Don’t blame me. I considered my house a big-ticket consumption item when I bought it. I never expected to make a net profit, living as I do in a rust-belt city.
“Congress gives the people what they want.”
Actually I don’t totally agree with this statement. I think most people wanted the Macs to make reasonable loans. IMHO it was some people in Washington who wanted to included low income people to be able to share in the American dream. We can see the results of that. There were way to many people getting loans that had no business getting one.
WSJ speaks the truth on this:
Truth No. 1: Congress gives the people what they want.
Truth No. 2: Wall Street helps people get what they want.
Truth No. 3: Hank Paulson did the only thing he could.
Truth No. 4: We are all to blame.
It boils down to greed - on many levels of society. Everyone tried to get a piece of the pie. The American Taxpayer is left holding the bag.
The criminality involved in the whole housing meltdown is mind boggling.
Me, I tried to scrimp and save money to buy my first house at a time when Carter (with the help of Burns) made the notion of saving money a great big joke. Greenspan just continued the borrowing spree.
Something I don’t hear in all these stories, is what to do with this massive dearth of homes. In almost every area, there were stories of frenzied homebuilding during the boom. My take is that we have too many homes for anything to recover.
I bought in at 10.93 and should have sold off at 11.60. Now it is worthless.
Mark Levin was talking about this tonight. It’s basically a scandal which dwarfs any and all other scandals of our times, it’s entirely the work of democrats including many friends of Oinkbama, and the media refuses to touch it while they scour Alaska for stories about Sarah Palin getting parking tickets. This is a GIGANTIC issue for republicans.
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.
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.
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.
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.
Funny.
Hands off till you loose, then get the government to bail you out. Good game if you can play it.