Freddie, Fannie bailed out by USG

Discussion in 'Politics, Religion, Social Issues' started by miloblithe, Jul 13, 2008.

  1. miloblithe macrumors 68020

    miloblithe

    Joined:
    Nov 14, 2003
    Location:
    Washington, DC
    #1
    http://www.marketwatch.com/news/sto...975-4F01-AF6F-F1D7591E4526&dist=SecMostMailed


    Wow.

    Remember Bush repeatedly touting expanded home ownership as a sure sign of his excellent economic stewardship?

    FYI, Fannie Mae and Freddie Mac either hold or back $5.3 trillion of mortgage debt. That's about half the outstanding mortgages in the United States.

    http://ap.google.com/article/ALeqM5gPfdSGL82ufTASVrfgCbKslcCYPgD91T86DO0
     
  2. SMM macrumors 65816

    SMM

    Joined:
    Sep 22, 2006
    Location:
    Tiger Mountain - WA State
    #2
    So typical of republicans to do something like this. They pour money into the pockets of those who helped create this mess, but vote against providing aid to the citizens who are losing their homes. Someone needs to hang for this, and I do not mean the small fish. Phil Graham is the cretin who was behind this sub-prime mortgage rip-off. That would be a good place to start.
     
  3. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #3
    Oh please. If we can't even hold the president accountable for his actions, what makes you think we can hold anyone else accountable for theirs?
     
  4. SMM macrumors 65816

    SMM

    Joined:
    Sep 22, 2006
    Location:
    Tiger Mountain - WA State
    #4
    Unfortunately, your skepticism is well-founded, Lee. Everything is really waiting to see what the make-up of the next Congress is, and whether we get a Democratic regime change. That is what is critical. For me, the key is what the new DoJ will be. If Obama appoints someone like Wexler, Edwards, Waxman or Conyers for AG , there will be many people brought to justice. That is my hope. As long as I can fine hope, it keeps me from slipping into despair.
     
  5. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #5
    but it also is another catch. you don't bail out the companies that help make the mess things will get even worse.

    On the flip side do to much to help the idoits who got themselves in trouble with there home you make the problem worse.

    And yes I am calling the people who losing their homes idiots. Most of them where dumb enough to get adjustable rate mortgages and buy more home than they could afford.

    To many people are in over there heads in debt and housing debt is now just added to the list of people going to far.
     
  6. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #6
    I say no bail outs for anyone. People don't learn unless they're allowed to fail. This short-term fix does nothing in the long run. We'll just keep repeating it.
     
  7. Blue Velvet Moderator emeritus

    Joined:
    Jul 4, 2004
    #7
    Crippled by national debt, the dollar rapidly losing its sheen as reserve currency... the price of energy soaring through the roof, manufacturing and services outsourced to all parts of the world, mired in a costly and pointless war with more drumbeats in the Middle East, billions of dollars pouring upwards to the wealthy and upper-middle classes who are becoming increasingly detached from the concerns of others as evidenced by Phil Gramm's blind and insensitive comments last week.

    I'm not sure how much worse things have to get before key parts of the electorate wake up. Banana republic status beckons, and not just for the US. We may be on the verge of a political earthquake and realignment over the coming years as governments and institutions get overturned. Hold onto your hats.
     
  8. Peterkro macrumors 68020

    Peterkro

    Joined:
    Aug 17, 2004
    Location:
    Communard de Londres
    #8
    We can but hope.I wouldn't underestimate how low those in power in the "democracies" will stoop to hold on to it however.
     
  9. nbs2 macrumors 68030

    nbs2

    Joined:
    Mar 31, 2004
    Location:
    A geographical oddity
    #9
    The problem isn't just the folks losing their homes. The trouble in the housing sector has increased the costs of obtaining a mortgage. It is driving out new buyers in many regions, both urban and not. What this bailout whould do, hopefully, is lead to lower costs for lending while maintaining the increased vigilance that lenders are exercising in making loans.

    Eventually, I would like to buy a house. However, not being able to afford a townhouse, with 15-18% down and a six figure combined income, makes me ask - who is going to buy the homes?
     
  10. BoyBach macrumors 68040

    BoyBach

    Joined:
    Feb 24, 2006
    Location:
    UK
    #10

    Viva la revolución!
     
  11. Thomas Veil macrumors 68020

    Thomas Veil

    Joined:
    Feb 14, 2004
    Location:
    OBJECTIVE reality
    #11
    You and I share similar hopes.

    Ideally I'd love it if the new president would be something of a New Dealer, and I do realize that Obama isn't going to be that. But it'd be nice to have an AG that would nudge him a little more in that direction, to advise him that regulation isn't a bad idea nor is it antithetical to what the people want. Out of the four Democrats you mentioned, I'll take whichever one fits that bill the best.
     
