40 Years of Class Warfare in One Chart.

[georgephillip]

of course thats absurd. Many of the major companies went bankrupt.

"What Was the Real Cost of the Great Recession?
by Andrew Sheng on August 19, 2013..."

"The above study supplemented an important piece of data released through the latest Fed Flow of Funds tables, which revealed the changes in net worth by sector.

"The data showed that the household sector lost US$12.7 trillion in 2008, mostly through the decline in share prices and real estate value.

"The business sector lost US$1.6 trillion in 2008 and US$6.1 trillion in 2009.

"The government sector went into deficit by US$0.7 trillion in 2008, and has lost roughly US$1.3 to US$1.5 trillion yearly since then.

"How much did the financial business sector lose?

"Its net worth rose US$1.6 trillion in 2008, lost US$0.7 trillion in 2009 and US$0.5 trillion in 2010, and was in the black again by 2011.

"In sum, almost everyone lost during the financial crisis, with households losing most, but Wall Street lost least. The reason is that its losses were covered by capital injection by the corporate and household sector, and there was huge government support. No wonder there was an Occupy Wall Street movement."

No wonder Goldman S. donated over $900,000 to Obama's 2008 campaign.

What Was the Real Cost of the Great Recession The Institute for New Economic Thinking

 

[Dad2three]

-"GSE mortgages perform exponentially better than the rest of the market,

Of course they would since they had govt backing and thus lower rates to attract all the best customers while the private sector was stuck the leftovers.

Stuck with? lol..... Try to be honest one time Bubba



The historical "originate and hold" mortgage model was replaced with the "originate and distribute" model.


"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."


https://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50% OF ALL MORTGAGES IN 2006 DIDN'T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.

FOECED TO BY WHOM BUBBA? LL





Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them.

FACTS on Dubya s great recession US Message Board - Political Discussion Forum

 

[Dad2three]

of course thats absurd. Many of the major companies went bankrupt.

"What Was the Real Cost of the Great Recession?
by Andrew Sheng on August 19, 2013..."

"The above study supplemented an important piece of data released through the latest Fed Flow of Funds tables, which revealed the changes in net worth by sector.

"The data showed that the household sector lost US$12.7 trillion in 2008, mostly through the decline in share prices and real estate value.

"The business sector lost US$1.6 trillion in 2008 and US$6.1 trillion in 2009.

"The government sector went into deficit by US$0.7 trillion in 2008, and has lost roughly US$1.3 to US$1.5 trillion yearly since then.

"How much did the financial business sector lose?

"Its net worth rose US$1.6 trillion in 2008, lost US$0.7 trillion in 2009 and US$0.5 trillion in 2010, and was in the black again by 2011.

"In sum, almost everyone lost during the financial crisis, with households losing most, but Wall Street lost least. The reason is that its losses were covered by capital injection by the corporate and household sector, and there was huge government support. No wonder there was an Occupy Wall Street movement."

No wonder Goldman S. donated over $900,000 to Obama's 2008 campaign.

What Was the Real Cost of the Great Recession The Institute for New Economic Thinking

Bush: ‘I’ve Abandoned Free Market Principles To Save The Free Market System’


BUSH; Well, I have obviously made a decision to make sure the economy doesn’t collapse. I’ve abandoned free market principles to save the free market system. I think when people review what’s taken place in the last six months, uh, and put it all in one, in one, (sigh), you know, in one package, they’re realize how significantly we have moved.

Bush’s logic of abandoning the free market to “save” the free market is deeply flawed. Much of the crisis was caused by the “belief that markets are self-adjusting and that the role of government should be minimal,”

Bush I ve Abandoned Free Market Principles To Save The Free Market System ThinkProgress

 

[ralfy]

Much of that wealth consists of numbers in hard drives, is essentially debt, controlled by a very small number of people:

Revealed the capitalist network that runs the world - physics-math - 19 October 2011 - New Scientist

and ultimately dependent on increasing amounts of material resources and energy to maintain its importance.

