Posted on 09/09/2008 7:28:58 PM PDT by Lorianne
Just wait until underwriting standards get more strict with regard to credit history, employment stability, income/debt ratio and down payment (loan-to-value ratio).... Rat howls about “red-lining” and “discriminatory lending practices” will once again fill the halls of Congress.
I would make one minor emendation to your spot on diatribe. While I think DC as a whole does not bear prime culpability, Greenspan does. He kept creating the money that made financing this debacle possible.
Greed is as dangerous, destructive and evil as sloth.
Nope. Sorry. Bought my house for cash, and I've worked for years for pro-growth Republicans and tried to educate as many people as I could about the fact that there should be no "quasi governmental" financial entities, the FDIC and Federal pension guarantee are terrifically underfunded, and that Social Security money has all been spent and there is no "trust fund."
Politicians and bureaucrats should be allowed nowhere near our finances and the coming meltdown in Social Security is going to make the housing bubble correction (which is going to continue for years) look like one bad day in the Market. The currently despised President of the United States tried to put Social Security on the only track that could possibly salvage any part of it: privatization. He was attacked by AARP, Big Labor, the Punditocracy, and of course, Democrats.
The Franny McMay fiasco is the result of political corruption -- mostly but not exclusively -- by Democrats. Now we are compounding our failure by allowing the morons who created this mess to keep their jobs and pay off their bond-holders. People who make bad investments deserve to lose money, and people who lose other people's money deserve to get fired or be sent to prison depending on the circumstances. It's how capitalism works. Period.
We have a political party in this country that's savaged anyone -- in or out of politics -- who's tried to raise the alarm about the financial future of entitlements. Everybody knows the party that demagogues this issue; and everybody knows the party that created these "quasi-governmental" financial entities. Now I have to read in a supposedly reputable business journal how this is everybody's fault.
No. It's not.
I don't buy this we were all in it BS for one second. Many of us saw it for what it was right from the start.
I suspect some of Tigers friends are not going to buy into what you are selling either.
But I know what this is about. If you can blame everyone, then there will not be a populist uprising to go find the hotshots on wall street who made hundreds of millions in bonuses on these financial finagles and nicely request that they give some of it back.
Trace Fannie and Freddie back to their origins, and then tell me that the Feds did not have a big part in this debacle.
Fannie should never have been allowed to be created, and should have been dismantled after the depression when there was an opportunity to do so. Freddie then would not have been necessary, and in any case never should have been created in the first place either.
This is what happens when government interjects itself in what should be private markets, where EVERYONE who invests takes PRIVATE and personal risks...this is what inevitably happens to entities like “GSE’s” (government sponsored enterprises) where risk is assumed by the deep pockets of the U.S. Treasury.
“No, you are not putting the blame on me. I think I have some other friends here you cannot put the blame on.
I don’t buy this we were all in it BS for one second. Many of us saw it for what it was right from the start. “
Some did but they did NOTHING about it. They still voted the crooks in and when it comes to $$$$$ in the business world, well they like money too! Yes, it was a “bubble” and it burst. GEESH! Don’t give me this naieve nonsense.
Most recently the “no money down” was actually true! Banks loved it. Real Estate agents loved it. Homeowners about to retire ADORED it. Flippers LOVED it. People that couldn’t afford the house LOVED it. Builders LOVED it. Appraisers LOVED it. Tax accessors LOVED it. Liberals LOVED it - no more “red lining” and everyone could have the “American Dream”. Getting the picture? They weren’t all Demoncrats that benefitted from this ... .
“I suspect some of Tigers friends are not going to buy into what you are selling either.”
I’m not “selling” anything. I’m just stating the obvious.
“But I know what this is about. If you can blame everyone, then there will not be a populist uprising to go find the hotshots on wall street who made hundreds of millions in bonuses on these financial finagles and nicely request that they give some of it back.”
LOL! I don’t know what’s happened to the American people. I wish people would rise up. I wish they would stop voting these self serving crooks in to pass legislation that enables all this to happen. Unfortunatly one hand washes the other. It’s not just Wall Street that made “millions”. No, it’s not class warfare. Many made money.
It all starts in DC. Legislation allowed this to happen in the housing market.
Maybe this will help you out.
One can only try ...
The Truth About Freddie & Fannie
http://www.rushlimbaugh.com/home/daily/site_090908/content/01125109.guest.html
I happened to catch Rush today and he had a sub in. He was good and gave very good specific on how all this occurred. I wrote down the guys radio station. He claims he has it listed on his website. Tomorrow night after I get home, and remember, I’ll post it.
Horsecrap.
If this is what passes for intellect at the WSJ, is it any wonder why serious investors prefer the IBD over this twaddle?
He does not breath a word about the stunning level of leverage inside Fannie/Freddie. He omits any mention of the drive in the last 10 years to plump up the valuation of the common stock. He neglects to mention that it was the doing of Fannie/Freddie management that they retained a huge portfolio of loans on their balance sheet, when they should have been selling those loans into the market and keeping only a minimum of paper on their own balance sheet.
