Wind Down Freddie and Fannie? Whoa! Not So Fast - GOP

[uscitizen]

What does it take for Americans to understand that congress has mismanaged Fannie to a criminal degree? The Fannie board of directors ware appointed not for their experience in the mortage industry but for their political affiliation. Look them up. The Fannie CEO's lavish yearly bonuses were tied to Fannie making a profit so he allegedly cooked the books to show a fake profit while Fannie was dying. Frank Raines walked away with 90 Million in bonus money for three years work. The democrat in charge of the bankinbg committee said that he allowed Fannie to collapse because of "ideological blinders". The first thing republicans need to do when they gain the congressional majority on the 6th of January is to investigate the corruption thet led to Fannie Mae's collapse.

LMAO
Like the Republicans are going to seriously investigate the real cause of Fannie and Freddies problems.

That is nieve to the max.

 

[8537]

Banks and mortgage lenders like Countrywide weren't regulated?

I'm sure that's news to Angelo Mozilo, who doled out all sorts of sweetheart mortgages to turds like Chris Dodd.

Part of Countrywide was under FDIC regulation as a depository institution.

Part of it was not.

I wasn't aware Countrywide ever was a depository bank. Learn somethin' new every day.

They weren't a regular depository institution, but they had branches that controlled deposits to the extent that they were held to CRA regulations - but of course, those weren't the branches fucking everything up because CRA loans had to meet conforming standards.

 

[loosecannon]

Earlier this year, leading House Republicans proposed privatizing mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) or placing them in receivership starting in two years.

Now, as Republicans prepare to assume control of the House next week, they are offering a more nuanced message: Any retreat of government support in the housing market should be gradual.

"We recognize that some things can be done overnight and other things can't be," said Rep. Scott Garrett, (R., N.J.), incoming chairman of the House Financial Services subcommittee that oversees Fannie and Freddie. "You have to recognize what the impact would be on the fragile housing market as it stands right now."

Cautious statements from key Republicans on the House Financial Services Committee are a shift from the debate over the Dodd-Frank financial overhaul during the spring and summer, when Republicans blasted the Obama administration for leaving Fannie and Freddie out of that legislation.

At the time, Republicans were backing a bill by Rep. Jeb Hensarling, (R., Texas), to cut the government's ties to the mortgage giants, or put them into receivership starting in two years. If they were deemed financially viable under Hensarling's approach, they would be fully private within five years. ...

A hasty end to the government's support of Fannie and Freddie would mean fewer Americans could get home loans, causing home sales and prices to drop even further and making the taxpayer bill for rescuing the mortgage giants even higher, said Rep. Randy Neugebauer (R., Texas), a former banker and housing developer who serves on the House Financial Services Committee.

"You'd cause Freddie and Fannie to have even larger losses than they'd already have," Neugebauer said. ...

"We don't believe that the private market, right now, is willing or able to provide the liquidity that's necessary to get us out of this," said Joe Stanton, chief lobbyist for the National Association of Home Builders.

"To erode that support right now would be a disaster," said Vince Malta, a real-estate agent in San Francisco and a vice president of the National Association of Realtors.

UPDATE: Top House Republicans More Cautious About Fannie, Freddie - WSJ.com

Bloody RINOs, eh?!

This is why politicos deserve no role in making financial decisions.

Somehow the framers got that aspect of republic totally wrong!

I am pretty much in favor of phasing them out within a few short years since the incentives in banking and lending have changed completely since securitization took over 20 years ago.

The government can no longer guarantee what banks and mortgage companies issue but don't hold stakes in.

Of course I would phase out the GOP quicker!

 

[8537]

And it was regulated, contrary to popular myth.

Of course, regulations don't mean jack when you're buying off those who would be regulating you.

The nondepository side of Countrywide was not regulated by FM, the FDIC or any other agency responsible for protecting the interests of clients.

They were, of course, regulated by the SEC as an investment institution. But the SEC has no authority to impact Countrywide lending standards.

