Posted on 08/30/2010 7:14:07 AM PDT by SeekAndFind
When the housing boom went bust and mortgage giants Fannie Mae and Freddie Mac failed, forcing taxpayers to cough up $150 billion and counting, Washington should have reconsidered its policy of promoting homeownership. It hasn't.
Last Tuesday, Tim Geithner led a summit to determine the future of Fannie and Freddie. According to Geithner, "We will not support returning Fannie and Freddie to the role they played before conservatorship."
We should hope not. But Geithner hastened to add that Washington would still play an important role in housing. "I believe there is a strong case to be made for a carefully designed guarantee in a reformed system, with the objective of providing stability in access to mortgages, even in future downturns." HUD secretary Shaun Donovan put it this way: "The government's footprint in housing finance needs to be much smaller than it is today." Smaller? At a time when government backs 97% of new mortgages, it would be hard to make its footprint any larger.
(Excerpt) Read more at forbes.com ...
Even Bush stated that “Owning a Home is part of the American Dream”.
Bush was echoing a theme that reaches back at least to Herbert Hoover. The theory is that Communities are strengthened when people own their homes and government has to help strengthen communities.
This confuses the understanding of the term : “Pursuit of Happiness”. The founders understood this to mean that individuals have a right to pursue their own happiness without government interference.
Now what is happening is government is instituting policies that in effect decide how you should live and if you do follow what they have decided, you will be rewarded for it.
So, home buyers are being “rewarded” more than renters because the government decides that the former are more important to the economy than the latter.
This is totally un-American.
You might find this article educational.
The theme reaches all the way back to Benjamin Franklin. I remember reading an essay by Ben Franklin, urgin government support of home ownership by keeping interest rates low and stable.
I don’t have a problem with the government supporting home mortgages. I have a problem when there are no controls to ensure the valuations are appropriate. Or when banks are allowed to enter high risk mortgages using unregulated foreign insurance products (think AIG credit default swaps) to balance their risk. Or when quasi-federal agencies are allowed to cook their books to give misleading results.
home ownership is a plague upon the home owners. They get charged obscene property tax rates to pay for everything from city government to fire and police protection to cleaning out the damn sewers. I live in a home I own, and my subdivision is surrounded by apartments and condo’s. I pay more in property taxes than the average rent of an apartment every year. Since I am surrounded by transients, they go and vote to raise my property taxes every election. Screw owning your own home, the taxes will kill you....rent, and let the property owners (suckers) pay the big bucks to the government...
The authors are correct. And yet I fear Obama’s alternative
(Section 8 Nation)
I own a few rental houses, and there are certain people who simply cannot own a house. A house is a legal asset. It requires assets to maintain it, pay taxes, etc. Many people live lives mooching off of people, losing court judgments and moving on to mooch off other people with no intention of every paying the people they owe. Owning legal assets (homes, checking and savings accounts, etc) is out of the question for these people because they provide an opportunity for the people they screwed to place liens and get the money they are owed.
Are you referring to this article I posted, or did you forget to provide a link to another article you planned to share with me?
Some folks believe the banksters - except Freddie and Fannie - are the picture of free markets and high integrity. So he's “educating me” using your article that banking problems rests solely with Freddie and Fannie and not the too big to fail banksters who shook down our Treasury. That's okay.
I found your insult to me on this thread intersting as well. You are a piece of work, aren’t you.
“Some folks believe the banksters - except Freddie and Fannie - are the picture of free markets and high integrity”
Does that mean that MNJohnnie thinks that Fannie and Freddie were the only two evil banksters? Or does he believe that Fannie and Freddie are part of the government? He seems to think the housing bubble was created by the government.
You said “banksters.” Now you are a brain washed Hollywood viewer who knows nothing.
In the context of MNJ and my conservation in which he refers to on this threat, the whole banking industry was being addressed. Clinton made a deal with Goldman and the others that he would deregulate banking if they would give loosen their loan standards. If they failed to do that, Clinton threatened to sue them for failing to have quotas in loans under the CRA.
So, the forclosure problems for loans in the US are riddled throughout the banking industry and not just Fannie and Freddie. However, the major part of the housing aspect of the real estate market’s bad loans came from Freddie and Fanny as they orginate the vast majority of the home loans.
“banksters”
Nah, I’ve just been reading Yves Smith and Mike Shedlock for too long. And Gillian Tett and Charles Gasparino, and Muolo and Padilla.
Those who have followed the machinations of Goldman and Merrill and Countrywide and Ameriquest and Magnetar and John Paulson and AIG and a host of others may not share the Candide-like vision of an innocent Wall Street beset by evil government minions who forced them, against their will, to blow up the world.
“However, the major part of the housing aspect of the real estate markets bad loans came from Freddie and Fanny as they orginate the vast majority of the home loans.”
An interesting idea. But Fannie and Freddie don’t originate any loans at all, and never have.
They purchase conforming loans from those who do make loans and resell them to investors. A field they had to themselves for many decades, until Wall Street entered it during the bubble with enormous quantities of non-conforming paper. Private market non-conforming paper is where the big trouble began.
“Clinton made a deal with Goldman and the others that he would deregulate banking if they would give loosen their loan standards. If they failed to do that, Clinton threatened to sue them for failing to have quotas in loans under the CRA.”
Another interesting idea. Except that Goldman and the other Wall Street players who wanted Glass Steagall repealed were investment banks, not retail banks. The CRA applied only to deposit-taking institutions, and investment banks don’t take deposits. They are funded by investors.
Retail banks have branches in different communities. Retail banks take deposits from those communities. So it is possible, if not always desirable, for banks to loan money back to a percentage of the residents of those communities from which they take deposits, as the CRA requires them to do.
Investment banks don’t have branches. They don’t take deposits. They have no communities, and may not even be located in the US. So someone needs to explain to me how the Community Reinvestment Act was supposed to be extended by Clinton to apply to firms without communities and without depositors who could ask for loans. I’m sure the explanation will be fascinating.
Thanks for the informative post. We were not talking about just the real estate market, we were discussing reform needed to keep the too big to fail banksters out of the Treasury in the future.
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