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RE: Freddie and Fannie - 9/9/2008 9:22:01 AM
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NoShow
Posts: 462
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quote:
ORIGINAL: ekserekseez
If you think that this "bailout" is going to stabilize the economy, or keep the housing market from collapsing, or anything else, you're wrong. What this bailout is doing is this: reinforcing and rewarding lack of personal responsibility.
It's one thing to give charity to people. It's another thing for the feds to steal my money and then give it to some social climber who wanted a house bigger than he could afford, just to make his wife happy because her sister had a house that size.
We'll have to agree to disagree, because I think you're wrong here. The bailout has nothing to do with Bob keeping his house and everything to do with stabilizing the credit market.
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RE: Freddie and Fannie - 9/9/2008 9:34:16 AM
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deliveredarling
Posts: 2001
Joined: 8/30/2007
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We are attempting to stabilize a blatantly corrupt entity. How is that good?
What is going to keep all these other major players that are bombing from running to the government the first time the see economic failure, asking to be bailed out too?
They have now opened a door that every financial giant can run screaming, if we collapse, the world economic system can fail!!!!!!
They need to be held accountable for their poor decision making. Whether the people bail them out or not. Conditions need to be put in place, so that this CAN"T happen again.
Unfortunately, our government can not be trusted to institute those kind of plans.
It might mean for them that their pockets are a little less full.
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RE: Freddie and Fannie - 9/9/2008 10:44:54 AM
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mapachito13
Posts: 2527
Joined: 10/1/2007
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What I don't know is why the Justice Dept. isn't investigating these companies that were offering these blatantly ridiculous loans for a low teaser payment and then a couple years later the payment goes up to a level beyond what the people could pay to begin with. This is fraud IMO!They misrepresented these loans to people just to get their exorbitant fees.
I think the rules for these mortgage and bank fees needs to be scrutinized too! I don't understand why they give you an "estimate" of the fees and the actual ones are hundreds if not thousands of dollars higher. If I negotiated a fee for my service and then after completion of that service charged a lot more for that service my customers would think me a fraud and not an ethical person to do business with.
Pre-paid interest is unethical IMO since the company is charging you for interest and the money hasn't been deposited into your bank account yet!
That's like charging you interest on your unused part of your credit line on a credit card on the basis that one day you might use it!
_____________________________
Peace Sells....But Who's Buying!
"I would argue that the most serious threat to the United States is not someone hiding in a cave in Pakistan or Afghanistan, but our own fiscal irresponsibility."-David Walker, fmr comptroller general of the US
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RE: Freddie and Fannie - 9/9/2008 11:45:30 AM
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NoShow
Posts: 462
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quote:
ORIGINAL: deliveredarling
We are attempting to stabilize a blatantly corrupt entity. How is that good?
I don't agree. They're trying to stablize the bond and credit market. Fannie and Freddie packaged up (securitzed) the loans, which where than sold with the implied backing of the United States Federal government. So they were bought as "safe" investments. The bulk of them are owned by foreign owned, as well as owned by funds (think pension funds). To let them tank, would be to screw the holders; which politically, the U.S. is in no position to do. As for the later, we're talking about a lot of fixed income people, getting hurt. To "default" on these would cause repercussions through all U.S. issued securities.
quote:
What is going to keep all these other major players that are bombing from running to the government the first time the see economic failure, asking to be bailed out too?
They have now opened a door that every financial giant can run screaming, if we collapse, the world economic system can fail!!!!!!
There is a difference, in that Freddie and Fannie were GSA's.
quote:
They need to be held accountable for their poor decision making. Whether the people bail them out or not. Conditions need to be put in place, so that this CAN"T happen again.
Unfortunately, our government can not be trusted to institute those kind of plans.
It might mean for them that their pockets are a little less full.
The whole purpose of Freddie and Fannie was to provide "confidence" in the mortgage industry. You add on top of that, the fact that the mortgage deduction (on one's taxes) encourages people to take out mortgages. Maybe what the government needs to do is stop trying to support the "American Dream Of Homeownership", because it's not what makes this country good.
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RE: Freddie and Fannie - 9/9/2008 1:58:32 PM
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Ps103
Posts: 11696
Joined: 4/16/2005
From: Here, now
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quote:
as well as owned by funds (think pension funds).
I think a lot of people fail to understand this part.
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RE: Freddie and Fannie - 9/9/2008 2:05:48 PM
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SwedishCovenant
Posts: 606
Joined: 8/8/2008
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quote:
ORIGINAL: WesP
quote:
BZZZZZZZZZZZT!! Wrong!!
Don't respond to me anymore. Your ability to discuss is sorely lacking and misinformed.
It is certainly a pity that you would wish that no one remind you of reality.
Remember THE REST of my post? It said:
http://www.forbes.com/afxnewslimited/feeds/afx/2008/09/09/afx5402870.html
In case you didn't know, the Treasury Department works for the President. Your attempt to blame the (Dem) Congress for the actions of the GOP Executive was, at best, ill-informed, and at worst, mendacious. "
...REMEMBER?
Gee, I wonder why you would choose to ignore the facts of the second half of my post, and instead choose to take an affectation of offense at the first half. Could it be that you simply haven't got anything to say about the facts of the second half?
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RE: Freddie and Fannie - 9/9/2008 2:39:54 PM
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SwedishCovenant
Posts: 606
Joined: 8/8/2008
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quote:
ORIGINAL: WesP
quote:
Could it be that you simply haven't got anything to say about the facts of the second half?
Or it could be that arrogance and condescension does not further discussion. 
Thereby proving my point - you haven't got anything to refute the facts, so try for the diversion.
But okay, just to remove any possible excuse for trying to evade the subject you raised - consider the offending language stricken.
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RE: Freddie and Fannie - 9/9/2008 3:00:26 PM
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Ps103
Posts: 11696
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MODERATOR'S NOTE :: ATTENTION PLEASE
TOPIC!
Take the personal squabbles to pm if you feel you must continue them.
Thanks.
Please do not reply to this message within the Community.
Please email Community@salemwebnetwork.com with questions, comments, or concerns.
Please do not send me PMs regarding this message.
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Fasten your seatbelts...it's going to be a bumpy night.
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RE: Freddie and Fannie - 9/9/2008 4:13:25 PM
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SwedishCovenant
Posts: 606
Joined: 8/8/2008
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quote:
ORIGINAL: WesP
quote:
Thereby proving my point - you haven't got anything to refute the facts, so try for the diversion.
But okay, just to remove any possible excuse for trying to evade the subject you raised - consider the offending language stricken.
You don't understand. You are still doing it. Anywho, did the President call the Treasury and say bail them out? Was is solely his choice? I am truly requesting an answer.
http://www.ustreas.gov/education/duties/
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RE: Freddie and Fannie - 9/9/2008 6:56:46 PM
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mapachito13
Posts: 2527
Joined: 10/1/2007
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quote:
ORIGINAL: SwedishCovenant
quote:
ORIGINAL: WesP
quote:
Thereby proving my point - you haven't got anything to refute the facts, so try for the diversion.
But okay, just to remove any possible excuse for trying to evade the subject you raised - consider the offending language stricken.
You don't understand. You are still doing it. Anywho, did the President call the Treasury and say bail them out? Was is solely his choice? I am truly requesting an answer.
http://www.ustreas.gov/education/duties/
"It was Treasury Secretary Henry M. Paulson Jr. who first proposed the idea of a government conservatorship, and broached it with Mr. Bush while the president was at his ranch in Crawford, Tex. It was Mr. Paulson who set the guiding principles for the subsequent deal; Mr. Bush endorsed them, a departure from usual White House practice, in which the president articulates principles for his underlings to follow."
Link
Of course, the man hasn't had an original idea in his life. Even going to war it was all Wolfowitz, Cheney and Rumsfeld.
That article you referenced had one very interesting line about how the treasury's duties include:
Supervising national banks and thrift institutions;
Advising on domestic and international financial, monetary, economic, trade and tax policy;
Enforcing Federal finance and tax laws;
Is someone asleep at the wheel there or what?
_____________________________
Peace Sells....But Who's Buying!
"I would argue that the most serious threat to the United States is not someone hiding in a cave in Pakistan or Afghanistan, but our own fiscal irresponsibility."-David Walker, fmr comptroller general of the US
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RE: Freddie and Fannie - 9/10/2008 9:01:33 AM
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SwedishCovenant
Posts: 606
Joined: 8/8/2008
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quote:
ORIGINAL: mapachito13
That article you referenced had one very interesting line about how the treasury's duties include:
Supervising national banks and thrift institutions;
Advising on domestic and international financial, monetary, economic, trade and tax policy;
Enforcing Federal finance and tax laws;
Is someone asleep at the wheel there or what?
Gee, imagine that - a Bush Administration department fumbling their statutorial duties.
"I'm shocked - SHOCKED - to hear it!!"
Wonder what it is tht they HAVE been doing for the past seven years, if they haven't been doing what is supposed to be their jobs.
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RE: Freddie and Fannie - 9/10/2008 10:22:44 AM
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relady
Posts: 1289
Joined: 4/11/2005
From: Greater St. Louis Metro
Status: online
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quote:
My mom said the same thing. She also said that if the government didn't bail out F and F, this country would go into a depression greater than the Great Depression.
