Posted on 08/17/2010 7:13:16 AM PDT by Painesright
Opinion Journal Video: I Was a Fannie Mae Executive
Former Chief Credit Officer Edward Pinto explains how it all went wrong.
(Excerpt) Read more at online.wsj.com ...
Calling a loan prime does not a prime loan make.
“Calling a loan prime does not a prime loan make.”
Corect. However this may also be moral hazzard writ large.
Why pay (even if you can) if you think you might be able to get some kind of bailout?
The federal govt has been using housing to prop it's coffers for the last two decades but since people were raking in money off of the deals too, people didn't care. Now that the feds are STILL making money off of but the private sector's teats have run dry the clamoring starts.
ping
I hope some take the time to watch or listen to this...it shows it is an across the board problem with all of the gifters in DC.
If you slog through the entire interview, you’ll find out that this fellow (who seems pretty objective) expects social bureaucrats (rather than those who know some economics) to continue to set FM/FM lending policy, and that requirements for minimum down payments and reasonable credit ratings don’t appear to be of any substantial concern to them.
And that’s part of why Congress continues to put off revamping FM/FM: no sense reopening that can of worms - at least not until *after* the election. Then they can go right back to the “affordable housing” stupidity that got us here in the first place.
One thing is patently clear to me. Government did this. Meddling in things they have no authority to meddle in.
Feckless Democrat Ruling Class “initiatives” that buy votes with wealth transfers.
My house is worth half what it was. That money went straight down the gaping maw of the poor who thought they would like to have a house. Utopian circle jerk ideas fueled by Liberal race guilt expressed through force of law.
If all these people are bailed out, especially forgiving the principle, I’ll stop making payments and so should everyone else. That’s the only way all the houses in this country would be appraised equally.
It wasn’t just the dems. Bush and McCain started talking about it in 2006. A little late, don’t you think? Especially since Bush made a speech in AZ bragging about how more people than ever now owned homes. And he was all for immigrants owning homes, too.
I hate all things democrat. But Bush was also a part of this problem. It was started by Carter and pushed by Clinton but it all happened on his watch.
bttt
[Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.
Andrew H. Card Jr., Mr. Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Mr. Bush had just nominated Mr. Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed.
“Maybe I was asleep at the switch,” Mr. Card said in an interview.
Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.]
IOW, the predators anticipated/lobbied every move on the chess board and herded their prey into the fleecing zone - like a pack of "specially related" killer whales that cooperatively trap herring against the water's surface by blowing bubbles.... and when there's no room left to rise, the game is over and the prey gets eaten alive.
“Maybe I was asleep at the switch,” Mr. Card said in an interview.
Maybe?
And then there's the other issue nobody likes to talk about - that bubbles facilitate keeping the Russell Trust laundry clean.
The Appetite of Tyranny is never far removed from the Tyranny of the Appetite.
Same ol same ol.
Meet the New Boss, Same as the Old Ba'al
--The Who?
Nothing to see there, moooove along....
You’re right. Spineless RINO enablers tried to make hay with it too.
Yep, he was. Right from the very beginning. This is why he was elected and why this was his very first act upon taking office.
I never forget that Duh!-bya comes from a long line of Wall Street bankers and he was doing their bidding. It just melted down a little too soon.
The federal govt has been using housing to prop it's coffers for the last two decades but since people were raking in money off of the deals too, people didn't care...
And, because people were making money, they thought his policies were doing a good job encouraging growth in the economy. Little did they know.
The biggest contributions from Arnall went to the Progress for America Voter Fund, a 501c4 set up by Tony Feather, former political director of Bush-Cheney 2000 and a close friend of White House political adviser Karl Rove.
The DemocRATs got crumbs, in comparison.
The Claude Arnall filing says Roland Arnall paid his brother $20 million in 2004 to fold Olympus into Argent Mortgage, one of several businesses under the umbrella of Ameriquest Capital Corp., the family-owned holding company. Claude Arnall said he received several payments on the obligation totaling $7.4 million, but that Roland Arnall kept coming up with excuses to delay paying the entire debt.
One excuse cited by Claude Arnall was his older brother’s deal to pay $325 million in January 2006 to settle investigations by attorneys general in 49 states that Ameriquest ran “boiler rooms” and engaged in predatory lending. That payment cleared the way for Roland Arnall’s nomination as U.S. Ambassador to the Netherlands, which provided another excuse to delay payments, Claude Arnall claimed. The ambassador resigned from his post on March 10, 2008, and died of esophageal cancer a week later, the filing says.
“Claimant (Claude Arnall) did not have any opportunity to resolve the payment of the balance due on the buy-out before Roland Arnall passed away,” Claude Arnall’s filing said.
Claude Arnall’s filing said the debts were well-known to his brother’s widow, Dawn Arnall, and others, who discussed the plan at informal meetings and over meals.
Early this decade, as the Legislature considered bills aimed at curbing abusive lending tactics, Ameriquest lobbied on bills sponsored by prominent Democrats including former California Assembly Speaker Herb Wesson of Los Angeles and current Senate President Pro Tem Don Perata of Oakland, noted Steve Blackledge, legislative director for the California Public Interest Research Group.
Wesson, whose bill was considered weak by consumer groups such as CalPIRG, received $53,000 from Arnall and his companies in 2000 and 2001, and Perata got $10,000.
In late 2001, the Legislature passed a law backed by the lending industry. When Oakland approved a tougher mortgage-lending ordinance, Perata rallied a successful push to have the state law override it. Ameriquest gave him an additional $78,200 in 2003 and 2004.
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