They didn't need to. The Fed was demanding Countrywide make loans to people who could not pay and comply with provisions of the CRA.

Countrywide's most abhorrent Subprime departments weren't under CRA regulations - and of course, the CRA required depository institutions to sell only conforming loans.

 

[shintao]

Earlier this year, leading House Republicans proposed privatizing mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) or placing them in receivership starting in two years.

Now, as Republicans prepare to assume control of the House next week, they are offering a more nuanced message: Any retreat of government support in the housing market should be gradual.

"We recognize that some things can be done overnight and other things can't be," said Rep. Scott Garrett, (R., N.J.), incoming chairman of the House Financial Services subcommittee that oversees Fannie and Freddie. "You have to recognize what the impact would be on the fragile housing market as it stands right now."

Cautious statements from key Republicans on the House Financial Services Committee are a shift from the debate over the Dodd-Frank financial overhaul during the spring and summer, when Republicans blasted the Obama administration for leaving Fannie and Freddie out of that legislation.

At the time, Republicans were backing a bill by Rep. Jeb Hensarling, (R., Texas), to cut the government's ties to the mortgage giants, or put them into receivership starting in two years. If they were deemed financially viable under Hensarling's approach, they would be fully private within five years. ...

A hasty end to the government's support of Fannie and Freddie would mean fewer Americans could get home loans, causing home sales and prices to drop even further and making the taxpayer bill for rescuing the mortgage giants even higher, said Rep. Randy Neugebauer (R., Texas), a former banker and housing developer who serves on the House Financial Services Committee.

"You'd cause Freddie and Fannie to have even larger losses than they'd already have," Neugebauer said. ...

"We don't believe that the private market, right now, is willing or able to provide the liquidity that's necessary to get us out of this," said Joe Stanton, chief lobbyist for the National Association of Home Builders.

"To erode that support right now would be a disaster," said Vince Malta, a real-estate agent in San Francisco and a vice president of the National Association of Realtors.

UPDATE: Top House Republicans More Cautious About Fannie, Freddie - WSJ.com

Bloody RINOs, eh?!

LMAO!!! The Retards are all Hat & no cattle!!! That was Bush's Ranch problem, wasn't it.

Fact is 98% of the homes for sale in America are short sales and foreclosures, which means billions are being lost. For instance I can buy a $675,000. home for less than $276,000. That $400,000. plus a lost 4% interest on 30 years is the bank lenders taking it in the shorts. What private corporation would buy that?? LOL!! Only if you fork over the difference in subsidies, and I am sure that is what the Retards are hoping you will do next for the rich.

 

[loosecannon]

Fannie and Freddie should never be allowed to buy another residential mortgage again on pain of death.

You knew that the GSE's now control 100% of the mortgage market, right? That's up from 40% precrash.

You knew that right?

To take Fannie and Freddie out back to be shot, as they should, would severely disrupt the already fucked up economy.

Yep killing Fannnie or Freddie would drop housing prices another 25-30%.

Kill em, we need cheaper houses?

I disagree.

If Fannie and Freddie disappeared the only people effected would be banks and folks whose business revolves around buying securitized bundles.

I can't see how housing prices would be sorely impacted. Interest rates might climb tho. Banks might start charging borrowers for the derivatives coverage they purchase to cover their risks.

 

[whitehall]

Democrats created the monster back in the 90's when they had total majority and a degenerate in the White House. They decided that every American should have the American dream of owning a home regardless of their ability to pay so they created a scheme worthy of Organized Crime. Banks would be forced to make bad loans or face civil rights litigation and the bad loans would be bundled up with good loans and sold to mortgage lenders as good loans. The scheme worked for a decade or more until congressional corruption finally caused it to collapse. Moral of the story...when government dabbles in socialism it turns into a disaster.

