BUS610 Organizational Behavior

The original problemsare so diverse that one would reflect back to the chicken or the egg question…no one really know what came first. OneWest Bank is the question that is wrapped in an enigma; then thrust into a politically charged, policy driven, black hole. Fannie Mae and Freddie Mac were formed to deal with VA and FHA loans. These were loans for low income and first time home buyers. A loophole in the charter allowed them to back or guarantee the loans in case of default.  Over the years the guidelines and regulations became lax and the two giants began guaranteeing loans that they were not really supposed to be dealing with. Things like Nina loans, (No Income, no assets) were encouraged and ‘stated income loans’ became very popular. The push for loan originations began to flood the market and the legal loophole now became a standard. “The underwriting standards declined.” (Norris, 2007)As the ride continued and became more popular the fail safe did not kick in and the dangers were ignored. Anthony Piszel, who was Freddie Mac’s chief financial officer stated in a 2007 interview, “As long as house prices were going up, it cured all evils” (Norris, 2007) Mr. Piszel made the point crystal clear when he made the following statement: