Posted on 10/29/2007 8:59:36 PM PDT by bruinbirdman
Angelo Mozilo, chief executive of Countrywide Financial, on Monday strongly criticised the US governments response to the collapse of the subprime lending market, saying there had been zero effort to tackle the crisis.
In terms of tangible effort from the federal government...there has been no programme, no federal effort, no legislative assistance zero, he said.
He criticised the US governments refusal to lift caps on the size of loans that can be bought by Fannie Mae and Freddie Mac, the government-sponsored entities created to promote affordable housing.
Fannie Mae and Freddie Mac are prohibited from buying loans worth more than $417,000. Failure to increase this limit would continue to depress the property market and keep first-time buyers out of the housing market, particularly in California, where property is expensive, said Mr Mozilo.
First-time buyers cannot buy a home now. Only the wealthy and privileged can afford to buy homes, he said.
Mr Mozilos stock sales are being probed by the Securities and Exchange Commission as part of an examination of trading by executives at subprime lenders. He has sold more than $130m worth of Countrywide shares since beginning a stock-sale plan at the end of last year.
Quan Zhu, a former Countrywide vice-president, agreed to pay $108,840 to settle insider trading charges filed against him by the SEC, without admitting or denying the allegation, the commission said yesterday in a statement.
The SEC alleged that Mr Zhu traded in Countrywide stock while aware of confidential negative earnings information.
Speaking at the Milken Institutes State of the State conference in Beverly Hills, Mr Mozilo blamed the subprime crisis on easy, low-cost money that drove up house prices and exotic loans and diminished underwriting standards.
People stretched themselves, he said, though he implied that the blame for the crisis should be shared.
It takes a village to do this. As long as [house] values keep falling, the subprime situation will get worse.
Jeff Mezger, chief executive of KB Home, said house prices would remain depressed. Were anticipating that its going to stay tough for quite some time.
Countrywide, the largest US mortgage lender, last week announced a $1.2bn third-quarter loss, reflecting $2.9bn of mortgage-related writedowns, credit losses and restructuring charges.
But shares in the California-based lender rose sharply after it said it would return to profitability this quarter.
"I was irresponsible with lending practices..I practically had to stuff money in peoples pockets..I got bonuses I didn't deserved...I made a killing in the market..it was get it while the getting was good...but *sniff sniff*..I don't like the spotlight when it all falls apart....squeal,squeallllll...squealllll..ssssqueallllll"
So what is the crisis?
2 Thigs:
a) Move away from California if you can’t afford a house there. Who would want to live there anyway.
b) Stop lending money to people who can’t make the payments all while expecting a welfare bailout program to repay the unaffordable loan you gave to the borrower.
I mean, really. I want a shiny new GT40, can I just get it on an ARM loan and have uncle sam make my payments when the day comes that I can’t? No, I came to terms with the fact I can’t afford one and settled for computer wallpaper (and it breaks my heart!)
Geez
The money quote has to be “First-time buyers cannot buy a home now. Only the wealthy and privileged can afford to buy homes. The essential truth of this debacle in sub prime was the pushing beyond reason of the idea of home ownership. By moving that number up 1 or 2 percentage points we may have tripled the rate of foreclosures.
So what is the crisis?
A) The forclosed house(s) depresses the price of other houses in the area.
B)The packaged loans were sold off to hedge funds that borrowed money from banks to buy them. Basically the banks got rid of the mortgages, then the mortgages returned in the form of collateral for loans from the funds.
But if the lender has excess inventory, would he not be forced to sell at a discounted price? And would that not make housing more affordable and cause cash flow to increase, lubricating the economy?
I admit I'm weak in economics, but I’m struggling to see a national crisis. It looks like a crisis to the lenders, but that’s a risk they took in making these loans.
Now THAT is funny!
“IF” this moron cut the value of his mortgages to 1/3 of their amount, and then bundled them at auction, then I could see the FedGov providing the courthouse steps to auction them off upon.
Pass out 500,000 mortgages to anyone with a pulse then whine when the loans go bad qualifies for a Financial Darwin Award.
I think he means to say:
So far, the feds have refused to line up more suckers to keep the Ponzi scheme going.
Would someone explain that to me? I don’t get it.
He’s holding lawmakers hostage to his crisis. Basically he’s saying, “I may have made the mess, but folks are going to blame you guys if you don’t fix it.” And he’s right.
Banks are getting stuck with lots of real estate they don't want and losing not only anticipated interest income on outstanding balances, but also seeing the collateral for those outstanding balances - - the real estate - - continue to lose value to the point where a ton of money is hanging out there uncollateralized.
In short, banks are taking a beating and if enough banks get into trouble or fail then that's bad for other financial institutions and therefore for the economy in general. I guess that's the crisis.
In the words of Red Foreman “ Dumbass”!
Tackle, v.t. To dump enormous amounts of taxpayer dollars on while demanding no accountability from anyone; tackled, tackling
--International Leftist Dictionary, Third International Edition
....plus even legit people — non subprime folks — are seeing the values of their homes decline.
Not to mention the ancillary effects, such as a slow down in building, which means jobs in manufacturing and sales.
Hopefully, the market will get this mess straightened out soon.
And I think it will.
Whatta buncha BS!
I suspect a "first time" home buyer will have no problem securing a mortgage is they:
IMHO, folks today don't understand the word sacrifice.
it is a shame when a few a-holes ruin a useful tool like easy low interest short-term loans....
It will, but there’s going to be a lot of damage. That’s a nice way of lost jobs, bankrupt companies, closed small businesses, etc.
Yep. It’s a shame, but what can you do?
Well, sorta. The government is leeting the FED deal with the situation, along with the Treasury.
The "fix" is INFLATION, more cheap money and an unregulated slush fund which will be allowed to buy SIVs and CDOs...and never having to report their true value or eventual disposition.
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