. Today, the Green Movement, looking to protect the earth for future generations, is wholeheartedly embracing them.

Back to the Garden presents a time-lapse view—twenty years in the lives of a group of idealist baby boomers who rejected and dropped out of the mainstream, who went back to the land, overcoming many personal sacrifices In pursuit of their dreams. It’s also a story about the personal consequences of those radical dreams and choices. Not only is this their story, but ours too, because the counterculture of the sixties affected all of us and forever changed our ideas about how we define love, wealth, spirituality and freedom.

Kevin Tomlinson
Healing Gathering (1988)

Filmmaker David M. Edwards talks about his film Sprawling from Grace

Sprawling From Grace; Driven To Madness is a documentary feature film about the unintended consequences of suburban sprawl. It illustrates the importance of altering the course of how we develop our nation’s cities. It communicates the dangers of continuing to invest in the inefficient horizontal growth patterns of suburban communities, and details how they threaten to bankrupt the remaining wealth of our nation. It explores how the depletion of fossil fuels will impact this living arrangement, and investigates the viability of alternative energies that are currently available. This film sounds the alarm that the cheap fossil-fuel-dependant suburban American way of life is not just at risk. It is in peril!.

After interviewing close to thirty experts on the subject, one reoccurring theme has revealed itself. We can no longer continue building our cities in the same way we have over the last half-century. The suburbs, while being an integral part of our nation’s maturation, contribute substantially to our problems of air and water pollution, increasing our health risks, and decreasing our quality of life. Suburbia has trapped Americans behind the wheels of their automobiles, as they commute further and further distances to find good paying jobs. Given the inevitable depletion of non-renewable fossil fuels, such as oil and natural gas, it’s clear that this 50 year suburban experiment has created a host of unintended, unlivable consequences. Consequences we will have to find solutions for if we want a sustainable future in a post-fossil-fuel world.

This nation and its citizens have been lulled into a false sense of security. We are blissfully unaware of the impending ramifications of continuing the patterns of growth that have locked us behind the wheels of our cars. Like Nero, we are fiddling away, confident that tomorrow will be as promising as today. We don’t realize that with each new suburban subdivision, with each new strip-mall, each new corporate office park, that promise slips further and further away.

Wrestling with these emerging realities, state and city governments are finding that they can no longer encourage these patterns of growth by further investing in highway and utility infrastructures. They are now forced to find viable alternatives by investing in public transit in the form of BRT (Bus Rapid Transit), commuter rail, and light rail to serve their community’s transportation needs. Through this process they are gaining an historical understanding of the relationship between land use and transportation. They are rediscovering how well designed, walkable, mixed-use communities, that are served by transit can build and support local economies, aid in defining and creating communities, provide for diversity, improve accessibility, provide transit choices, reduce pollution, and improve health. These many benefits ensure a successful and sustainable solution to the problems associated with their growing populations. In our interview with former Massachusetts Governor Michael Dukakis, he quoted Albert Einstein saying, "The definition of insanity is doing the same thing over and over again, and each time expecting a different result." He clarified this quote by adding, "Continuing to develop our cities in these ever increasing suburban sprawl patterns will increasingly diminish our quality of life, both physically and mentally. We simply have to stop building more highways!"

How we build our cities will determine the future of how we live our lives, how we form our values, and will determine what we leave for our next generation. It’s time we answer the wake up call.

Director Paul Lynch comments on the making of his film "Birth of a Movement"

On January 28th 1969, just off the coast of Santa Barbara, oil burst out of the ocean like a black artesian well. The fallout and mishap were disheartening to say the least as residents gathered on the beaches to witness the oil slick coming to shore; there was nothing to stop it.

The Birth of a Movement is a documentary film investigating the 1969 oil blow out in Santa Barbara, which is considered by many to be the birth of the “modern environmental movement.” The activism inspired by this disaster quickly spread across the country and spawned landmark legislation, the first Earth Day, and the Environmental Studies program at UCSB.

The film aims to educate viewers about this important piece of history and motivate present and future generations alike to become good environmental stewards. Yet, this goal is unachievable without drawing connections between oil-development and the global financial crisis, climate change, and social injustice. Here we look 40 years back so as to look 40 years forward.

One of the greatest challenges of the 21st Century is how to deal with the dual-threat of global climate change and the inequities created by a capitalist dominated economy. We believe the solution is in merging the movements. Increased consumption, peak oil, polar caps melting, wars, pollution, and inequality reveal only one side of the story. The other side is the rise of grassroots movements redefining environmentalism in the 21st Century; it is The Birth of a Movement.


