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McRocket
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Posted: Sat Nov 7th, 2009 06:25 am |
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'NEW YORK (Reuters) - Freddie Mac, the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a "prolonged deterioration" in housing.
Increases in the value of securities Freddie Mac held over the period helped buoy its net worth, however, erasing its need to tap government funds for a second straight quarter to stay solvent while continuing to buy and guarantee home loans....'
http://www.reuters.com/article/newsOne/idUSTRE5A55PR20091107
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Joe Steel
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Posted: Sat Nov 7th, 2009 12:19 pm |
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The mortgage problem is bad.
Blame Bush.
He had years to fix the problem but he just made it worse. He let the banks make bad loans. He let them create financial instruments no one, not even them, could understand. He let them imperil the economy.
Conservatives created the problem and Bush didn't fix it when he could.
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PATruth
Member
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Posted: Sat Nov 7th, 2009 02:10 pm |
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Another liberal accomplishment. Turn our biggest mortgage holders into social services agencies that answer to ACORN and politicians then refuse to regulate them. This is a Barney Fanks, Bill Clinton, Chris Dodd, Maxine Waters creation.
This failure however multi-billion is nothing in comparison to social security and Medicare. Remember, if it's liberal it's failing.
These silly community organizers now think they can run healthcare? Yep, just like public education, AMTRAK, USPS, SS, Medicare and a thousand other liberal programs all sucking the working man's blood for what? More debt?
2012 can't come quick enough.
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loxy3
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Posted: Sat Nov 7th, 2009 02:21 pm |
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| And from what I have heard they haven't learned their lessons yet.
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loxy3
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Posted: Sat Nov 7th, 2009 02:23 pm |
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Joe Steel wrote: The mortgage problem is bad.
Blame Bush.
He had years to fix the problem but he just made it worse. He let the banks make bad loans. He let them create financial instruments no one, not even them, could understand. He let them imperil the economy.
Conservatives created the problem and Bush didn't fix it when he could.
Bull Joe, absolute bull!! He tried to get the legislator to rein it in as early as 2001!
And he kept trying. We have Frank and Dodd on tape saying there is no problem.
Get your facts straight before you start throwing bull why don't ya?
Last edited on Sat Nov 7th, 2009 02:23 pm by loxy3
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loxy3
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Posted: Sat Nov 7th, 2009 02:24 pm |
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| I believe you can also add Maxine Waters to that list. What problem, there is no problem, over and over again.
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Joe Steel
Member
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Posted: Sat Nov 7th, 2009 02:45 pm |
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loxy3 wrote:
Joe Steel wrote: The mortgage problem is bad.
Blame Bush.
He had years to fix the problem but he just made it worse. He let the banks make bad loans. He let them create financial instruments no one, not even them, could understand. He let them imperil the economy.
Conservatives created the problem and Bush didn't fix it when he could.
Bull Joe, absolute bull!! He tried to get the legislator to rein it in as early as 2001!
And he kept trying. We have Frank and Dodd on tape saying there is no problem.
Get your facts straight before you start throwing bull why don't ya?
My facts are straight. The bill Bush was pushing wouldn't have done anything to stop the banks from gambling with their depositors' money.
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
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Warjorse
Member/DJ
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Posted: Sat Nov 7th, 2009 02:57 pm |
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Joe Steel wrote: loxy3 wrote:
Joe Steel wrote: The mortgage problem is bad.
Blame Bush.
He had years to fix the problem but he just made it worse. He let the banks make bad loans. He let them create financial instruments no one, not even them, could understand. He let them imperil the economy.
Conservatives created the problem and Bush didn't fix it when he could.
Bull Joe, absolute bull!! He tried to get the legislator to rein it in as early as 2001!
And he kept trying. We have Frank and Dodd on tape saying there is no problem.
Get your facts straight before you start throwing bull why don't ya?
My facts are straight. The bill Bush was pushing wouldn't have done anything to stop the banks from gambling with their depositors' money.
