Vol_Bengal Posted October 8, 2008 Report Share Posted October 8, 2008 these hearings occurred in late 2004... eye-opening. And, if you just disregard the first 8 minutes of the tape the last 15 seconds speaks volumes... but its all the Republicans fault, right? Link to comment Share on other sites More sharing options...
Jamie_B Posted October 8, 2008 Report Share Posted October 8, 2008 This is bigger than Fannie and Freddie. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 8, 2008 Author Report Share Posted October 8, 2008 [quote name='Jamie_B' post='710910' date='Oct 8 2008, 08:32 AM']This is bigger than Fannie and Freddie.[/quote] agree and disagree... when over 50% of all mortgages in this country (which is a fact) run through Fannie Mae they're a lion's share of the problem. And, like it or not, but the market and the banking industry (due to mark to market accounting) have little confidence in them because the dropping value of real estate which is forcing the banking industry (mortgage portfolio holders primarily) to realize losses on their balance sheets. Link to comment Share on other sites More sharing options...
Homer_Rice Posted October 8, 2008 Report Share Posted October 8, 2008 To paraphrase Carville in '92: "It's the deriviatives, stupid." That said, Fannie and Freddie mismanagement is certainly a very good example of the kinds of shenanigans found throughout the FIRE economy. Some factions of Dems do have a lot of culpability here, as they abetted this mess, too. But, this is not a housing crisis in its origins. That just happened to be the sector of the economy being used to pump up fictitious capital when the FIRE economy hit the wall. Coulda been tech around 2K had Greenspan chosen not to inflate housing. And, if by some miracle of malfeasance they get away with this looting again, it'll be something else next: foolish investment in non-productive energy sources is the likely candidate. But I don't think we make it this time. Economy Go Boom! Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 8, 2008 Author Report Share Posted October 8, 2008 [quote name='Homer_Rice' post='710944' date='Oct 8 2008, 09:54 AM']To paraphrase Carville in '92: "It's the deriviatives, stupid." That said, Fannie and Freddie mismanagement is certainly a very good example of the kinds of shenanigans found throughout the FIRE economy. Some factions of Dems do have a lot of culpability here, as they abetted this mess, too. But, this is not a housing crisis in its origins. That just happened to be the sector of the economy being used to pump up fictitious capital when the FIRE economy hit the wall. Coulda been tech around 2K had Greenspan chosen not to inflate housing. And, if by some miracle of malfeasance they get away with this looting again, it'll be something else next: [b]foolish investment in non-productive energy sources is the likely candidate.[/b] But I don't think we make it this time. Economy Go Boom![/quote] I'd agree with that... I agree with you regarding housing... however, we just dropped this BS $700 billion bill to bail out banks that weren't liquid because investor confidence was gone because balance sheets were reflecting losses due to mark to market accounting and writing down housing values... and housing values have dropped like rocks for various reasons - chief among them giving loans to folks that couldn't afford them but "wanting everyone to live the American dream"... now there is a glut of homes on the market, thus values drop. And, I agree with you that very likely the only thing that "fixes" our economy is for it to go Boom... all this bill did is prop up a false sense of security again by making banking institutions flush with cash. All the while, they're still writing down their mortgage portfolio, realizing losses in value (until the housing market stabilizes that is), and it didn't fix that actual problem. I do think it is funny that a couple weeks back various folks in this very forum were ready to burn "bankers" at the stake for taking advantage of borrowers regarding subprime mortgages and loss-leader loans and how "additional regulation was needed... I'll not name names but you know who you are. Now some additional information comes out that reflects that there were attempts made to do that (dating back to at least 2004) and democrats in Congress are painting a "everything is fine, do not panic" Titanic moment and grilling the regulator for writing an alert piece stating concerns about Fannie Mae (which better than half of those bankers loans went through for approval) and now all of a sudden "this is bigger than Fannie Mae and Freddie Mac" and "this isn't really about housing". Seems like it was 2-3 weeks ago... and, two former CEO's of Fannie Mae (which we've established holds a majority interest in all of the mortgages in this country) left the company with millions (because of bonuses they received for meeting quotas with bad loans) and there is no outcry in that regard. Why the change of position? Link to comment Share on other sites More sharing options...