In addition, such living standards can only be maintained if businesses are able to sell to a growing global consumer market:

The rise of the global middle class - BBC News

which is not likely given a world with physical limitations:

Limits to Growth was right. New research shows we re nearing collapse Cathy Alexander and Graham Turner Comment is free The Guardian

Nah. I would completely reject all of that. Wealth is not debt. Wealth is stuff. I personally do not owe anyone anywhere, anything. Zero debt. I don't have a credit card, or a car note, or anything.

Yet, I have a standard of living that would be an envy to the rest of the world.

Second, there are millions of businesses that buy and sell exclusively in the US.

Now don't get me wrong, there is no question at all, that global commerce is a benefit to everyone, and obviously harming global trade would harm living standards. I agree. But to say that we could not achieve a decent standard of living out side of global trade, I don't see any real evidence of that.

As "stuff," it's actually paper, metal, or numbers in hard drives. As "wealth," it's actually debt.

Most people use money, with significant numbers using credit cards. But the largest transactions in businesses aren't personal ones but between financiers and businesses, and involving more than a quadrillion dollars in notional value.

Bonds have the corporation as collateral. That's 'stuff'. All of those mortgage backed securities, are built on property, which is 'stuff'.

The only bonds that have zero backing in stuff, is government bonds. If the government refuses to pay......... you just don't get paid.

Everything else though, is built on stuff.

Credit levels for unregulated derivatives alone are twenty times higher than the size of the global GDP itself:

Top Derivatives Expert Estimates Size of the Global Derivatives Market at 1 200 Trillion Dollars ... 20 Times Larger than the Global Economy Washington s Blog

Also, liquidity pyramids show that the same is far greater than the value of real estate, bonds, stocks, bills, and reserve and currency notes combined.

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, it's the opposite.

 

[ralfy]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

 

[Andylusion]

Fraudulent loans, were loans made with fabricated documentation

How is fraud determined without reviewing a sample of loan files BEFORE giving AAA ratings to non-prime mortgage financial derivatives? Do you blame the FBI for revealing the epidemic of mortgage fraud in 2004 or the corporate rating agencies who assigned AAA ratings WITHOUT reviewing loan file tapes on the underlying securities?

First, rating agencies have absolutely nothing to do with fraud. Nothing. Moody's is not an FBI front. They don't have trained investigators. They don't interview employees. They don't travel around to Countrywide offices checking documentation. Rating agencies do not inspect individual loans, or the paperwork related to them.

If you have ever purchased a used car, you know that one of the generally smart things to do, is to drive the car into a repair bay, and ask a mechanic to just put the car in the air, and look over the car to see if anything jumps out at him.

However, he's not going to tear the dash out, to check to see of the odometer has been rolled back.

The rating agency is not tasked with detecting fraud. That is up to the originator, and the security sellers. The rating agency goes by the information they are given from the security seller.

Do you blame the FBI for revealing...

Don't say idiotic things. It makes you look childish and pathetic. We're having a decent conversation, let's keep it that way.

Of course no one blames anyone for detecting the fraud. That's what they are supposed to do.

Although we could spend hours on hours speculating about why rating agencies, gave what ratings to what securities.... I have no interest in doing that. It would just be my speculative opinion vs your speculative opinion.

Instead we can look at the what facts we do know.

First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

First Union Capital Markets Corp.
and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
securities backed by Community Reinvestment Act (CRA) loans - marking the
industry's first public securitization of CRA loans.

The $384.6 million in senior certificates are guaranteed by Freddie Mac
and have an implied "AAA" rating. First Union Capital Markets Corp. is the
investment banking subsidiary of First Union Corporation​

So what can we gather from this?

One, I can't find a single instance of sub-prime mortgages being securitized at any level, up to this point in 1998. So for 50 years or more, there had never been a sub-prime mortgage given any rating.

Two, not only where they securitized and rated, but they were given a AAA rating. Which of course begs the question, why were sub-prime mortgages, considered too risky to even give a rating for over 50 years, suddenly given a AAA rating?

