What happened to the jobs?

[Trajan]

I agree that F&F jumped into the subprime business and had the same problems with derivatives and packaging that private mortgage companies did, but they were NOT the sole cause, nor did they initiate what became a downward spiral.

Get Me ReWrite! | The Big Picture
.

And on the CRAs:
CRA Thought Experiment | The Big Picture

When the big banks began chasing subprime, it was due to the profit motive, not any mandate from the President (a Republican) or the the Congress (Republican controlled) or the GSEs they oversaw.

horsehockey.

91 James A. Johnson becomes Fannie Mae's Chairman and Chief Executive Officer. The $10 billion "Opening Doors to Affordable Housing" initiative is launched. In September, Fannie Mae promotes Lawrence M. Small to President and Chief Operating Officer.
1992 Fannie Mae becomes, for the first time, the largest issuer and guarantor of MBS, surpassing Ginnie Mae and Freddie Mac.
1993 Fannie Mae succeeds the "Opening Doors" goal of producing $10 billion in purchases for low- and moderate-income and other special housing needs by July, more than 16 months ahead of time.
1994 In an expansion of the "Opening Doors" campaign, the Trillion Dollar Commitment is launched, pledging $1 trillion in targeted housing finance that will serve 10 million low- to moderate-income families.
1996 Fannie Mae celebrates its 10th consecutive year of record earnings. Fannie Mae contributes $350 million in stock to the Fannie Mae Foundation to expand its consumer outreach efforts.
1998 James A. Johnson, Fannie Mae's Chairman and CEO, announces his intention to retire. Franklin D. Raines joins Fannie Mae as Chairman and Chief Executive Officer - Designate. In April, Fannie Mae announces the national availability of Flexible 97, a new mortgage product designed to expand home ownership through a low three percent down-payment requirement. On September 30, Fannie Mae celebrates its 30th anniversary as a private, shareholder-owned company. The corporation achieves record business volumes in purchases, commitments, MBS issued, profits, and families served. Fannie Mae reaches $1 Trillion mark in mortgage books of business outstanding.

I don't need a history lesson, and Barry Ritholtz is no fan of F&F (read the link!!!). If you think they were the primary culprits of the economic meltdown caused by the housing crash, then you should contact him. Somewhere in that link, he repeats his offer of (I think) $100,000 to anyone who can prove him wrong. You should also read the book "Bailout Nation." And no, it isn't a "liberal-leaning" analysis at all. He takes everyone to task for not paying enough attention to what was going on behind the scenes.

umh ok then thx for the mish mash of the strawman and the rest.

 

[Trajan]

further, right here, it all started going south-

1976 For the first time, Fannie Mae purchases more conventional loans than FHA and VA loans.

1982 Fannie Mae funds one of every seven home mortgages made in the U.S.

1983 Fannie Mae begins purchasing conventional multifamily housing loans.

this is why we are here now as F& F has what % of the mortgage biz? The whirligig never stopped. The private mortgage market is at a stand still.

Oh and in the 90's capitalization limits required were taken lower so as to drop the creditworthiness required for a mortgage to be considered "sub-prime".

So? Back then, there was no "free down payment," and an income-to-mortgage ratio that they all followed. That went out the window in 2004. Back then, every banker (government sponsored VA, FHA or F&F) and privately run knew the value of each of their loans. By 2008, nobody knew. Nobody.

let me ask you a question maggie, what points did you think I was making as to the 2 posts I made on the previous page?

 

[MaggieMae]

We cannot reverse this trend but we can slow it down. The corporate tax rate is too high. It's encouraging businesses to leave the country. Further there are too many tax loopholes in corporate taxes that reward companies for sending jobs overseas. We need to eliminate these loopholes and cut corporate taxes in half, however we can't do that without major spending cuts or raising personal income tax. A bill that would cut corporate taxes, provide some spending cuttings and restructure corporate taxes would go along way toward bring jobs back to America.

How much are most companies paying in taxes now??? Most dont pay any. Why isnt the economy booming

Current tax laws encourage companies to recognize earnings outside US jurisdiction, all that takes is some accounting magic and not very much of that.

That's part of what's on the table now as far as budget/revenue discussions. But the Republicans deem any change in that perk to be a "tax," so now what?

