Freddie Mac and Fannie Mae Bailout

[Guest]

This is unbelievable...these publicly traded corporations are now going to be bailed out by the Feds.

This makes 3....Bear Sterns was the first. Did you see how much money the CEO's of these companies got in compenstation last year?

Millions of people have lost their homes with no help in sight...this is corporate welfare.

[Guest]

Things will return to the standards of 30-40 years ago. That is, lending requirements will be stricter, down payments will be higher, and rates will go back to a more "normal" 7-8% during times of low inflation. Fewer people will be able to qualify for mortgages which, based upon what we've seen in the past few years, is a good thing. This will eventually result in a better balanced supply and demand situation than we're currently seeing, but there will be more homes for sale than buyers with mortgages to buy them. Home prices will bottom out and then return to a more reasonable rate of increase that is more in line with affordability.

And, of course, those in Washington will be around to help the next bunch of crooks who stumble upon a new Ponzi scheme.

[Guest]

I cant take credit for the below post but found it interesting to read...

During the Enron collapse of 2002, the public and the media were persuaded that Enron was somehow a Republican scandal, based on little more than senior management's history of contributions to the Republican party.

The ties between the Fannie Mae debacle and the Democratic party are much more intimate than that. Senior Democrats chosen for their political connections - James Johnson, Franklin Raines, Jamie Gorelick - took tens of millions of dollars in compensation out of the company. The ties between the Obama campaign and Fannie Mae are especially intimate: not only did Johnson head Obama's veep-vetting operation, but we learn in this Washington Post article that the campaign that Raines is advising Obama on the mortgage crisis! Well, he should know. Let's just hope the Obama operation is able to keep Raines away from the accounting side of things. Even the amazing Obama fundraising operation could not afford that!

More seriously: Here is potentially the largest financial disaster in American history. The American taxpayer stands to lose billions; Democratic insiders have extracted tens of millions. If Enron was a party scandal ... what is this?

Comments on this ??

[Guest]

Phil Gramm was one of five co-sponsors of the Commodity Futures Modernization Act of 2000. One provision of the bill was referred to as the "Enron loophole" because the House Agriculture Committee drafted it and it was later applied to Enron. Some critics blame the provision for permitting the Enron scandal to occur. At the time, Gramm's wife was on Enron's board of directors. Later in his Senate career, Gramm spearheaded efforts to pass banking reform laws, including the landmark Gramm-Leach-Bliley Act in 1999, which served to reduce government regulations in existence since the Great Depression separating banking, insurance and brokerage activities. Years later, critics of Gramm point out that this same legislation may have been pivotal in encouraging the corporate practices that led to the 2008 mortgage crises in America. Between 1995 and 2000 Gramm, who was the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, received $1,000,914 in campaign contributions from the Securities & Investment industry. Later, as lobbyist for Swiss bank UBS, Gramm pressured congress to ease it's restrictions on predatory lending tactics by mortgage brokers. For his efforts, Gramm received $750,000 from UBS in during a one year period starting in 2007. He was John McCain’s presidential campaign co-chair and his most senior economic adviser from summer 2007 to July 18, 2008. While advising the McCain campaign, Gramm was being paid by UBS to lobby Congress about the U.S. mortgage crisis. During this time, "the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages." Gramm had input on McCain's March 26, 2008 policy speech on the mortgage crisis. In a July 9, 2008 interview explaining McCain's plans in reforming the U.S. economy, Gramm downplayed the idea that the nation was in a recession, stating, "You've heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline."

The Republicans are responsible for this economy and the middle east war(s). The Republicans are not the party of change. The disaster of the last eight years cannot be blamed on Clinton or the current Congress. You have fooled all of the people some of the time and some of the people all the time. Now is the time to stop the spin.

[Guest]

JUNGLEJIM....link please
Thanks

[Guest]

Bucco
Do some of your own research. Exercise your mind and think a little.

[Guest]

OkJim....I just try and add a link to anything I post so that other posters can make a reasonable decision on its accuracy and slant, thats all.

If you dont wish to do so, it is up to you !

[Guest]

Bucco
The only way you will accept a post from anyone as valid will be if they say God told me to write this!

[Guest]

Bucco
The only way you will accept a post from anyone as valid will be if they say God told me to write this!
__________________________________________________ ________--

Easy Jim...if you dont want to show your link when you cut and paste from a site so folks can measure it in context or for accuracy it is entirely up to you.

Heck I am sure I am not done it all the time...just posted in here and my only id on it was that I can not take credit for it...it was a post on another board I subscribe to and I foundit interesting so I brought it here and asked for comments.

Hey, you can do whatever you want..it does help your credibility in my opinion to allow folks your source however !