  12. maestro55 macrumors 68030

    maestro55

    Joined:
    Nov 13, 2005
    Location:
    Goat Farm in Meridian, TX
    #12
    ...and the national debt is now at $9,506,484,390,080.44 and counting....
     
  13. CorvusCamenarum macrumors 65816

    CorvusCamenarum

    Joined:
    Dec 16, 2004
    Location:
    Birmingham, AL
    #13
    You do realize Fannie Mae was born out of the New Deal...

    I can't find the link at the moment, but I do find it interesting the Bush mandated nearly doubling the quota of mortgages that had to go to the "underserved" (read: people with lower incomes and spotty credit histories that never deserved to be granted a mortgage in the first place), to around 2 in 5. Now that everything is falling to shambles, he wants to throw taxpayer money in the wrong direction.
     
  14. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #14
    No one for a while. And what do you think that will do to the price of housing? It will adjust and get lower. Then housing may be affordable again. That's been the problem all along. Housing shot up like mad after the web bubble burst and people were scared. Let's not forget that there was a lot of fear involved here. People were afraid if they didn't buy right away, they'd never be able to afford a house in the future because the market went through the roof. We'll never get back to decent prices if this bailout occurs.

    And yes, I know it's gonna hurt short term. Why don't people think long term anymore?
     
  15. iShater macrumors 604

    iShater

    Joined:
    Aug 13, 2002
    Location:
    Chicagoland
    #15
    You are making a major assumption here that people used to think long term in the first place. We haven't had that in decades.

    People are more thinking about credit limits vs. how much they have in savings. And a lot of people got in way over their head in the housing mess. I couldn't believe some of the stories I heard on NPR about some of the cases. People making a 1/4th of my income were getting houses and payments twice as much as mine is. :eek:
     
  16. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #16
    You would think but the problem is with housing prices dropping so fast it leaves a lot of people upside down on the house. There loan is more than the house is worth. Because of the sudden drop in housing prices in the past year it left a lot of people upside down. This in turn caused them to walk away from the home and the loan only causing the housing prices to drop even farther and the cycle repeats.

    The bail outs are supposed to be used to soften the landing.

    I thinking long term and the goal long term is tie minimize the damage. Short term with no bail out it will take a hell of a lot longer to recover. We would be talking years to decades of recovery.

    With each major player going down it causes the ones that are left to hurt even more. At some point BANKS are going to start failing and guess where all out money is in.
     
  17. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #17
    I understand what you're saying. I'm saying that maybe it's time we went through this- maybe then people will learn something. They won't otherwise. They'll just dust themselves off, start all over again and make the same mistakes. This applies to all parties involved.
     
  18. Thomas Veil macrumors 68020

    Thomas Veil

    Joined:
    Feb 14, 2004
    Location:
    OBJECTIVE reality
    #18
    Sure, but I doubt FDR intended for Fannie Mae to buy ill-advised mortages made by banks who should know better in a Republican-created almost-anything-goes environment.

    Now now, do I detect a note of cynicism regarding Bush's motivations? I'm sure it was just that "compassionate conservatism" we've heard so much about.
     
  19. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #19
    The laws by which Fannie and Freddie took over all this bad paper were in place long before Dubya even got to be Gubernator of Texas.

    The laws about making loans to sub-prime borrowers came about during Carter.

    Blame all the talking heads on such as CNBC, hollering "Low interest rates mean you should buy a house!" as much as anybody. Blame Greenspan for low mortgage-interest rates.

    And blame the buyers in general for thinking that a deal that sounds too good to be true is indeed true. ARMs and I/O loans were doomed from the git-go: And Congress in a wondrous bi-partisan manner yakked it up about how wonderful it all was.

    Folks jumped on the bandwagon, not realizing that at some point in time ya gotta pay the musicians.

    So, now Bernanke and Paulson are doing what they can to save what can be saved from this mess. I have no idea what could be done differently, other than say, "To hell with it," and let Fannie and Freddie collapse. That would pull some $12 trillion out of the credit markets, which would pretty much guarantee a contraction worse than the 1930s.

    B&P have already been buying bad CDLs with your tax dollars. This particular "save" of F&F puts another $5.6 trillion with a T into federal indebedness.

    That effort at avoiding a monstrous contraction comes at the price of inflation of the currency, which invokes Gresham's law--and we thus see the rise in the price of everything, bought with dollars unending worth less and less. The only way to save the dollar is to raise the Fed rate, which then would guarantee the failure of even more of the financial entities.

    And while I'm laying this little trip on you, add this: It seems the big credit card companies have been bundling their own paper and selling it. Some as high-rated paper; some as "sub-prime" with higher interest rates. All that is potentially set to unravel, so I read in one of the Agora commentaries.

