Research online to find and watch videos on the Corruption at Fannie Mae and Freddie Mac, Countrywide Financial Investigated for Securities Fraud, and Countrywide Financial- Friends of Angelo. What were the results of the banking industry’s ethical decisions? Do you feel that if the banking industry would have made different ethical decisions that the Great Recession could have been avoided? (Please include your video links)
Fannie Mae and Freddie Mac are two mortgage lending companies that have established the parameters of how mortgage lending works in the United States of America. In his video, “Fannie Mae, Freddie Mac Explained,” Kirk Simmons states that Fannie Mae and Freddie Mac“ are two what used to be quasi-government institutions. . .they had an implicit backing by the government” (2012). But despite the backing that they received from the U.S. Government, when the Fannie Mae and Freddie Mac corruption emerged, the banking industry failed to behave ethically in order to fix the mistakes that they irresponsibly caused for the American public.
One of the biggest mistakes that Fannie Mae and Freddie Mac made was advising the general population to use the companies’ methods as a means of obtaining their dream homes. Both Fannie Mae and Freddie Mac were coercing their customers to purchase homes that were out of their price ranges, trying their best to convince them that they would be all right through the tools that the companies provided them. However, unbeknownst to the public, Fannie Mae and Freddie Mac were not looking out for their customers’ best interests when recommending such lending tools. Instead, they were more so concerned with maintaining their quotas and satisfying their stakeholders, or the people who have donated substantial amounts of money into either company who would also lose their personally invested money if the lending companies had begun to suffer financially.
When it was all said and done, Fannie Mae and Freddie Mac accumulated a multi-trillion dollar debt of which the U.S. Government was responsible for bailing them out. In addition to this, the lending companies did very little to show their remorse to the people they essentially scammed out of their money. When the news about the U.S. Government bailout surfaced, no one on behalf of either company made any public apologies in which they showed remorse for what the company and its representatives have done to the nation.
Despite the fact that there were many causes that contributed toward the Great Recession that occurred in the 2000s, I can honestly say that the debt that Fannie Mae and Freddie Mac had placed upon the entire nation played a major role in the financial setback that occurred during this same exact time period. Although some may say that the United States of America was headed down that financial downturn long before the decisions that Fannie Mae and Freddie Mac made, the corruption that these lending companies exhibited made it so the country experienced the downturn even quicker.
Simmon, K. (2012). Fannie mae, freddie mac explained. Youtube. Retrieved from https://www.youtube.com/watch?v=8WGVYmSQDso