[Guest]

Bucco, You can link all day long. Just because "something" is on the internet doesn't make "something" true. Even reputable sites get it wrong on occasion. I like to see the words coming out of the candidates mouths. So link all day long. Much of it is crap.

[Guest]

Gee, if Enron is somehow relevant to Freddie Mac, might as well bring in the S&L bailout of the 80's. Cost taxpayers around $160 billion and right in the middle were the Keating 5 ( think John McCain) and of course, the infamous famous brother Neal Bush (Silverado S&L which got Neal banned from banking), who, after numerous fun times with Thai prostitutes, now makes money milking the government by selling an alleged "educational learning program" tied into the No Child Left Behind program.

http://www.nytimes.com/2007/11/07/washington/07neil.html

Tried hard to find a link to Faux News to add "credilbility" but just couldn't do it???

[Guest]

Bucco, seriously, is there anything you don't want to blame on Senator Obama?

Here's a link for you from your fav VP Nominee

http://blogs.abcnews.com/politicalpunch/2008/09/a-confusing-com.html

[Guest]

Bucco, seriously, is there anything you don't want to blame on Senator Obama?

Here's a link for you from your fav VP Nominee

http://blogs.abcnews.com/politicalpunch/2008/09/a-confusing-com.html
__________________________________________________ __________________-

I am on the record as saying very clearly that I do not agree with Sen McCain on a lot of things and that he was not my first choice. My criticism of Sen Obama has pretty much been along the lines of his background which I think is important. The post on this thread as I said was a post I thought was an interesting take and was asking for comments.

[Guest]

Bucco, You can link all day long. Just because "something" is on the internet doesn't make "something" true. Even reputable sites get it wrong on occasion. I like to see the words coming out of the candidates mouths. So link all day long. Much of it is
__________________________________________________ ______________--

Does that apply to ALL topics ?

[Guest]

A pretty comprehensive piece on the Fannie Mae situation from NPR !!!

http://www.npr.org/templates/story/story.php?storyId=94393089

[Guest]

Bucco, I am saying that many subjects we research via the net may be inaccurate or biased.
If I look for medical research, I tend to go to the Mayo Clinic site or something similar. There are so many snake oil salesmen on the internet be it in medicine, durable goods, politics, etc.
It is very difficult to be unbiased in politics, food, religion, child rearing or other facets of life. You and I could see a kangaroo jump over a wall and interpret it in different ways. Viewpoints are subjective. How did that old saying go... "Don't believe anything you read and only half of what you see". Now that I believe in. ;)

[Guest]

Bucco, I am saying that many subjects we research via the net may be inaccurate or biased.
If I look for medical research, I tend to go to the Mayo Clinic site or something similar. There are so many snake oil salesmen on the internet be it in medicine, durable goods, politics, etc.
It is very difficult to be unbiased in politics, food, religion, child rearing or other facets of life. You and I could see a kangaroo jump over a wall and interpret it in different ways. Viewpoints are subjective. How did that old saying go... "Don't believe anything you read and only half of what you see". Now that I believe in. ;)

The goal is not to battle each other, but to learn from facts - and rarely do two or more peole interpret the same fact in the same manner.

We can slam the current administation, the current candidates, and all of their relatives from here to the day after election day, and slamming does not make anyone smarter or better informed. It may allow venting of anger, but little else.

From here on out, it is the future, not the past (whether the Bush or Clinton years). What are the candidates capable and willing to accomplish, how will they get it done, and are their plans realistic or folly?

The bailouts of the mortgage companies match other bailouts of airlines, banks, manufacturing giants and other lynchpins of our economy. They happen, and each administration has had to ead with it, as the future administrations will as well.

Let's be thankful we CAN handle a bailout, versus the full nationalization if industries as occurs in other countries, as the bailouts eventually get paid back.

[Guest]

This question is not loaded, nor is it rhetorical. I quite simply want to know.

Through all of this mess with the lending industry, I have been watching in horror. How could the things that have happened have happened? Why did those lenders not have to answer to anyone all along?

I do not want to hear about how borrowers did it to themselves. We all know that happened in some cases. But how did conditions exist for that to happen at all?

How do usury laws work in this? Or not? Do we have any usury laws? Or is it the technicality of usury being defined as an exceedingly high rate of interest? Does usury cover all the other stuff? Predatory lending? I live in a state that is filled with those awful payday loan places. Talk about usury. I have never figured out why those things are allowed.

Back to the mortgages though. How did this happen? It never happened before. What changed? And why?

How did it start? Why wasn't it stopped?

I knew all along that we were all tied to the railroad track together, in the path of an oncoming train. I knew it all along. And I am a bumpkin. What did our elected know or not know or not care about all through this whole mess?

Please educate me. I am serious. I want to know and I have no idea. How could this ever have happened?

Boomer

[Guest]

Boomer, As they say....Follow the money. You will find your answers.