 

[8537]

Democrats created the monster back in the 90's when they had total majority and a degenerate in the White House. They decided that every American should have the American dream of owning a home regardless of their ability to pay so they created a scheme worthy of Organized Crime. Banks would be forced to make bad loans or face civil rights litigation and the bad loans would be bundled up with good loans and sold to mortgage lenders as good loans. The scheme worked for a decade or more until congressional corruption finally caused it to collapse. Moral of the story...when government dabbles in socialism it turns into a disaster.

no bank was forced to make a bad loan. As a matter of fact, under CRA regulations banks were only allowed to sell loans that conformed to FM standards - which were loose, of course, but there's a reason the GSE's lost so much of the subprime market during the 2000's: The private sector standards were far more loose.

 

[shintao]

What does it take for Americans to understand that congress has mismanaged Fannie to a criminal degree? The Fannie board of directors ware appointed not for their experience in the mortage industry but for their political affiliation. Look them up. The Fannie CEO's lavish yearly bonuses were tied to Fannie making a profit so he allegedly cooked the books to show a fake profit while Fannie was dying. Frank Raines walked away with 90 Million in bonus money for three years work. The democrat in charge of the bankinbg committee said that he allowed Fannie to collapse because of "ideological blinders". The first thing republicans need to do when they gain the congressional majority on the 6th of January is to investigate the corruption thet led to Fannie Mae's collapse.

So you are saying we already lost millions, so lets spend millions more losing more millions. I don't see a profit angle in that.

 

[Oddball]

Democrats created the monster back in the 90's when they had total majority and a degenerate in the White House. They decided that every American should have the American dream of owning a home regardless of their ability to pay so they created a scheme worthy of Organized Crime. Banks would be forced to make bad loans or face civil rights litigation and the bad loans would be bundled up with good loans and sold to mortgage lenders as good loans. The scheme worked for a decade or more until congressional corruption finally caused it to collapse. Moral of the story...when government dabbles in socialism it turns into a disaster.

no bank was forced to make a bad loan. As a matter of fact, under CRA regulations banks were only allowed to sell loans that conformed to FM standards - which were loose, of course, but there's a reason the GSE's lost so much of the subprime market during the 2000's: The private sector standards were far more loose.

Bullshit...They were politically browbeaten about things like "red lining" for years and finally caved to political pressure.

Just like none of the auto industry CEOs were forced to give up their company conventions in Vegas or fly their company jets to those congressional mau-mau-ings either, but they did so just to avoid the grief they were getting from a bunch of pious know-nothings.

 

[shintao]

They decided that every American should have the American dream of owning a home regardless of their ability to pay so they created a scheme worthy of Organized Crime.

Hmm, OK, lets get back into reality. Here is a Bush tweerp of yesteryear.


New Prosperity Initiative
April 11, 2000
“I propose a New Prosperity Initiative…A plan to
help remove obstacles on the road to the middle class…
Instead of helping people cope with their need, we will
help them to move beyond it. With the same energy and
activism that others have brought to expanding government,
we must expand opportunity.”
Governor George W. Bush

 

[william the wie]

Kill the GSEs and let housing hit bottom. This killing the middleclass slowly with inflation and bailouts is the Irish road to regaining prosperity when we need to take the Icelandic road that does in fact work.

 

[Toro]

Fannie and Freddie should never be allowed to buy another residential mortgage again on pain of death.

You knew that the GSE's now control 100% of the mortgage market, right? That's up from 40% precrash.

You knew that right?

To take Fannie and Freddie out back to be shot, as they should, would severely disrupt the already fucked up economy.

Actually, its 90%.

Ever since the housing market went bust, the federal government has been the main source of support for new mortgage lending. Fannie, Freddie, the Federal Housing Administration and the Department of Veterans Affairs backed nearly 90% of new home loans in the first three quarters of 2010, according to trade publication Inside Mortgage Finance.

Positive rep coming your way for point out that huge mistake on my part. I think it was 100% over the summer.

Thank God Obamanomics is working!

Thanks!

I'm always happy to do my part to lift The Fog of Ignorance and Misunderstanding!