Of course the answer is right there. "guaranteed by Freddie Mac".

Now we can speculate over what they should have done, and such, but these are the facts of what actually happened.

 

[georgephillip]

irst, rating agencies have absolutely nothing to do with fraud. Nothing. Moody's is not an FBI front. They don't have trained investigators. They don't interview employees. They don't travel around to Countrywide offices checking documentation. Rating agencies do not inspect individual loans, or the paperwork related to them.

Wouldn't it be illogical, if not idiotic, to expect a professional credit rater to evaluate the risk of complex financial derivatives dependent on the credit quality of the mortgages underlying the derivative to make an accurate evaluation without reviewing a sample of the loan files?
"Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files. Paper loan files are bulky, so they are photographed and the images are stored on computer tapes. Unfortunately, 'most investors' (the large commercial and investment banks that purchased nonprime loans and pooled them to create financial derivatives) did not review the loan files before purchasing nonprime loans and did not even require the lender to provide loan tapes.

"The rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives."

The Two Documents Everyone Should Read to Better Understand the Crisis William K. Black

 

[georgephillip]

If you have ever purchased a used car, you know that one of the generally smart things to do, is to drive the car into a repair bay, and ask a mechanic to just put the car in the air, and look over the car to see if anything jumps out at him.

However, he's not going to tear the dash out, to check to see of the odometer has been rolled back.

If you are truly concerned with having a decent, adult conversation, why are you wasting bandwidth with childish non-sequitors like the above?

 

[georgephillip]

Instead we can look at the what facts we do know.

First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

First Union Capital Markets Corp.
and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
securities backed by Community Reinvestment Act (CRA) loans - marking the
industry's first public securitization of CRA loans.

The $384.6 million in senior certificates are guaranteed by Freddie Mac
and have an implied "AAA" rating. First Union Capital Markets Corp. is the
investment banking subsidiary of First Union Corporation
So what can we gather from this?

At least a couple of things.
Firstly, I don't find any mention of which private rating agencies bestowed the "AAA" rating on these CRA loans, Moodys, S&P?

Secondly, we can gather how much First Union's fee income grew between 1995-'97:
"First Union has grown its capital markets business substantially over the
last three years. First Union's Capital Markets Group reported 1997 fee income
through Sept. 30 of $531 million, up from $464 million for the full year of
1996 and $265 million in 1995."
Socialize the cost and privatize the profit, right?

First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

 

[Dad2three]

of course thats absurd. Many of the major companies went bankrupt.

"What Was the Real Cost of the Great Recession?
by Andrew Sheng on August 19, 2013..."

"The above study supplemented an important piece of data released through the latest Fed Flow of Funds tables, which revealed the changes in net worth by sector.

"The data showed that the household sector lost US$12.7 trillion in 2008, mostly through the decline in share prices and real estate value.

"The business sector lost US$1.6 trillion in 2008 and US$6.1 trillion in 2009.

"The government sector went into deficit by US$0.7 trillion in 2008, and has lost roughly US$1.3 to US$1.5 trillion yearly since then.

"How much did the financial business sector lose?

"Its net worth rose US$1.6 trillion in 2008, lost US$0.7 trillion in 2009 and US$0.5 trillion in 2010, and was in the black again by 2011.

"In sum, almost everyone lost during the financial crisis, with households losing most, but Wall Street lost least. The reason is that its losses were covered by capital injection by the corporate and household sector, and there was huge government support. No wonder there was an Occupy Wall Street movement."

No wonder Goldman S. donated over $900,000 to Obama's 2008 campaign.

What Was the Real Cost of the Great Recession The Institute for New Economic Thinking

Bush: ‘I’ve Abandoned Free Market Principles To Save The Free Market System’


BUSH; Well, I have obviously made a decision to make sure the economy doesn’t collapse. I’ve abandoned free market principles to save the free market system. I think when people review what’s taken place in the last six months, uh, and put it all in one, in one, (sigh), you know, in one package, they’re realize how significantly we have moved.