[Guest]

Boomer, As they say....Follow the money. You will find your answers.


Oh how well I get exactly what you are saying. I have done a couple of rants on here about lobbyists. I sometimes say mean things I guess. You know like, "As long as all those lobbyists are in DC sloppin' the hogs, the average American cannot be heard."

I think I also ranted one time long ago about my impossible dream of seeing term limitations on Congress. Let's see. . .voting it in for themselves. . .throwing themselves out of that nice cozy bed they have crawled into. Yeah, that will happen.

Why did trickle down economics have to turn into a real hosing of average Americans?

I do not have some great in depth knowledge of trickle down econ, but the theory makes sense to me I think. But all I have seen lately is nothing more than Congress lifting its hind leg on the American people.

I have liked those tax cuts a lot. I fear their expiration. Coming soon. Did that Congress pacify those of us who voted them in into not watching?

I am a woman scorned. Morphing hurts.

And it is 7:00 AM and here I am back in the kitchen looking for heat so it seems. Those typing fingers of mine that I thought I had chewed off, rather than type political stuff, seem to have grown back. Uh oh.

Like I said, Sam, I know all about following the money. I get that part.

But I really am looking for a little step by step explanation of how conditions exist that allowed those bad lenders to pillage and plunder.

I was the girl in grade school long ago who actually read her big orange social studies book, the one with just a few grainy black and white pictures. Those late 1950's social studies books. There I would sit, wearing my cateye glasses, reading about laws and stuff. (Well, sometimes in those days, I had to run and hide from my mother who was always trying to give me one of those home permanents to complete my glamorous look.) But I really do remember actually reading that big old ugly social studies book. I was a nerd before nerd was a word. And I remember reading something about how laws protected us from stuff happening that should not happen.

My question above in this thread is a serious one. And I really do hope someone here who gets it will take the time to explain it.

Why did this happen? I get that part.

I want an explanation of How? I am looking for the Cliff's Notes version, but I still want to know. I have a need to understand stuff. Still. Even though I no longer have those cateye glasses.

I will leave this, for now, with that favorite quote of mine. I still do not know who said it. And I still wish I had.

"Unrestrained greed is not only bad morals, it's bad economics."

And when I look back in here later, I really do hope to find an answer to that question I asked here in this thread yesterrday afternoon. I want to read an explanation of the specific conditions that exist that allowed this mess to happen.

How did this happen?

I am just looking to be educated.

Boomer in the Morning

[Guest]

...

How did this happen?

I am just looking to be educated.

Boomer in the Morning



Business runs on risk management - the greater the risk, the greater the profits, but greater is the potential for disaster (but, it will NEVER happen to my industry!).

In the case of the mortgage companies, they took larger risks on the concept that the bubble would grow and not burst on them. The same thing (different financial industry, but same principle) happened in 1929 - just bigger!

Investors want greater returns on their investments, and that will only happen when greater risk occurs. As companies compete for investment funds, the profit prospectus is critical in attracting the investment money. In other words, it's a vicious cycle that only culls itself after people get burned.

The Enrons and mortgage company situations demonstrate this perfectly, and it is mortant to consider that none of them would have happened had not investors (large and small) been so eager to get that extra percentage of profit. The same with those who took sweetheat mortgage deals of greater size than was prudent - all because they wanted a little biggerhouse than they could actually afford, and bet that salaries, taxes, expenses etc (especially in situations where the mortgage was based on a dual-income, and that second income disappeared) would always favor their decision.

"When it is too good to be true, it usually is..."

[Guest]

Great post, Steve. Essentially, the USA was living beyond it's means! :agree:

[Guest]

I know that once bricks and mortar lending started to be less and less, and fewer and fewer loans were shelved in house, things started to go haywire.

But where was the regulation? That is what I don't get. How did it run out of control so fast?

And those REIT's looked so pretty. But I never bought those. I was noticing all that empty strip mall space, all along. Did the tech bubble teach us nothing. (Rhetorical question. I did not forget the question mark.)

I have got to get out of here. I could talk about this stuff all day. When I get back down there, maybe I will just go to the porch at a golf course club and put out an APB on my laptop and we can all meet and discuss. Or maybe that would just be plain nuts!

Boomer

[Guest]

As a REALTOR, landlord, and property manager since 1973 I think I have some insight regarding these loan defaults, particularly sub prime. No matter who benefited or who got hurt, I think it was very beneficial to citizens.
Am I crazy?
The default rate nationally is around 5%, The sub prime default rate is near 15% ( both give or take ).
Thats a lot of problems BUT.
I have watched so many people being given the chance of home ownership who otherwise could have never been able to own there dream home. In years past they would never have a chance at ownership because they would never have qualified. Many took the chance and bought homes. Many couldn't keep up and lost their homes to foreclosure but 85% so far have kept up and are in a home for the first time in their lives. A home they would have otherwise never even had the chance to own. So there are two sides to the mortgage meltdown, and I think the 85% who have gambled and won will make a difference to our economy and society. Benj

[Guest]

But where was the regulation? That is what I don't get. How did it run out of control so fast?