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
Blame the president who increased regulations and enforcement spending more than anyone since Nixon? .. Bush 43 should'a been a a leftists dream .. and I do blame him for faking conservatism before his election. ![[allamerican]](/forums/themes/default/allamerican.gif)
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loxy3
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Posted: Sat Nov 7th, 2009 03:06 pm |
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Joe Steel wrote: loxy3 wrote:
Joe Steel wrote: The mortgage problem is bad.
Blame Bush.
He had years to fix the problem but he just made it worse. He let the banks make bad loans. He let them create financial instruments no one, not even them, could understand. He let them imperil the economy.
Conservatives created the problem and Bush didn't fix it when he could.
Bull Joe, absolute bull!! He tried to get the legislator to rein it in as early as 2001!
And he kept trying. We have Frank and Dodd on tape saying there is no problem.
Get your facts straight before you start throwing bull why don't ya?
My facts are straight. The bill Bush was pushing wouldn't have done anything to stop the banks from gambling with their depositors' money.
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
have you not seen the tapes Joe?
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By Stephen Labaton
September 11, 2003
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
”There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,” Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing. ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” Representative Melvin L. Watt, Democrat of North Carolina, agreed. ”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said
Federal Housing Enterprise Regulatory Reform Act of 2005
The United States Senate May 25, 2006 Sen. John McCain [R-AZ]: Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal. The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac. The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay. I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. I urge my colleagues to support swift action on this GSE reform legislation.
The Democrats killed this measure in Committee preventing the full Senate Vote.
Nov. 6, 2003, 4:50 p.m. EST ·White House warns of GSE risks
Fannie, Freddie enjoy perception of backing, Mankiw says
By Matt Andrejczak, CBS.MarketWatch.com
WASHINGTON (CBS.MW) - The notion that the U.S. government would bail out Fannie Mae and Freddie Mac if they ran into financial trouble "creates a source of systemic risk for our financial system," a top White House economic adviser warned Thursday.
Fannie Mae /quotes/comstock/13*!fnm/quotes/nls/fnm (FNM 1.04, -0.08, -7.14%) and Freddie Mac /quotes/comstock/13*!fre/quotes/nls/fre (FRE 1.23, -0.02, -1.60%) , government-sponsored enterprises created by Congress to help fund home mortgages, enjoy special privileges, such as lines of credit with the Treasury Department.
Those special privileges "feed market perceptions that GSE debt has the backing of the U.S. government," said Gregory Mankiw, chairman of the administration's Council of Economic Advisers. "This notion is inaccurate." Read Mankiw's remarks.
Fannie Mae spokesman Chuck Greener disagreed with the administration's assertions about the implicit government guarantee.
"This is a question that has been asked and answered many times before, and in our view, has been refuted definitively by policymakers and economic experts," he said.
Mankiw's remarks to the Conference of State Bank Supervisors come as the administration and lawmakers push to overhaul the regulatory framework for Fannie Mae and Freddie Mac, which earlier this year admitted to understating its profit by $4.5 billion. See full story.
Adding to the uneasiness, Fannie Mae on Oct. 29 reported a $1.2 billion accounting error but said the mistake would have no impact on its income statement.
Mankiw said that a small misstep in the risk management programs at Fannie Mae and Freddie Mac could have repercussions for other financial institutions.
Fannie Mae and Freddie Mac hold a small amount of capital to cushion against unforeseen financial blows, he said. Combined, the sister companies hold $2.2 trillion in debt.
Coincidentally, Mankiw's predecessor at the White House, Glenn Hubbard, published a study Thursday that indicated that Fannie Mae's assets are less risky than those of commercial banks. Read his paper.
Fannie Mae and Freddie Mac are dominant players in the secondary mortgage securities market.
The sister companies buy mortgages from lenders, package them up, and sell to them to investors as mortgage-backed securities with guaranteed yield payments.
Due to the enormous size of the mortgage-backed securities market, any problems at Fannie Mae and Freddie Mac would have a ripple effect, Mankiw said.
"This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions," he said.
Matt Andrejczak is a reporter for CBS.MarketWatch.com in Washington.
White House warned about Fannie and Freddie
September 23, 2008 - 0:49 ETptember 23, 2008 - 0:49 ET
For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.