I don't see how that could be, but...... Because Freddie and Fannie take loans the banks make and give the banks more money in return to keep making loans. That's a very simplistic way of putting it but it is basically what they do. If banks had to keep and service the loans they make, there would be WAAAAY less money for home purchases and WAAAY less people would be able to get loans for homes. In fact, I'd go so far as to say it would probably wipe out a chance at home ownerhsip for anyone at middle class or below. It would bring the home purchase market to almost a complete standstill. And since home ownership drives a lot of retail markets, that would trickle down and we'd be in a real mess worse than the one we've got.
Yup, I'd like to see a little more enthusiastic enforcement of laws regarding fraud - maybe make it a little less difficult to prove as concerns mortgage brokers - licensure of mortgage brokers, and some additional regulations on what types of loans can be offered and HOW they can be advertised. I'm a Realtor and I understand more than a lot of people and I STILL find some of the products being offered extremely complicated to understand.
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RE: Freddie and Fannie - 9/10/2008 10:55:03 AM
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rlj
Posts: 2191
Joined: 4/14/2005
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quote:
Yup, I'd like to see a little more enthusiastic enforcement of laws regarding fraud - maybe make it a little less difficult to prove as concerns mortgage brokers - licensure of mortgage brokers, and some additional regulations on what types of loans can be offered and HOW they can be advertised. I'm a Realtor and I understand more than a lot of people and I STILL find some of the products being offered extremely complicated to understand.
That is a tough sell when talking on a forum with so many free market conservatives. ; )
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RE: Freddie and Fannie - 9/10/2008 11:03:11 AM
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NoShow
Posts: 462
Joined: 5/10/2005
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quote:
ORIGINAL: rlj
quote:
Yup, I'd like to see a little more enthusiastic enforcement of laws regarding fraud - maybe make it a little less difficult to prove as concerns mortgage brokers - licensure of mortgage brokers, and some additional regulations on what types of loans can be offered and HOW they can be advertised. I'm a Realtor and I understand more than a lot of people and I STILL find some of the products being offered extremely complicated to understand.
That is a tough sell when talking on a forum with so many free market conservatives. ; )
Actually, it seems like the resistance would come from the other side. The problem wasn't the complexity of the loans, rather the ability of the borrower to understand them. Basically, what it boiled down to, was many people just weren't smart enough to understand the loan structure.
So it's the same side of the coin. People are complaining that lenders sold these loans to low-income people and most of them were minorities. So they view it as racially motiviated predatory lending. You put in the regulations that they have to understand the loan and you drastically limit their options. The lender says the borrower isn't "smart" enough for these\that loan, and the liberals scream that the lender is calling minorities stupid.
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RE: Freddie and Fannie - 9/10/2008 11:06:10 AM
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RichLP
Posts: 1578
Joined: 5/4/2005
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You gotta love it. Many small investors picked the relatively safe preferred stock of both FNMA and FHLMC, and now what? They're worth a whopping five to ten percent of their face value. So, while the government taps $200bln of taxpayer money to bail out these two agencies, the Wall Street folks swimming in cash who've been making money all this time get to continue doing what they've been doing (make more and more) while the average Joe gets his wallet squeezed yet again. Couldn't the Treasury buy up the outstanding preferred shares and give the proceeds to the GSEs? Or exchange those severely devalued preferred shares for cash so the little guy would at least break even?
We've just seen two national lenders get nationalized, folks. This is socialistic whether we like to admit it or not.
_____________________________
"We have removed an ally of Al Qaeda" - G.W. Bush lies to America and to the world, 5/1/2003
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RE: Freddie and Fannie - 9/10/2008 11:08:17 AM
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P31W
Posts: 3005
Joined: 6/13/2005
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quote:
The problem wasn't the complexity of the loans, rather the ability of the borrower to understand them.
Hummmm, are you sure the borrower even cared? I don't think many of them even tried to think beyond the moment?
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RE: Freddie and Fannie - 9/10/2008 11:27:52 AM
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NoShow
Posts: 462
Joined: 5/10/2005
Status: offline
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quote:
ORIGINAL: relady
quote:
My mom said the same thing. She also said that if the government didn't bail out F and F, this country would go into a depression greater than the Great Depression.
I don't see how that could be, but...... Because Freddie and Fannie take loans the banks make and give the banks more money in return to keep making loans. That's a very simplistic way of putting it but it is basically what they do. If banks had to keep and service the loans they make, there would be WAAAAY less money for home purchases and WAAAY less people would be able to get loans for homes. In fact, I'd go so far as to say it would probably wipe out a chance at home ownerhsip for anyone at middle class or below. It would bring the home purchase market to almost a complete standstill. And since home ownership drives a lot of retail markets, that would trickle down and we'd be in a real mess worse than the one we've got.