Bush’s logic of abandoning the free market to “save” the free market is deeply flawed. Much of the crisis was caused by the “belief that markets are self-adjusting and that the role of government should be minimal,”

Bush I ve Abandoned Free Market Principles To Save The Free Market System ThinkProgress

If you have ever purchased a used car, you know that one of the generally smart things to do, is to drive the car into a repair bay, and ask a mechanic to just put the car in the air, and look over the car to see if anything jumps out at him.

However, he's not going to tear the dash out, to check to see of the odometer has been rolled back.

If you are truly concerned with having a decent, adult conversation, why are you wasting bandwidth with childish non-sequitors like the above?

I believe the right wing Klown has me blocked

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

 

[georgephillip]

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

I suspect the short-term prospects for success in the fight you mentioned depend on whether or not it is accurate to say Fannie and Freddie were/are themselves credit rating agencies or did the GSEs depend on private for-profit institutions like S&P?

 

[orogenicman]

Basic supply and demand. In the late 60s women and minorities were being educated more and more and entering the workforce. The addition of women in many formerly male jobs created a large supply.

The only problem with that argument is that women entered many formerly male only jobs starting in the early 1940s during WWII, and yet that didn't affect the relationship between productivity and pay.

 

[SwimExpert]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

He cares not. He prefers to pretend that slapping a label on something magically makes it such in reality.

 

[Andylusion]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

Let me just clarify.... I don't want to imply you are saying something that you are not.

FDsys - Browse Code of Federal Regulations Annual Edition

This web site is the Federal Code of Regulations, for the year 2000.

If you scroll down to Title 12, Banks and Banking, you will discover that the regulations come in a 6 Volume set. If you download all 6 volumes, (as I have done), you will discovered over 4,000 pages of regulations on virtually all aspects of banking.

In addition, you will discovered several government bodies created to monitor banks, including Federal Financing Bank, Federal Housing Finance Board, Department of the Treasury which has it's own regulations, FDIC which has it's own regulations, and lastly Comptroller of the Currency which has it's own regulations.

But wait! There's more!

Moving down to Title 17, you'll find a three volume set, containing over 2,400 pages exclusively to regulation on securities.
Then moving to Title 24, you'll find another three volumes, of just under 1500 pages, and while they are not all related to mortgage securities, some are, such as Government National Mortgage Association, Office of Assistant Secretary for Housing, and Office of Housing and Office of Multifamily Housing Assistance Restructuring, each with their own various regulations that must be followed.

And of course, if you wish to claim that the roughly 8,000 pages of regulations that existed back in 2000, regulating and over-seeing every aspect of banks was just far too limited and modest.....

Lawriter - ORC - Title 11 XI FINANCIAL INSTITUTIONS

Let us add in State Level banking regulations as well. Ohio Revised Code, Title 11, contains no less than 80 Chapters regulating banks. That's just Ohio Revised Code. Many states have more regulations than Ohio.


Now.... Allow me to ask again.... Are you saying that the banks and mortgage backed securities were not regulated?

 

[Andylusion]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

He cares not. He prefers to pretend that slapping a label on something magically makes it such in reality.

I've noticed you never have anything of value to say.

 

[Andylusion]

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

I suspect the short-term prospects for success in the fight you mentioned depend on whether or not it is accurate to say Fannie and Freddie were/are themselves credit rating agencies or did the GSEs depend on private for-profit institutions like S&P?

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Read the article again. Freddie Mac securitized the sub-prime mortgages BEFORE they ever gave the securities to rating agencies to be rated.

This is completely backwards of how mortgage backed securities worked to that point. Normally, you come up with a mortgage backed security, have it rated first, and then *IF* the rating is good, then you guarantee it.

Freddie Mac guaranteed these things first.

Now let me ask you.... if you have a mortgage backed security that ALREADY is guaranteed by Freddie Mac, which is the Federal Government.... what rating do you think it has? AAA. The Government guaranteed it. You can't lose money on that.

