Re: Freddie Mac and Fannie Mae Bailout
 

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. ;)

Re: Freddie Mac and Fannie Mae Bailout
 

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.

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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..."

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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.

Re: Freddie Mac and Fannie Mae Bailout
 

cologal

You ask where was the regulation?

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

Re: Freddie Mac and Fannie Mae Bailout
 

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.

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

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

Re: Freddie Mac and Fannie Mae Bailout
 

Yep.

Boomer of Few Words