2001
April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."
2002
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
2003
January: Freddie Mac announces it has to restate financial results for the previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.
September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.
October: Fannie Mae discloses $1.2 billion accounting error.
November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)
2004
February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)
February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)
2005
April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)
2007
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)
September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.
December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)
2008
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)
March: Bear Stearns announces it will sell itself to JPMorgan Chase.
March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)
April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)
May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.
- "Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)
- "[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)
- Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)
June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)
July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
(White House Press Release)
here is a start for you Joe. if you really want to know what happened, please read these. I am gathering the rest for another post for you.
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Joe Steel
Member
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Posted: Sat Nov 7th, 2009 03:17 pm |
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loxy3 wrote:
Joe Steel wrote: My facts are straight. The bill Bush was pushing wouldn't have done anything to stop the banks from gambling with their depositors' money.
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
have you not seen the tapes Joe?
...
here is a start for you Joe. if you really want to know what happened, please read these. I am gathering the rest for another post for you.
Links will be sufficient. You don't have to post the whole thing.
Secondly, what you did post dealt with the Bush regime's war on Fannie Mae and Freddie Mac. That's not what I requested. They had very little to do with the mortgage collapse. I want something to prove Bush wanted to stop the dangerous practices of the big banks who were selling collateralized debt obligations and credit default swaps. The collapse of that scheme is what caused the problem.
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loxy3
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Posted: Sat Nov 7th, 2009 03:19 pm |
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Joe Steel wrote: loxy3 wrote:
Joe Steel wrote: The mortgage problem is bad.
Blame Bush.
He had years to fix the problem but he just made it worse. He let the banks make bad loans. He let them create financial instruments no one, not even them, could understand. He let them imperil the economy.
Conservatives created the problem and Bush didn't fix it when he could.
Bull Joe, absolute bull!! He tried to get the legislator to rein it in as early as 2001!
And he kept trying. We have Frank and Dodd on tape saying there is no problem.
Get your facts straight before you start throwing bull why don't ya?
My facts are straight. The bill Bush was pushing wouldn't have done anything to stop the banks from gambling with their depositors' money.
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
Here is the entire video from c-span.
Well, the video did not load - here is the direct link for you.
http://www.c-spanvideo.org/program/178110-1
See 4:40 for the beginning fo Barney Franks remarks. Here is the transcript -
I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury.
I must say we have an interesting example of self-fulfilling prophecy. Some of the critics of Fannie Mae and Freddie Mac say that the problem is that the Federal Government is obligated to bail out people who might lose money in connection with them. I do not believe that we have any such obligation. And as I said, it is a self-fulfilling prophecy by some people.
So let me make it clear, I am a strong supporter of the role that Fannie Mae and Freddie Mac play in housing, but nobody who invests in them should come looking to me for a nickel--nor anybody else in the Federal Government. And if investors take some comfort and want to lend them a little money and less interest rates, because they like this set of affiliations, good, because housing will benefit. But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own.
Now, we have got a system that I think has worked very well to help housing. The high cost of housing is one of the great social bombs of this country. I would rank it second to the inadequacy of our health delivery system as a problem that afflicts many, many Americans. We have gotten recent reports about the difficulty here.
Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable, both in general through leveraging the mortgage market, and in particular, they have a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing, and that is what I am concerned about here. I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. I worry frankly that there is a tension here.
The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn't bail them out. But the more pressure there is there, then the less I think we see in terms of affordable housing.
Last edited on Sat Nov 7th, 2009 03:21 pm by loxy3
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Joe Steel
Member
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Posted: Sat Nov 7th, 2009 03:20 pm |
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Warjorse wrote:
Joe Steel wrote:
Blame Bush.
Blame the president who increased regulations and enforcement spending more than anyone since Nixon? .. Bush 43 should'a been a a leftists dream .. and I do blame him for faking conservatism before his election.
Yes. His policies are responsible, in great part, for our economic difficulties.