This clown is a moron. He has no clue what is actually going on inside these two GSE’s.
Here’s the unvarnished truth: Inside Fannie/Freddie, they’re running their own hedge fund(s) - only at levels of leverage at least TWICE what the most absurdly risky hedge funds are using.
Here’s more unvarnished truth: they fail accounting standards. They have consistently failed GAAP accounting. Fannie took years to issue a financial statement after the investigation that deposed Franklin Raines.
The failure here is that Congress failed to exercise their oversight authority. The SEC failed to investigate them. The US Treasury did not make explicit, public pronouncements after the investigation that the US taxpayer would not back Fannie/Freddie paper. And on and on and on.
If Fannie/Freddie stuck to their original mission, ie, providing a conduit to secondary financing, and ONLY that mission, per their charter, and had maintained the levels of capital as required by Congress, then we wouldn’t be in this situation.
This moron of a writer, however, would like to pretend that the common US citizen, or even anyone who got a mortgage as a result of the GSE’s secondary financing of the mortgage market, is to blame. Riiiight. As tho people who complied with the rules/laws had anything to do with 85:1 (or higher) leverage inside their portfolios.
Riiiiight.
The WSJ obviously doesn’t know their pompous buttocks from a warm rock about what is really going on inside these two GSE’s.
preach it budda... while I didn’t pay cash I have a conventional 30yr community bank owned mortgage and I make 10X it’s monthly payment. Sure its austere but I save a lot so hopefully I don’t have to rely on SS or stock market performance.
In the late ‘70s and early 80s the area I live in experienced an oil boom. Housing prices, rents, went through the roof, and many bought too little house for too much. When the boom died, it died hard, and the housing market was glutted with recent construction which had no buyers, nor even renters.
Well, the oil boom is back, housing is tight (locally) and prices are through the roof (for here) again.
Thankfully, I bought an affordable older home while the ‘bust’ was on—for one third what it had sold for during the last boom.
Similar opportunities should open up for home buyers in areas where prices were inflated by flippers and unqualified buyers, if the market is allowed to come down, and there should be some bargains out there.
However, those of us who live within our means should not be called to subsidize those who do not, nor to support those who enabled that sort of irresponsibility—and made a lot of profit for themselves in the process. .
Prosecute the CEO’s?? Sign me up..
But don’t forget the Congressmen behind this debacle either:
http://online.wsj.com/article/SB122091796187012529.html?mod=opinion_main_review_and_outlooks
This is what happens when NON-CONSTITUTIONAL Government is allowed to simply operate without oversight.
Not saying you disagree with this, just that others in the government are equally complicit.
And don’t forget to add that Wall Street, including Paulson’s Goldman Sachs, made a fortune trading this worthless paper
After seeing his pic on the page, I want to punch that smug look right off of his face.
There are a lot of crooks who made out like bandits from this. They knew what they were doing, and this idiot author, and you, are trying to dodge responsibility and palm this off on the rest of us.
They are scoundrels. Keep trying to absolve them, and blame me, and I am going to call you a scoundrel too.
I heard on Rush today that HUD back in the 90’s under Andrew Cuomo mandated that freddie and fannie had to make loans to low income households–ie high risk households. And this on top of the loans to low income neighborhoods (ie high risk loans) fostered by the Community Reinvestment Act 1979.
The CDO concept was developed by (convicted) Michael Milken of (now-defunct) Drexel Burnham Lambert. After the securities scandal, the vehicle lay dormant until picked up by the mortgage industry around 1999/2000. CSPAN aired an interview with a journalist who looked into the subject; took more than a few calls from some articulate folks who objected to placing the blame on Fannie/Freddie for exactly the reason I stated. The CDO package - courtesy of Mikey Milken - is flawed.
A lot of the financial and economic realities of these things would be completely transparent to people if they were not so absolutely innumerate. Imagine somebody saying: "Oh, reading anything more complex than Dick and Jane, I never mastered that." Yet I have overheard these kinds of idiotic conversations so many times in elevators and men's rooms with regards to math: "I can't even balance my checkbook." Duh. "I can't do percentages." You're bragging about that? It's taught in third grade.
I see a number of people on this board blaming Wall Street for this fiasco. It's crap. Byron York has a great column on this at National Review Online: Politics and the Fannie Mae Piggy Bank. These people didn't even follow generally accepted principles of accounting -- for at least ten years -- and they were allowed to get away with it. Now we hear from all the commentators about how necessary it was to bail out the bond-holders. Evidently, though, it wasn't necessary to bail out the stockholders -- most of whom were small investors -- and who're going to get mills on the dollar out of all this. Once again, the rich, politically connected people commit crimes and get bailed out, and small investors who thought they were investing in something as safe as a treasury security are getting hosed.
Oh, and by the way, most of those very rich people were Democrats, but Republicans are still branded as the party of the "the Rich." Figure that one out. When Social Security goes casters up, we'll get to read more bilge of this sort: It's both Parties' fault. Rubbish.
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