Franklin Raines on risk management at Fannie Mae

When I was at Fannie Mae, we had a very tough risk management structure. That was 5, almost 6 years ago [2003, when housing bubble first took off]. Instead of staying the course as later management said, they changed that structure in order to become a bigger player in the market. They were losing market share by maintaining their tough standards, they wanted to be players, they jumped in and they bought a lot of things they shouldn't have bought. They've testified to this themselves so I'm not really speaking out of turn here, and that really led to the company's failing financially because they took on more risk than they should have.

~Franklin Raines, former chairman and CEO, Fannie Mae, CNBC, May 4th, 2010

(Of course, this directly contradicts the point he made moments earlier in the interview, in which he argued that Fannie Mae, Freddie Mac and the FHA need to be available to support the mortgage market when traditional lenders become risk-averse and flee from these very types of mortgages he now says shouldn't have been made.)

Franklin Raines on how to prevent financial crises amongst large institutions

I think the American system and its focus on 30-year fixed-rate mortgages is a very, very powerful thing. Canada is a country of 20, 25 million people with adjustable-rate mortgages for banks, not a very consumer-friendly environment. Although, if you put the burden on the consumers, it's true you won't have as many crises amongst your large financial institutions.

~Franklin Raines, former chairman and CEO, Fannie Mae, CNBC, May 4th, 2010

Franklin Raines on the importance of federal mortgage subsidies

Today, they [Fannie and Freddie] and the FHA are 100% of the mortgage market and we have seen in this last crisis that ordinary financial institutions will withdraw from that market at the slightest indication of problems. You simply can't have a country like ours, with a large middle class, that doesn't have a functioning mortgage market all the time.

~Franklin Raines, former chairman and CEO, Fannie Mae, CNBC, May 4th, 2010

Warren Buffett on the US government's stimulus efforts circa 2008

I think they went all in, and the American public needed to see that they were going all in. When the whole world wants to deleverage, the only party that can lever up is the government and the United States government did something perfectly proper. Whether they did it perfectly, nobody knows.

What became clear in the fall of 2008 is that the chairman of the Fed and the secretary of the Treasury and Sheila Bair at the FDIC were willing to do extraordinary things to essentially prevent a panic. They were the only ones that could've done it and I cheer them mightily for that.

~Warren Buffett, Goldman Sachs investor, "The Buffett Express", CNBC's Squawk Box, May 3, 2010

Warren Buffet on large government deficits

It's certainly hard to imagine deficits like we've [the USA] been running, or like other countries have been running, being consistent with low interest rates over time. If you could really run deficits of 10% of GDP and not have anything bad happen, people would've figured that out a long time ago, because it's too much fun to do. There will be a price to be paid for the medicine we used to break out of our panic situation.

Who wants to lend money to someone who has a long-term policy of running deficits at 10%? It's unsustainable over time.

~Warren Buffett, Goldman Sachs investor, "The Buffett Express", CNBC's Squawk Box, May 3rd, 2010

Warren Buffett on jobs

We have jobs when we have demand for our goods, we're not going to hire somebody just to stand around. The best jobs program is demand. Demand is coming back, and that means we hire people.

~Warren Buffett, Goldman Sachs investor, "The Buffett Express", CNBC's Squawk Box, May 3rd, 2010

Warren Buffett on the historical resilience of the US economy

The American economy is an amazing engine of growth over time. We may try to mess it up occasionally and we go to excesses and all of that. But if you look at the history of this country, this country works. It's a mistake to bet against it.

~Warren Buffett, Goldman Sachs investor, "The Buffett Express", CNBC's Squawk Box, May 3rd, 2010