It's even bigger picture than that. F&F after making those loans to the Jones and Smiths to buy houses, than bundled up the loans into securities and sold them to investors. Since F&F are (were) GSEs, the securities were implied to be backed by the U.S government.
Now that the Jones are having trouble making their mortgage payment, F&F are having trouble making their interest payments to their investors. If F&F were to saying they cannot paying their investors and that the U.S government's guarantee has no value, a decrease in F&F securities (due to the increased risk of holding them) would most likely be accompanied by a decrease in ALL U.S. government securities. So basically that could lead to a run on, not banks, but the U.S. government.
Imagine if the bank were allowed to call your mortgage tomorrow (i.e. you had to pay it off). Most of the general public (households) would be bankrupt in that scenario. So imagine, F&F collapsing and the investors "calling" all U.S. government issued securities. Or in other words, the world calling in the U.S national debt. The U.S would pretty much be bankrupt. Or the U.S. government would print off all the money needed to make the payment. But that printing of money would drastically devalue the dollar to the point of you needing to have a wheelbarrow full of money to go buy a loaf of bread.
The government isn't trying to bail out banks or Freddie and Fannie or let the borrower keep their home, they're trying to protect themselves (us). It's really not about the Jones and Smiths. The U.S. government will inject money into F&F, so they can keep making payments to the investors. F&F will keep hounding the Jones and Smiths to make their mortgage payments. The governments money will be to fill the gap. Obviously the smaller the gap, the less money the government has to put in. Telling the Jones they don't have to make their payment, would only make the gap bigger, so the government has no motiviation to do that. Sure they have motiviation to help in some manner, but that means doing the least possible to "help" the Jones to continue making their payments.
And screwing the investors isn't going to work, because of the bigger picture. Imagine if you have a mortgage, car loan and credit card debt up to your eyeballs. And not only that you're continously taking out payday loans. Now is going in and telling your boss "screw you", when you don't have another job lined up, a very good idea?
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RE: Freddie and Fannie - 9/10/2008 11:41:36 AM
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NoShow
Posts: 462
Joined: 5/10/2005
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quote:
ORIGINAL: RichLP
You gotta love it. Many small investors picked the relatively safe preferred stock of both FNMA and FHLMC, and now what? They're worth a whopping five to ten percent of their face value. So, while the government taps $200bln of taxpayer money to bail out these two agencies, the Wall Street folks swimming in cash who've been making money all this time get to continue doing what they've been doing (make more and more) while the average Joe gets his wallet squeezed yet again. Couldn't the Treasury buy up the outstanding preferred shares and give the proceeds to the GSEs? Or exchange those severely devalued preferred shares for cash so the little guy would at least break even?
We've just seen two national lenders get nationalized, folks. This is socialistic whether we like to admit it or not.
They were never relatively safe, because the backing was on the securities F&F were issuing, not the preferred stock.
The government buying up the outstanding preferred stock would put money into the "little guy's" pocket, from the government's wallet. They wouldn't have proceeds to give to the GSEs (the GSE's got the proceeds, from the little guy, when the PS were issued). Making the shareholder whole is of no concern, when they have to worry about their (the governments) creditworthiness. What the government should have done was long ago, removed the implied backing. But that wasn't done, even when they went from being GSEs to private.
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RE: Freddie and Fannie - 9/10/2008 4:45:20 PM
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relady
Posts: 1289
Joined: 4/11/2005
From: Greater St. Louis Metro
Status: online
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quote:
It's even bigger picture than that. F&F after making those loans to the Jones and Smiths to buy houses, than bundled up the loans into securities and sold them to investors. Since F&F are (were) GSEs, the securities were implied to be backed by the U.S government.
True, but there is also a lot of self-regulation that goes on behind the scenes between Freddie and Fannie and the lenders. When a loan that has ultimately been sold to F&F goes bad, then F&F send it back to the lender -- ultimately the original one -- to make the lender give the money back. In other words, they call the loan. What happened was that a LOT, and I mean A LOT of these loans that have defaulted were issued by BROKERS who don't do their own lending and when the actual lenders started calling the loans the brokers of course couldn't make them good because they don't have their own money, and so they went belly up. This happened to some banks too as the you know what started rolling back up the hill. That's just ONE aspect of this whole fiasco. It is fascinating to watch.
I am no longer a home owner at this point so it's really fun for me, LOL.
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