    All this stuff above? Hey, that's the good news. I ain't gonna say any bad news; scares me too much.

    'Rat
     
  20. GoCubsGo macrumors Nehalem

    GoCubsGo

    Joined:
    Feb 19, 2005
    #20
    I believe it is what we like to refer to as homeowners using the equity in their homes as an ATM. Equity in, equity out.

    Actually, to stay out of hot water lenders are modifying mortgages taking the borrowers from their now adjusted 2 year fixed and putting them into another 2 year fixed. If they can somehow fit them into a fixed rate they do, but most of the modifications are 2,3,4, or 5 year fixed.
     
  21. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #21
    yeah but you see I would like to be able to buy my first house in the 4-5 years or so. I do not want to be screwed out of owning a home for 20 years or so.

    Sorry I do not want to raise kids in an apartment.

    I think as bad as it is we need something to soften the landing because we can not afford to let the majors players fail. Bank of American for example took some major hits image if you will a bank like that failed. The goverment would be force to pay up to a 100k to every single one of the account holders to cover there accounts. It is a hell of a lot cheaper to bail them out than it is to cover a failed bank.

    It is a mess right now but like I said before I want to buy my first house in the next few years and I do not want to be screwed by the practices that got us in this mess.

    As for some one pointing out using home Equity as an ATM is a problem some people did but the larger problem is homes being worth more than the loan. People are walking away from there home because it makes financial since to say screw it. Not like they are out in any money and to top it off so many people are doing it they will not black list them all.
     
  22. Ugg macrumors 68000

    Ugg

    Joined:
    Apr 7, 2003
    Location:
    Penryn
    #22
    He's definitely one of those who should be buried in cow do do right now. I doubt history will treat him well.

    However, you're right, there's no single person, party or decade to blame for the mess. In the end, it's all about human greed.
     
  23. pseudobrit macrumors 68040

    pseudobrit

    Joined:
    Jul 23, 2002
    Location:
    Jobs' Spare Liver Jar
    #23
    Go back to the repeal of the Glass-Steagal Act in 1999 and the Commodities Futures Modernization Act of 2000 to get a taste of why the middle class is being dismantled. Institutional investors have fueled one bubble to the next, from dotcom to housing to commodities.

    SEC has been undoing protective regulations, OTS has been asleep at the switch and banks have been naughty. The derivatives market in the past ten years has gone crazy and there are instruments that cannot be accurately valued. Look at the level III assets on the books at some of even the most prestigious names in finance – even after their recent writedowns – and you'll understand instantly how a bank can go from assuring its investors and depositors of its liquidity on Monday and being swallowed up or bailed out the following weekend.

    FDIC is going to piss away 10-20% of its cash reserves bailing out IndyMac, which means they'll have to raise insurance rates. From this point on, suspect any bank offering excellent rates on CDs to be in full meltdown.


    The blame for all this goes back quite a way, but the recklessness has accelerated in the past 10 years. Banks who lobbied for – and got – more privatized profits now demand socialized losses. All this for collapses that wouldn't have happened if it weren't for the deregulation and removal of oversight upon which they insisted. The Fed will have to save the banks, because not doing so will destroy any chance of recovery until well into the next decade. They'll print money as fast as they can until wages start to rise and only then start to reign in the inflation.

    This is going to hurt. There are at least between a trillion to four trillion dollars in phantom assets that will disappear from the economy in the next year or three. It will take brave and visionary leadership and our next president will be criticized and ridiculed for making the necessary moves as much as he would for idly watching our capitalist system crumble. Bush seems content to do the latter, which is just as well because I'm sure the only card left he'd think to play is something ridiculous like privatizing Social Security.

    Last week, after meeting with his economic team about FannieMae and FreddieMac, Bush spent less than one minute saying they talked about the situation and assured everyone they were working on it, and then – I **** you not – spent the remainder of the press conference (3 minutes or so) pushing for offshore drilling as the answer to most of America's economic troubles. Is it January yet?

    (Full disclosure: I'm shorting financials)
     
  24. sushi Moderator emeritus

    sushi

    Joined:
    Jul 19, 2002
    Location:
    キャンプスワ&#
    #24
    Hell just froze over. It surely did...

    I concur with Ugg's post completely.

    Man it is getting cold here! :p

    Just to add, that my friends in the financial arena have never had much nice to say about Greenspan.
     
  25. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #25
    Cry me a river. I'm 41 and still don't own property. Why? Because it's too expensive! I'm not poor, it's just that housing is ridiculously priced! I've got immaculate credit too. You can also kiss home equity goodbye if we keep letting this happen over and over.

    And Rat- quit trying to make this a partisan issue, it isn't. Everyone is to blame for this, and everyone is going to suffer for it.
     

Share This Page