The Big Lie: Intro
Tell a lie so big and enough times and it will never be questioned as anything but the truth. Well, not in this case. Here is a story we have all come to known and believe as being the root cause of the financial crisis. That tall tale we all have been told is that Fannie Mae caused the financial crisis in 2008. The slightest question to almost anyone as to what they know about the recession or Fannie Mae, and their response will most likely be that they caused the Great Recession. Job well done Government and media! Blame had to be placed and it landed on Fannie Mae to be the scapegoat. In the halls of Congress, most bureaucrats couldn’t stand the power Fannie Mae executives held and so when the opportunity came to bring them down, they didn’t miss the chance!
It is difficult to understand the financial instruments used to create the housing bubble, (like the “Big Short” explained) however that doesn’t and should absolutely not mean that blame rests on Fannie Mae, as it currently does in the court of public opinion. What people should understand is that Fannie Mae is alive and thriving, while under complete Government control. Wow! What has been completely lost through time is that people don’t know what is going on with Fannie Mae today. So the lie will continue until we realize the importance of Fannie Mae and its current role in today’s housing market.
The story I’m going to tell is much different and more complex then what we have all been told. This story of course will not be remembered like the first since the original one has already clouded our judgement over time and convinced most as to what “really” happened. Over the past four years, through lawsuits, legal discovery, unsealed documents, President Privilege records, and straight out lies, the true and real facts are starting to come to light as to what really happened to Fannie Mae in 2008 and especially in 2012. What is for sure is the following assessments are going to sound a lot different then what we were lead to believe about Fannie Mae.
The proverbial curtain is being pulled back and exposing the government of its wrongful taking of a private company, in a way that should scare anyone who holds money in the public markets. One so brazen that thousands of documents have been sealed under Presidential Communication Privileges, (I thought the Obama administration was going to be the most transparent administration in history?) in an attempt to withhold information that surrounds the Government’s wrongdoings. I know it all sounds like a conspiracy theory already and I hate conspiracy theories but this one is going to be known as the “The Big Lie.”
The following assessments, like the “Oil Saga”, will be focusing strictly on Fannie Mae, since it is the larger of the two and one that most investors, including myself and my clients are invested in. The saying goes there is no reward without risk and by far the upside in the common shares of Fannie Mae far exceeds the risk to the downside.