See, once Freddie Mac guaranteed the sub-prime loans, it was no longer about the credit worthiness of the loans, but rather the credit worthiness of Freddie Mac. It's the same as co-signing on a loan for your teenage daughter, who's never worked a steady job in her life. They are not rating her ability to pay... even though she's getting the money. They are rating YOUR ability to pay.

So, why didn't they notice that F/F were not credit worthy?

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Check out John Allison's book. He details how F/F misled the rating agencies.

 

[Andylusion]

If you have ever purchased a used car, you know that one of the generally smart things to do, is to drive the car into a repair bay, and ask a mechanic to just put the car in the air, and look over the car to see if anything jumps out at him.

However, he's not going to tear the dash out, to check to see of the odometer has been rolled back.

If you are truly concerned with having a decent, adult conversation, why are you wasting bandwidth with childish non-sequitors like the above?

Yes, I'm beginning to see that I have over-estimated many things on this thread, and people. My apologies.

 

[Dad2three]

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

I suspect the short-term prospects for success in the fight you mentioned depend on whether or not it is accurate to say Fannie and Freddie were/are themselves credit rating agencies or did the GSEs depend on private for-profit institutions like S&P?

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Read the article again. Freddie Mac securitized the sub-prime mortgages BEFORE they ever gave the securities to rating agencies to be rated.

This is completely backwards of how mortgage backed securities worked to that point. Normally, you come up with a mortgage backed security, have it rated first, and then *IF* the rating is good, then you guarantee it.

Freddie Mac guaranteed these things first.

Now let me ask you.... if you have a mortgage backed security that ALREADY is guaranteed by Freddie Mac, which is the Federal Government.... what rating do you think it has? AAA. The Government guaranteed it. You can't lose money on that.

See, once Freddie Mac guaranteed the sub-prime loans, it was no longer about the credit worthiness of the loans, but rather the credit worthiness of Freddie Mac. It's the same as co-signing on a loan for your teenage daughter, who's never worked a steady job in her life. They are not rating her ability to pay... even though she's getting the money. They are rating YOUR ability to pay.

So, why didn't they notice that F/F were not credit worthy?

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Check out John Allison's book. He details how F/F misled the rating agencies.

Don't know how it worked huh Bubba?

F/F didn't label ANYTHING. Yes F/F bought OR insured mortgages, but didn't originate OR give ANY data to the rating agencies, who actually worked for the banksters


No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data)


1. Private markets caused the shady mortgage boom: The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Here’s some data to back that up: “More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions… Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”


2. The government’s affordability mission didn’t cause the crisis

3. There is a lot of research to back this up and little against it: This is not exactly an obscure corner of the wonk world — it is one of the most studied capital markets in the world.


4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now

MY FAV:

AEI'S (THE GROUP MOST RESPONSIBLE FOR THE GIOV'T DID IT MEME) Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”

Hey Mayor Bloomberg No the GSEs Did Not Cause the Financial Meltdown but thats just according to the data The Big Picture



Private sector loans, not Fannie or Freddie, triggered crisis


During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

Private sector loans not Fannie or Freddie triggered crisis Economics McClatchy DC

F/F AROUND FOR 70 YEARS ALL OF A SUDDEN DID THIS BUBS

 

[Dad2three]

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

I suspect the short-term prospects for success in the fight you mentioned depend on whether or not it is accurate to say Fannie and Freddie were/are themselves credit rating agencies or did the GSEs depend on private for-profit institutions like S&P?

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Read the article again. Freddie Mac securitized the sub-prime mortgages BEFORE they ever gave the securities to rating agencies to be rated.

This is completely backwards of how mortgage backed securities worked to that point. Normally, you come up with a mortgage backed security, have it rated first, and then *IF* the rating is good, then you guarantee it.

Freddie Mac guaranteed these things first.

Now let me ask you.... if you have a mortgage backed security that ALREADY is guaranteed by Freddie Mac, which is the Federal Government.... what rating do you think it has? AAA. The Government guaranteed it. You can't lose money on that.