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loxy3
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Posted: Sat Nov 7th, 2009 03:23 pm |
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Joe Steel wrote: loxy3 wrote:
Joe Steel wrote: My facts are straight. The bill Bush was pushing wouldn't have done anything to stop the banks from gambling with their depositors' money.
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
have you not seen the tapes Joe?
...
here is a start for you Joe. if you really want to know what happened, please read these. I am gathering the rest for another post for you.
Links will be sufficient. You don't have to post the whole thing.
Secondly, what you did post dealt with the Bush regime's war on Fannie Mae and Freddie Mac. That's not what I requested. They had very little to do with the mortgage collapse. I want something to prove Bush wanted to stop the dangerous practices of the big banks who were selling collateralized debt obligations and credit default swaps. The collapse of that scheme is what caused the problem.
you are kidding, right?? Do you really believe that? If that is the case, then you are blind and you choose not to see.
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Joe Steel
Member
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Posted: Sat Nov 7th, 2009 03:26 pm |
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loxy3 wrote:
Joe Steel wrote:
What, exactly, do you mean by "(w)e have Frank and Dodd on tape saying there is no problem?"
Here is the entire video from c-span.
...
See 4:40 for the beginning fo Barney Franks remarks. Here is the transcript -
Once again, you're attacking the GSEs. They weren't responsible for the problem. CDOs and CDSs were and Bush didn't do anything about them
For the record, I recognize the Clinton administration's complicity. They did liberalize GSE policies and that did contribute to the problem. The private banks contributed far, far more, though, and Bush didn't do anything about them.
By-the-way, the Bush plan to create a new agency wasn't a substantive fix, in my opinion. It didn't address the fundamental problems with the GSEs. It manipulated the process of administration.
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Joe Steel
Member
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Posted: Sat Nov 7th, 2009 03:34 pm |
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loxy3 wrote:
Joe Steel wrote:
Secondly, what you did post dealt with the Bush regime's war on Fannie Mae and Freddie Mac. That's not what I requested. They had very little to do with the mortgage collapse. I want something to prove Bush wanted to stop the dangerous practices of the big banks who were selling collateralized debt obligations and credit default swaps. The collapse of that scheme is what caused the problem.
you are kidding, right?? Do you really believe that? If that is the case, then you are blind and you choose not to see. I'm not kidding.
Read this:
A fierce opponent of government intervention in the marketplace, Mr. Gramm, a Republican from Texas, recalled the episode during a 2001 Senate debate over a measure to curb predatory lending. What some view as exploitive, he argued, others see as a gift.
“Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action,” he said. “My mother lived it as a result of a finance company making a mortgage loan that a bank would not make.”
On Capitol Hill, Mr. Gramm became the most effective proponent of deregulation in a generation, by dint of his expertise (a Ph.D in economics), free-market ideology, perch on the Senate banking committee and force of personality (a writer in Texas once called him “a snapping turtle”). And in one remarkable stretch from 1999 to 2001, he pushed laws and promoted policies that he says unshackled businesses from needless restraints but his critics charge significantly contributed to the financial crisis that has rattled the nation.
He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.
THE RECKONING
Deregulator Looks Back, Unswayed
While Clinton had a part in Gramm's scheme, Bush could have had it stopped when he took office. But even as the damage it was doing became evident, Bush did nothing.
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CC78
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Posted: Sat Nov 7th, 2009 03:52 pm |
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There are many factors contributing to the housing collapse but primary blame lies with the largely unregulated financial sector which allowed for almost unlimited investment packages, thus bringing individual home purchases to all of our doorsteps.
The logic is very simple....
Joe the plumber gets into a bad mortgage deal...an ARM for example. The teaser interest rate expires, his prime rate kicks in, he can't afford it, bank forecloses.
OK, who cares? This is where conservative logic is flawed...they seem to think that it was the bad mortgages that were the problem thus their analysis stops here. In fact, no, that wasn't the problem. Why? Because whether or not someone is involved with a bad mortgage is none of your business...in other words, that's between the borrower and the lender..the two parties to that transaction. You, as a third party, are irrelevant and have no say over that transaction.
