indy mac is just another example of am org. created by the gov. though ostensibly under civilian control that has been allowed to run amok. The "rumors" of fannie mae and freddy being in trouble have been long and loud for decades ( see below).
Allowing the FHA to get involved in this mess ala the real estate market equals savings and loans of the late 80's, and means they, the gov. is consciously folding the bad loans into FHA so as to be absorbed and paid for by us, the tax payer.
Every one of you that makes over 45K and pays taxes, are going to be paying for this, enjoy.
Critic of the Firms
Sadly Says 'Told You'
By JOHN D. MCKINNON
July 12, 2008; Page A8
WASHINGTON -- Peter Wallison saw Fannie Mae's troubles coming 25 years ago.
In the early 1980s, he was a top official in the Reagan Treasury Department. And Fannie Mae, at least by some measures, was insolvent, thanks to the economic storms that were then roaring through the savings-and-loan industry.
But getting anyone to do anything about the congressionally chartered mortgage company and its unusual vulnerabilities proved futile, even after Mr. Wallison began writing books warning that it and sister company Freddie Mac could take advantage of their government ties and relative lack of regulation to grow too large.
Now the two companies' struggles "in fact threaten not only the stability of the housing sector but the financial markets themselves," he says. Despite his concerns, he said, he thinks that pending legislation to strengthen regulation of the companies could help stabilize their financial situation.
Back in the 1980s, Fannie Mae and Freddie Mac seemed to rebound fine, even as many of the troubled S&L's eventually failed. The two mortgage companies kept right on going -- and growing. They either hold or guarantee $5.3 trillion of mortgage debt, covering about half the outstanding mortgages in the U.S.
The main reason was the government's implied backing for the mortgage companies' debt issuances. That allowed them to keep raising money for new investments, despite their financial problems, and eventually to escape the hole they were in.
Another reason was the political clout that came with their size and close ties to many lawmakers. That made even the conservative Reagan administration reluctant to take them on, Mr. Wallison said.
"I knew as we watched them grow that they would gradually become more central to the functioning of the housing markets," Mr. Wallison, 67 years old, said on Friday. "And if there was ever to be a problem in the housing markets they would...suffer the consequences. And that meant the taxpayers would have to step in."
Mr. Wallison, who went on to become White House counsel, decided to devote himself to exposing the potential risks posed by the mortgage giants after he retired from law practice and joined the conservative American Enterprise Institute in 1999.
Almost immediately, he said, he experienced political pressure of the sort that -- until now -- has made Fannie Mae largely invulnerable to new legislative oversight and left it under the supervision of a weak financial regulator.
At the time, he sat on the board of a mortgage-insurance company that did extensive business with Fannie Mae. When the company's officials noticed that they weren't being chosen to insure some mortgage pools, Fannie officials told them it was because of Mr. Wallison's new project at AEI, he said.Mr. Wallison went on to publish books about the mortgage companies with titles like, "Nationalizing Mortgage Risk," and "Serving Two Masters, Yet Out of Control."
So how does he feel to be proved correct about the possible risks of a huge government bailout? "Terrible," he said. "I would have preferred that Congress had listened when something could have been done."
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heres the journals take on the issues..
Crisis Deepens as Big Bank Fails - WSJ.com