Chris Henrys Dealer Posted October 8, 2008 Report Share Posted October 8, 2008 Ritzholtz has a shitload of stuff on this, and the causes of the mess, and imo, he's worth reading. Homer, I know you check him out. [url="http://bigpicture.typepad.com/"]http://bigpicture.typepad.com/[/url] I'm just swamped right now, so can't get to the articles, but they are about 2 or 3 articles down. [quote]From a speech back in 2004 comes this telling quote: > "One other thing I've done, is I've called on private sector mortgage banks and banks to be more aggressive about lending money to first-time home buyers. And the response has been really good. There's a lot of people in this -- our communities around the country that deeply care about the issue of homeownership, and they've been responsive." - George W. Bush, U.S. President, March 26, 2004. > Its important to understand how this situation occurred in the first place, if we want to be able to fix it. Blaming the CRA and Fannie/Freddie is a total misunderstanding of how the problem occurred, and what we need to do to fix it now, and avoid doing it again in the future. To repeat my prior arguments, the proximate cause of the Housing crisis were 1) Ultra-low rates; and 2) Abdication of traditional lending standards, thanks to 3) originators ability to resell mortgages for securitization purposes, and hence, 4) not have to worry about loan defaults. The credit crisis was caused by 1) the above securitized mortgage paper, that was 2) rated triple AAA by Moody's and Standard & Poors, which then 3) Which was then "insured" by credit default swaps (CDS) -- the unreserved for, shadow insurance products 4) whose exemption was made possible by the Commodities Futures Modernization Act. That legislation exempted these derivatives from any supervision or regulation. The lack of reserve requirements is why there is now $62 trillion in CDS, many of which will never pay their counter parties the promised insurance. If you are going to blame Fannie/Freddie/CRA, or George Bush or Barney Frank, you are missing the big picture.[/quote] Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 8, 2008 Author Report Share Posted October 8, 2008 [quote name='Chris Henrys Dealer' post='710963' date='Oct 8 2008, 10:29 AM']Ritzholtz has a shitload of stuff on this, and the causes of the mess, and imo, he's worth reading. Homer, I know you check him out. [url="http://bigpicture.typepad.com/"]http://bigpicture.typepad.com/[/url] I'm just swamped right now, so can't get to the articles, but they are about 2 or 3 articles down.[/quote] then I guess I'm missing the big picture... where do we point to then? Because, I'm going back again and seeing us taxpayers dropping $700 billion dollars to bail out various companies the largest of which is Fannie Mae... but they're not to blame? I'll need to read more of this fellow's stuff to draw further conclusion. I guess each has their own opinions of how things have occurred. Thanks for pointing me in his direction - I'll read some of his stuff and draw an opinion of him from that. Link to comment Share on other sites More sharing options...
Jamie_B Posted October 8, 2008 Report Share Posted October 8, 2008 OOOh this one is good. [url="http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html"]http://bigpicture.typepad.com/comments/200...derstandin.html[/url] Link to comment Share on other sites More sharing options...
steggyD Posted October 8, 2008 Report Share Posted October 8, 2008 [quote name='Vol_Bengal' post='710950' date='Oct 8 2008, 10:15 AM']...I do think it is funny that a couple weeks back various folks in this very forum were ready to burn "bankers" at the stake for taking advantage of borrowers regarding subprime mortgages and loss-leader loans and how "additional regulation was needed... I'll not name names but you know who you are...[/quote] Here's a good topic where a couple people showed their displeasure. [url="http://forum.go-bengals.com/index.php?showtopic=44515"]http://forum.go-bengals.com/index.php?showtopic=44515[/url] Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 8, 2008 Author Report Share Posted October 8, 2008 [quote name='Jamie_B' post='710994' date='Oct 8 2008, 11:29 AM']OOOh this one is good. [url="http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html"]http://bigpicture.typepad.com/comments/200...derstandin.html[/url][/quote] I read through that... and I'm reading almost all of that is referring back to CRA... not Fannie Mae. CRA was an act to "enhance" or entice lenders to attempt to generate more home ownership... in doing so, lenders relaxed lending practices to be able to approve more borrowers... they're correct - that has nothing to do with Fannie Mae. I'll play devils advocate for a minute though... if you and your competition are both selling a widget and your competition is able to sell to a larger prospect of customers and is able to sell it at a significantly cheaper price what are you going to do? There are a lot banks (I'm not saying all) but there are banks out there that relaxed standards to compete in the market place... but, again, haven't read enough of this Ritholz yet to get a take on him... Link to comment Share on other sites More sharing options...