Board of Advisors

Carl Pope, Executive Director of the Sierra Club
Marc McGinnes, J.D., Senior Lecturer Emeritus Environmental Studies, UCSB
Prof. Richard Appelbaum, Director MA Global & International Studies, UCSB
Paul Relis, Founding Director CEC, Executive Vice President for CR&R, Inc.
Monique Sonoquie, Founder, Indigenous Youth Foundation
Charlie Eckberg, Environmental Consultant & SB Environmental Leader

Patty Greer talks about the experience of making "The Wake Up Call"

Re-printed from pattygreer.com:

I entered my first Crop Circle in Wiltshire England in 2006 and my life hasn’t been the same since. There’s no doubt in my mind that I experienced a DNA shift that day. As I walked up the tram lines (tractor tracks) toward the Crop Circle my heart was pounding and goosebumps rose all over my body. The energy was something I had never felt before. I was totally drawn in. It was raining pretty hard that day and the wet wheat was up to my thighs. It got pretty cold after a while but it didn’t seem to matter. The formation was precise and immaculate, breathtaking really. I felt my body light up and re-align energetically, it was the strangest feeling. I rarely talk about that first year because it wasn’t until 2007 that I returned to Europe on a Crop Circle mission. For 9 weeks I entrenched myself in the Crop Circle mystery.

Beginning in Italy I carried 14 photos of Italian Crop Circles that I had found on the internet. I mapped out the train routes and went for it. I spoke some Spanish but it was a challenge to find specific farm fields in remote villages in Italy on my own. I found 3 Italian Crop Circles in different areas and sadly they were all dry, dead, unattended and buzz free. Even my pendulum went limp. I was exhausted and disappointed by my Italian Crop Circle experience.
Arriving in England, the farm fields were strewn with exquisite Crop Circles. They had been appearing almost every day since late April. I spent 8 weeks in the UK Crop Circles studying the wheat for signs of unusual activity made apparent by the blown nodes (bubbles) in the stalks of the grain, and just ‘Being’ in the fields. I spent late nights on the hillsides with my hard core Croppie buddies, watching the skies for the anomalous Balls of Light. We had some amazing sightings….

I went back to the UK in 2008 and filmed 2 more movies in the Crop Circles, Stone circles and Faerie glens. These two movies, “2012-We’re Already In It” and “Crop Circles-2010 Update-The Wake Up Call” both won the 2009 and 2010 EBE Awards for ‘Best Feature Film-UFO or Related’ at the prestigious International UFO Congress Convention. They are Ascension based movies richly loaded with beautiful Crop Circle, Orb and UFO visuals.

I interviewed fascinating people from all over the world and hiked into places most film makers would never haul their gear. Always outdoors, keeping it real. Wearing the movie camera around my neck I shot from under a hooded plastic tarp if it was raining. Nothing stopped me.

The military helicopters hovered 50′ above as I conducted interviews in the Crop Circles a few times. It became annoying after 20 minutes or so…

Still I kept my focus on the true majesty of the Crop Circles and waited patiently. They are one of the greatest gifts today and they are accessible to everyone wanting to see them.

I came home with a complete documentary and had no previous interest, training or experience whatsoever in film making. The first movie made itself through me! I feature devoted Croppies who had muddy boots and dirty knees, the passionate folks who were in the fields day after day like me. This is intense ART spoken through Nature. Important messages perhaps?

When I brought the footage back to America, I completed the movie in no time. While editing I made an incredible discovery within the famous footage of 2 Balls of Light creating a Crop Circle in seconds. For no apparent reason I asked my editor to slow the footage down and play it backward. What we found was a direct and visible line of communication between the 2 Balls of Light just before the wheat lays down! This discovery is featured in “Crop Circles-2010 Update-The Wake Up Call” and “The Wake Up Call-Anybody Listening?”

“The Wake Up Call-Anybody Listening?” premiered at the 2008 International UFO Congress Convention a month after completion and was well received. As I headed to the convention my editor handed me his movie camera and said, “Do it by yourself!” So I shot my second documentary that week, “UFOs-ETs-Abductees and Brilliant Minds” which features 29 brilliant speakers at the UFO Congress Convention, up close, back stage and personal. It brings the viewer the best of this 10 day (14 hours per day) event with the brightest minds in the world on the subjects of UFOs and advanced technologies. I was blown away by what I heard. It was a crash course in UFO realities!

With all the changes happening in the world today and energies shifting as they are, movies that are POSITIVE and UPLIFTING are more important than ever. Our thoughts, feelings, words and actions ripple out across the world, so watch your thoughts.

I have great hopes for the shift we are Already In.

Enjoy the ride!

From the makers of 'What Babies Want' and 'Water Baby"

Debby Takikawa reveals her motivations for making the film What Babies Want:

"I have always been fond of children and as I was growing up I was a willing babysitter of any little creature who needed company, help or protection. It was natural for me then professionally as a chiropractor to be interested in children. I ran a process-oriented practice that included the body mind and emotions equally in healing. However I was completely taken by surprise when a woman with a chronic whiplash neck injury spontaneously remembered her birth as I was gently holding her head at the end of a session. Over a period of a few years, there were other unexpected and amazing memories that seemed to surface from the very tissue essence of my patients, and I became more intrigued by the phenomena of body memory.