In a free market society REGULATION is a dirty word. Regulation hurts business or so they say. Sometimes the lack of regulation leads to problems as we can see now.

There needs to be a healthy balance between the interests of business and interests of the people.

[Guest]

cologal

You ask where was the regulation?

Fanny and Freddie were regulated by the govt. NUF SAID? Benj

[Guest]

cologal

You ask where was the regulation?

Fanny and Freddie were regulated by the govt. NUF SAID? Benj


Actually Boomer Beback asked that question....there was a good discussion on Public Television about this Hybrid model of Freddie Mac and Fannie Mae. Of course the Republican senator said the Democrats blocked a vote on changes and the Democratic senator said that Bush promised to veto any reform.

I suggest that Fanny and Freddie were not regulated by anyone, they are private companies and therefore should not be bailed out by the taxpayers.

[Guest]

[b]But where was the regulation?



cologal, sorry I thought you asked the question.

I did not mean my post as political in any way. Just that there are millions of citizens who wake up every morning and thank their lucky stars that they have their own home. Benj

[Guest]

cologal, sorry I thought you asked the question.

I did not mean my post as political in any way. Just that there are millions of citizens who wake up every morning and thank their lucky stars that they have their own home. Benj


Hey...no sweat here...I know just how lucky I am. I can feel the chill in the air it soon will be time to fly south.

Take Care

[Guest]

. . .In a free market society REGULATION is a dirty word. Regulation hurts business or so they say. Sometimes the lack of regulation leads to problems as we can see now. . .

There needs to be a healthy balance between the interests of business and interests of the people.


Yep.

Boomer of Few Words

[Guest]

There seems to be a combination of confusion regarding "why this, why now?" here, righteous indignation, anger, etc. There is even an attempt to politicize this situation, which adds a little humor to a serious financial situation.

As a retired banker, I know that the Fed did what it had to do to stabilize the financial markets and particularly the housing industry. They are smart enough to know what the causes were and will likely plan some new regulations to address the causes in the future. Yes, I believe that regulation is necessary. Without it, or with inadequate regulation, the lure of money and simple greed spawns results such as this financial disaster, the S&L failures of twenty years or so ago, etc.

I'd guess that the people at the Fed are as angered at the lack of regulation and greed by those involved, all the way from the loan salesmen peddling the loans to the mortgage company underwriters to the Wall Street types who packaged up the mortgages and sold them as mortgage-backed securities to the investors who bought them and certainly including the executives at Fannie and Freddie who showed an amazing lack of judgement and greed while taking gobs of bonus money.

But in the end, everyone had to swallow hard and come up with the plan that was announced to stabilize things. The only statement made in the description of what was done that I found disingenuous was that the $100 billion wouldn't be an obligation of the taxpayers. C'mon. Where did the Fed get that $100 bil anyway? It certainly didn't come from the federal surplus--there isn't any.

[Guest]

I have read every post in this thread.

Boomer's favorite quote:

"Unrestrained greed is not only bad morals, it's bad economics."

I am thinking of having t-shirts printed up with that quote. Do you think that might help to spread the word? Or maybe bumper stickers. Yeah, that's it. Big, long bumper stickers.

Goodnight.

Boomer the Redundant

[Guest]

Today the Fed is trying to pedal off Lehman before they go down. The government is trying to do this without having to use public funds.... Even the Republicans are against this one.

Bear Sterns...public money
Freddie Mac and Fannie Mae...public money
Lehman...public money???

http://www.cfrb.com/news/13/788335

[Guest]

As one of the earlier posts in this thread points out....the percent that is in default, foreclosure, et al is significantly over shadowed by the majority (85++%) that are legit and ongoing day in and day out.
If one could get a handle on the real number of speculators who got in, exploited the system's loose screening, then walked away from deals, I would venture to GUESS, the real foreclosures, bad loans, et al would be even lower.
There were those who were taking advantage of the system to build multiple homes, over reaching their capability when the bubble burst. Add to that the folks who are standing pat waiting to see what hand outs are coming...the ones who stop paying their mortgages, because of the new tolerances for non payment and the prospect of a bail out by somebody....breeds even more exploitation. These walk aways, and wait and see non payers distort the real measure of REAL foreclosures in the US.
It is a small % to start with.....smaller still if the real measure could be determined.
Like all other media and political views, the smaller % is the focus. They have a way of making a banquet out of a ham sandwich.

The mortgage default exploitation is no different than the price of oil exploitation by speculators.....as was said above....just follow the money!

BTK