 

[Cuyo]

Democrats created the monster back in the 90's when they had total majority and a degenerate in the White House. They decided that every American should have the American dream of owning a home regardless of their ability to pay so they created a scheme worthy of Organized Crime. Banks would be forced to make bad loans or face civil rights litigation and the bad loans would be bundled up with good loans and sold to mortgage lenders as good loans. The scheme worked for a decade or more until congressional corruption finally caused it to collapse. Moral of the story...when government dabbles in socialism it turns into a disaster.

no bank was forced to make a bad loan. As a matter of fact, under CRA regulations banks were only allowed to sell loans that conformed to FM standards - which were loose, of course, but there's a reason the GSE's lost so much of the subprime market during the 2000's: The private sector standards were far more loose.

Bullshit...They were politically browbeaten about things like "red lining" for years and finally caved to political pressure.

Just like none of the auto industry CEOs were forced to give up their company conventions in Vegas or fly their company jets to those congressional mau-mau-ings either, but they did so just to avoid the grief they were getting from a bunch of pious know-nothings.

No, dingus. The CRA also applies to depository institutions only.

Twist, crunch, knurl, cram, and reshape it until it's a BIIIIIIIIIIIIIIIIG GOVERNMENT CONSPIRACY, dude.

 

[Revere]

Banks were forced to set aside traditional underwriting requirements to make loans, i.e., make loans to borrowers who they knew could not pay.

http://www.bos.frb.org/commdev/commaff/closingt.pdf

So what were some of the "outdated" criteria?

Credit History: Lack of credit history should not be seen as a negative factor.... In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower–income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts....

Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower-income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. . . .

Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.

Accepting these new criteria was hardly voluntary. The Fed warned the banks:

"Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor’s net worth in class actions."

Sounds like threats to me.

 

[8537]

Democrats created the monster back in the 90's when they had total majority and a degenerate in the White House. They decided that every American should have the American dream of owning a home regardless of their ability to pay so they created a scheme worthy of Organized Crime. Banks would be forced to make bad loans or face civil rights litigation and the bad loans would be bundled up with good loans and sold to mortgage lenders as good loans. The scheme worked for a decade or more until congressional corruption finally caused it to collapse. Moral of the story...when government dabbles in socialism it turns into a disaster.

no bank was forced to make a bad loan. As a matter of fact, under CRA regulations banks were only allowed to sell loans that conformed to FM standards - which were loose, of course, but there's a reason the GSE's lost so much of the subprime market during the 2000's: The private sector standards were far more loose.

Bullshit...They were politically browbeaten about things like "red lining" for years and finally caved to political pressure.

ah yes, the old redlining argument. Yes, Tom - requiring banks that pull federal protection subsidies to loan to people with good credit who meet all other requirements who also happen to be black or live in "that" part of town is somehow "browbeating.

We get it Tom.

 

[8537]

Banks were forced to set aside traditional underwriting requirements to make loans, i.e., make loans to borrowers who they knew could not pay.

http://www.bos.frb.org/commdev/commaff/closingt.pdf

So what were some of the "outdated" criteria?

Credit History: Lack of credit history should not be seen as a negative factor.... In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower–income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts....

Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower-income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. . . .

Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.

Accepting these new criteria was hardly voluntary. The Fed warned the banks:

"Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor’s net worth in class actions."

Sounds like threats to me.

Lol....yet somehow, the institutions under these regs constituted less than 20% of subprimes. How could that be?

hmm...

 

[CrusaderFrank]

Fannie and Freddie actually do a reasonably good job on multifamily, they should be bared from ever buying a single family mortgage.

 

[loosecannon]

Kill the GSEs and let housing hit bottom. This killing the middleclass slowly with inflation and bailouts is the Irish road to regaining prosperity when we need to take the Icelandic road that does in fact work.

I agree this is the correct course. If you really want a recovery then you gotta accept reaching bottom first.

 

[Truthmatters]

the proof you right leaning people have NO idea how to solve this mess is you have no idea what caused it.