At the same time it seemed natural that my practice should be filled with babies and children. Over the years I developed my practice into work with attachment therapy with mothers and babies to support them to deepen their connection and overcome stresses and traumas that interfered with that connection. In 2000 I opened a nonprofit public clinic (Beginnings Inc.), took on interns and developed a public outreach program. The film What Babies Want is part of that outreach. It started out to be a short educational video and ended up with a creative life of its own, becoming an award winning documentary film, with Best Documentary, Audience Choice and Special Recognition from various film festivals. It has been shown in many countries and in many theaters as well as in homes, offices and in a variety of centers for healthy birth. I have since written a book and am developing a What Babies Want Parenting Series TM of films and books."

From Karil Daniels, regarding WATER BABY: EXPERIENCES OF WATER BIRTH:

"I've always been motivated by balance, fairness, sensitivity and the personal empowerment of individuals. Yet, I've noted that American culture fails us in many of these, and childbirth is especially problematic. As I've observed how traumatized women and babies often are at birth, I was troubled by the lack of control by, or respect for, the mother's wishes, which has been too common. I've also been concerned about the exclusion or minimization of the father's role at one of the most important events in his life. I knew a great deal of improvement was needed, and I wanted to contribute to it.

As an independent filmmaker interested in health subjects, cutting edge topics and social issues, when the opportunity to film a waterbirth presented itself, I happily took it. The things I learned in the course of filming amazed me, and I knew I had to make a film for expectant parents and healthcare providers, to teach them what I'd learned. That led to expanding the filming of just one waterbirth, initially for curiosity, to producing an in-depth feature documentary, and to following the story to France and Russia to film with the world's leading waterbirth pioneers. Ultimately, by bringing this vital information out, WATER BABY catalyzed the waterbirth method in the USA, and the families who have experienced waterbirth have been greatly enriched by it."

Farm Facts

Farm Facts
Re-printed from Miranda Productions.com

Only 0.2% of U.S. population is producing most of its food. The average age of U.S. farmers is currently fifty-six.
US Census Bureau

We suffer a net loss of 32,500 farms a year. 88% of average farm household income is derived from off-farm.
PrairieFire for Rural Action

U.S. farmers apply nearly 45 billion pounds of synthetic fertilizers each year. From 1990-1994, food processors and manufacturers showed an annual average return on their investment of 17.9%. Farmers during the same period showed a 1.98% return on their investment.
PrairieFire for Rural Action

In 1971 a new tractor cost $20,000 and wheat was $1.71 a bushel. In 1994 a new tractor of the same horsepower cost $100,000 and a bushel of wheat was $2.66.
Des Moines Register 7/16/94

Soil loss costs the U.S. economy around $44 billion a year. Worldwide, the number is well over $200 billion.
Dr. David Pimentel, Science magazine

Every pregnant woman in the world today has chemicals in her body that disrupt the endocrine system. These are transferred to the fetus as it grows. She also has measurable concentrations of endocrine disruptors in her milk that are transferred to the infant.
ERICE Statement 5/30/96

The World Resources Institute reports that, measured by traditional methods, the average farm shows an $80 per acre profit. If we calculate in all the costs of soil loss, water contamination, and environmental degradation caused by conventional farming practices, the average farm would show a $29 per acre loss.

Food in supermarkets travels an average of 1300 miles between production and consumption.

Out of every dollar Americans spend for food, ten cents goes to Phillip Morris, and six cents goes to Conagra.
PrairieFire for Rural Action

In a USDA study of twelve common food crops, from 35% to 80% of all samples tested had residues from one or more pesticides. This was after the samples had been washed, peeled and cored. In these residues were 12 different carcinogens, 17 different neurotoxins, and 11 different endocrine disruptors.
Environmental Working Group

Tree bark gathered from ninety sites around the world, from the tropics to the treeline, bears traces of chemicals related to DDT, lindane, chlordane, aldrin, and to 18 other pesticides and fungicides. Some chemicals used decades ago are still affecting the environment, often thousands of miles from where they were sprayed.
Associated Press 9/30/95

4.7 billion pounds of pesticides are annually applied to food crops worldwide. 1.25 billion pounds of pesticides were used in the U.S. in 1995, an all-time high.
EPA draft document June 1996

Assault rifles kill an estimated 250 people each year and pesticides kill an estimated 10,400 people each year, yet assault rifles have been banned while the use of pesticides is expanding.
Environmental News Weekly

Every spring, 18,000 pounds per day of herbicides wash down the Mississippi and into the Gulf of Mexico.
Environmental Working Group

Between 1950 (the beginning of the Chemical Age) and 1988, the incidence of all forms of cancer increased by 43.5%, adjusted for age. Mortality rates from cancer rose by 2.9%.
Environmental News Weekly

In the United States, despite the use of pesticides, 35% of potential crops are lost to insects, diseases, and weeds. In 1945, before synthetic pesticides came into use, crop losses were 33%.
Dr. David Pimentel, Cornell University

Sales of U.S. organic products increased from $2.31 billion in 1994 to $2.8 billion in 1995. This is a 22% increase, and the sixth year in which sales have grown by more than 20%.
Natural Foods Merchandiser survey, June 1996

The USDA states that total organic cropland is approximately 1,127,000 acres in 1996, up from an estimated 550,267 acres in 1991. The number of organic farmers almost doubled between 1991 and 1994, increasing from 2,841 to 4,060.