See, once Freddie Mac guaranteed the sub-prime loans, it was no longer about the credit worthiness of the loans, but rather the credit worthiness of Freddie Mac. It's the same as co-signing on a loan for your teenage daughter, who's never worked a steady job in her life. They are not rating her ability to pay... even though she's getting the money. They are rating YOUR ability to pay.

So, why didn't they notice that F/F were not credit worthy?

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Check out John Allison's book. He details how F/F misled the rating agencies.

LOL, MISLEAD??

Fannie, Freddie and the Right Wing Myth of a "Mortgage Meltdown"

"At the end of the day what really matters is losses," said Mark Zandi of Moody's Analytics. "Where are the losses?"


As the one Pinto-skeptic in the room, Zandi proceeded to answer his own question, "Where are the losses?" As of year-end 2013, approximately $1 trillion in credit losses on pre-crisis loans had been realized. But the realized loss rate among different sectors varied considerably. Best in class were Fannie and Freddie, with a realized loss rate of 3%. Then came depository institutions, like banks, which had a realized loss rate of 6%. The strong outlier was private label mortgage securities, with a realized loss rate of 23%, seven times that of the GSEs.

These numbers are in line with Laurie Goodman's 2010 projections, which showed a 24% overall loss rate on private 1st lien securities. And Zandi's 2013 numbers are consistent with his year-end 2012 numbers, which showed private label losses as 51% of the grand total, and GSE losses as 14% of the nationwide total.

These lopsided disparities are confirmed over and over from data going back two decades. By any standard"--"delinquencies, defaults, loss severity"--"GSE mortgages perform exponentially better than the rest of the market, whereas private label mortgages perform exponentially worse. To state otherwise is to lie.


Article Fannie Freddie and the Right Wing Myth of a Mortgage Meltdown OpEdNews




Examining the big lie: How the facts of the economic crisis stack up

The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.” It is highly unlikely that a simultaneous boom and bust everywhere else in the world was caused by one set of factors (ultra-low rates, securitized AAA-rated subprime, derivatives) but had a different set of causes in the United States. Indeed, this might be the biggest obstacle to pushing the false narrative.


Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. Check the mortgage origination data: The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06.

•Private lenders not subject to congressional regulations collapsed lending standards.

Examining the big lie How the facts of the economic crisis stack up - The Washington Post

 

[Dad2three]

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

I suspect the short-term prospects for success in the fight you mentioned depend on whether or not it is accurate to say Fannie and Freddie were/are themselves credit rating agencies or did the GSEs depend on private for-profit institutions like S&P?

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Read the article again. Freddie Mac securitized the sub-prime mortgages BEFORE they ever gave the securities to rating agencies to be rated.

This is completely backwards of how mortgage backed securities worked to that point. Normally, you come up with a mortgage backed security, have it rated first, and then *IF* the rating is good, then you guarantee it.

Freddie Mac guaranteed these things first.

Now let me ask you.... if you have a mortgage backed security that ALREADY is guaranteed by Freddie Mac, which is the Federal Government.... what rating do you think it has? AAA. The Government guaranteed it. You can't lose money on that.

See, once Freddie Mac guaranteed the sub-prime loans, it was no longer about the credit worthiness of the loans, but rather the credit worthiness of Freddie Mac. It's the same as co-signing on a loan for your teenage daughter, who's never worked a steady job in her life. They are not rating her ability to pay... even though she's getting the money. They are rating YOUR ability to pay.

So, why didn't they notice that F/F were not credit worthy?

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Check out John Allison's book. He details how F/F misled the rating agencies.

IF THE GOV'T GUARANTEED THE MORTGAGES, WHY'D THE BANKS NEED A RESCUE BUBBA?

During the halcyon days of 2005--2007, about $2.9 trillion private label single-family mortgage securities were issued, of which about 15% were purchased by Fannie and Freddie.

Article Fannie Freddie and the Right Wing Myth of a Mortgage Meltdown OpEdNews