The problem is when someone else's bad mortgage BECOMES my problem. So the question is not how poor people got involved with bad mortgages (which is what conservatives want us to think), the question is how these bad mortgages became OUR problem. If they don't become our problem, we don't have a collapse.
The answer, as Joe Steel rightly points out, is at the finance level. The financial industry was responsible for bringing Joe the plumber's individual problem to all of our doorsteps, thus collapsing the entire thing. Joe is responsible to himself and his lender. But he not responsible for the consequences of people who chose to buy his deal, creatively package it, and then re-sell it for profit on the market. Joe had nothing to do with that transaction.
Without the actions of the financial industry, nobody gives two sh*ts about Joe's bad mortgage other than Joe and his lender....as it should be. Further highlighting this fact is that low income housing, while an important market, was not the primary driver of these investment packages being gambled on the stock market....they simply weren't valuable enough. So no, were not talking about low income buyers collapsing the market here, hence detracting from the fannie/freddy naysayers' argument.
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speedman
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Posted: Sat Nov 7th, 2009 04:17 pm |
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| So you're giving a pass to politicians who "encouraged" lenders to make loans to those who couldn't repay them? the sub-prime crap began about 14 years ago. GW Bush, to his discredit, chose to continue the idiocy.
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CC78
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Posted: Sat Nov 7th, 2009 04:45 pm |
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They don't get a pass but that is a different problem actually in my view Encouraging the subprime market was actually a disservice to the actual buyers, but not the major culprit in the collapse.
In other words, I believe the politicians encouraging them can be held somewhat responsible for many of the buyers who find themselves in foreclosure; although ultimately, the individual parties are primarily responsible. For the most part these were questionable deals to start with, but stamped by the official channels of government, only served to give the impression of validity to the buyer.
So in other words, it's a harm, but a harm which is far more individualized and yes, I do support tighter lending standards. The undeniable conclusion of this housing mess will be contraction, ie, people are just going to have to rent or downsize. In the long rung, housing will become more affordable and then homeownership can actually become sane in this country again.
But the overall market collapse was not due to the mere act of people getting into subprimes. It was an irresponsible and largely unregulated financial sector who swooped in, knowingly IMO, and dumped these deals on all of our footsteps solely because they wanted to increase their profits. From my experience dealing with the financial sector, they've known about this for years. The entire financial scheme was designed, in fact, to quickly pass off these bad deals and cash in, so as to make as much money as possible before the inevitable collapse. So, Joe gets the ARM from Bank A, Bank A sells to B, who then sells to financial institute C, who then re-packages it along with a bunch of other bad deals and invests it on the stock market...thus dumping the risk on all of our shoulders, disposing the risk away from themselves, while they reep the profits.
In other words, the financial sector was literally willing to collapse the US economy for its own personal benefit. That, in my view, is the much greater harm and that's the reform, now currently being opposed by the GOP, that Obama is attempting to usher in. Reeling in these investment schemes will be the key in addressing future incidents of this problem. Had we been regulating this stuff properly, we wouldn't be bailing companies out right now....these "too big to fail" scenarios resulted from these open universe markets which, despite what conservatives say, still exist. This was one of them.
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speedman
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Posted: Sat Nov 7th, 2009 04:48 pm |
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| One big part of the problem is the idiotic notion that home ownership is somehow a "right". That is idiocy that transcends party lines.
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CC78
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Posted: Sat Nov 7th, 2009 05:00 pm |
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I agree.
Short of communism, homeownership is not a right.
Having said that, it is definitely an important part of the traditional "American dream." So, an overly inaccessible housing market is problematic given that so much of the American economy is premised on housing. Housing was not only becoming inaccessible to the poor, it was becoming inaccessible to most new homebuyers across all demographics; hence why bad mortgage deals became so common across all demographics. Even an otherwise educated, employed, and responsible new family in the US was faced with an incredibly daunting task to reasonably own their first home.
The irony, of course, is that treating housing as it should be treated, a very long term investment in one's quality of life (not as short sale stock gamble), will eventually make housing more accessible. Of course, that doesn't make it any easier for those caught up in this mess and, by way of the financial sector, for those impacted by it indirectly.
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