Jamie_B Posted October 8, 2008 Report Share Posted October 8, 2008 [quote name='Vol_Bengal' post='711014' date='Oct 8 2008, 11:23 AM']I read through that... and I'm reading almost all of that is referring back to CRA... not Fannie Mae. CRA was an act to "enhance" or entice lenders to attempt to generate more home ownership... in doing so, lenders relaxed lending practices to be able to approve more borrowers... they're correct - that has nothing to do with Fannie Mae. [color="#FF0000"]I'll play devils advocate for a minute though... if you and your competition are both selling a widget and your competition is able to sell to a larger prospect of customers and is able to sell it at a significantly cheaper price what are you going to do?[/color] There are a lot banks (I'm not saying all) but there are banks out there that relaxed standards to compete in the market place... but, again, haven't read enough of this Ritholz yet to get a take on him...[/quote] Which is why regulation is needed to keep me from destroying myself in an attempt to undercut you. And thats just if Im going about it with naievety, now if Im being unscroupulous........... Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 8, 2008 Author Report Share Posted October 8, 2008 [quote name='Jamie_B' post='711016' date='Oct 8 2008, 12:29 PM'][b]Which is why regulation is needed[/b] to keep me from destroying myself in an attempt to undercut you. And thats just if Im going about it with naievety, now if Im being unscroupulous...........[/quote] Which brings us right back to the video I showed... yes it is about Fannie Mae but it is also about regulation of those markets and dem's in Congress opposing such regulation... and the one guy from New York just grilling the regulator... the regulator then says, sir - this isn't about us reporting on bad accounting practices - this is about them using bad accounting practices. Link to comment Share on other sites More sharing options...
Jamie_B Posted October 8, 2008 Report Share Posted October 8, 2008 [quote name='Vol_Bengal' post='711025' date='Oct 8 2008, 11:49 AM']Which brings us right back to the video I showed... yes it is about Fannie Mae but it is also about regulation of those markets and dem's in Congress opposing such regulation... and the one guy from New York just grilling the regulator... the regulator then says, sir - this isn't about us reporting on bad accounting practices - this is about them using bad accounting practices.[/quote] Which is why they are part of the problem, but it wasnt them that wrote the deregulation. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 8, 2008 Author Report Share Posted October 8, 2008 [quote name='Jamie_B' post='711089' date='Oct 8 2008, 03:15 PM']Which is why they are part of the problem, but it wasnt them that wrote the deregulation.[/quote] But, it was democrats in congress continuing to block writing back in of regulation and basically light up the regulators overseeing Fannie Mae (what little they could oversee). Why was that? Because they were getting mucho donations from those companies. We'll not even bring up Raines and Johnson... making millions by allowing / even promoting poor lending practices to see larger bonuses... what of this are you arguing at this point? Link to comment Share on other sites More sharing options...
Jamie_B Posted October 8, 2008 Report Share Posted October 8, 2008 [quote name='Vol_Bengal' post='711091' date='Oct 8 2008, 02:23 PM']But, it was democrats in congress continuing to block writing back in of regulation and basically light up the regulators overseeing Fannie Mae (what little they could oversee). Why was that? Because they were getting mucho donations from those companies. We'll not even bring up Raines and Johnson... making millions by allowing / even promoting poor lending practices to see larger bonuses... what of this are you arguing at this point?[/quote] So get rid of those dems. My concern is letting the folks who wrote the damed thing in the first place not to have the power to exasterbate that. Link to comment Share on other sites More sharing options...
BengalBacker Posted October 9, 2008 Report Share Posted October 9, 2008 [quote name='Jamie_B' post='711101' date='Oct 8 2008, 03:37 PM']So get rid of those dems. My concern is letting the folks who wrote the damed thing in the first place not to have the power to exasterbate that.[/quote] Isn't Raines Obama's chief economic advisor? Link to comment Share on other sites More sharing options...
CincyInDC Posted October 9, 2008 Report Share Posted October 9, 2008 [quote name='BengalBacker' post='711237' date='Oct 9 2008, 09:06 AM']Isn't Raines Obama's chief economic advisor?[/quote] No. [url="http://www.snopes.com/politics/obama/fanniemae.asp"]http://www.snopes.com/politics/obama/fanniemae.asp[/url] But did you know Laura Bush killed a guy? Laura Bush killed a guy. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted October 9, 2008 Author Report Share Posted October 9, 2008 [quote name='BengalBacker' post='711237' date='Oct 9 2008, 03:06 AM']Isn't Raines Obama's chief economic advisor?[/quote] [quote name='CincyInDC' post='711238' date='Oct 9 2008, 03:52 AM']No. [url="http://www.snopes.com/politics/obama/fanniemae.asp"]http://www.snopes.com/politics/obama/fanniemae.asp[/url] But did you know Laura Bush killed a guy? Laura Bush killed a guy.[/quote] No, but they've got extremely close ties... as in Obama has admitted to various phone conversations with Raines to get his input on things... And, another former Fannie Mae CEO, Jim Johnson, headed up Obama's VP search committee until he stepped down after an outcry from citizens not believing Obama would select such a person for that position. Link to comment Share on other sites More sharing options...
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