 

[MaggieMae]

horsehockey.

91 James A. Johnson becomes Fannie Mae's Chairman and Chief Executive Officer. The $10 billion "Opening Doors to Affordable Housing" initiative is launched. In September, Fannie Mae promotes Lawrence M. Small to President and Chief Operating Officer.
1992 Fannie Mae becomes, for the first time, the largest issuer and guarantor of MBS, surpassing Ginnie Mae and Freddie Mac.
1993 Fannie Mae succeeds the "Opening Doors" goal of producing $10 billion in purchases for low- and moderate-income and other special housing needs by July, more than 16 months ahead of time.
1994 In an expansion of the "Opening Doors" campaign, the Trillion Dollar Commitment is launched, pledging $1 trillion in targeted housing finance that will serve 10 million low- to moderate-income families.
1996 Fannie Mae celebrates its 10th consecutive year of record earnings. Fannie Mae contributes $350 million in stock to the Fannie Mae Foundation to expand its consumer outreach efforts.
1998 James A. Johnson, Fannie Mae's Chairman and CEO, announces his intention to retire. Franklin D. Raines joins Fannie Mae as Chairman and Chief Executive Officer - Designate. In April, Fannie Mae announces the national availability of Flexible 97, a new mortgage product designed to expand home ownership through a low three percent down-payment requirement. On September 30, Fannie Mae celebrates its 30th anniversary as a private, shareholder-owned company. The corporation achieves record business volumes in purchases, commitments, MBS issued, profits, and families served. Fannie Mae reaches $1 Trillion mark in mortgage books of business outstanding.

I don't need a history lesson, and Barry Ritholtz is no fan of F&F (read the link!!!). If you think they were the primary culprits of the economic meltdown caused by the housing crash, then you should contact him. Somewhere in that link, he repeats his offer of (I think) $100,000 to anyone who can prove him wrong. You should also read the book "Bailout Nation." And no, it isn't a "liberal-leaning" analysis at all. He takes everyone to task for not paying enough attention to what was going on behind the scenes.

umh ok then thx for the mish mash of the strawman and the rest.

My analysis is a strawman "mishmash," but yours is...what? Oh, and without backing up, I do believe someone opened the discussion surrounding Fannie & Freddie. No?

 

[MaggieMae]

further, right here, it all started going south-

1976 For the first time, Fannie Mae purchases more conventional loans than FHA and VA loans.

1982 Fannie Mae funds one of every seven home mortgages made in the U.S.

1983 Fannie Mae begins purchasing conventional multifamily housing loans.

this is why we are here now as F& F has what % of the mortgage biz? The whirligig never stopped. The private mortgage market is at a stand still.

Oh and in the 90's capitalization limits required were taken lower so as to drop the creditworthiness required for a mortgage to be considered "sub-prime".

So? Back then, there was no "free down payment," and an income-to-mortgage ratio that they all followed. That went out the window in 2004. Back then, every banker (government sponsored VA, FHA or F&F) and privately run knew the value of each of their loans. By 2008, nobody knew. Nobody.

let me ask you a question maggie, what points did you think I was making as to the 2 posts I made on the previous page?

I assume you were making the point that a lot of mortgages were financed by F&F. But the economic mess resulting from the housing meltdown was the result of SUBPRIME lending by private mortgagors, which rocketed housing purchases to an all-time high. F&F didn't get in on the SUBPRIME action until 2005. Even the FHA has struggled to remain solvent following subprime lending.

http://www.investopedia.com/ask/answers/07/subprime-mortgage.asp#axzz1QJPMGES5

 

[asterism]

So? Back then, there was no "free down payment," and an income-to-mortgage ratio that they all followed. That went out the window in 2004. Back then, every banker (government sponsored VA, FHA or F&F) and privately run knew the value of each of their loans. By 2008, nobody knew. Nobody.

let me ask you a question maggie, what points did you think I was making as to the 2 posts I made on the previous page?

I assume you were making the point that a lot of mortgages were financed by F&F. But the economic mess resulting from the housing meltdown was the result of SUBPRIME lending by private mortgagors, which rocketed housing purchases to an all-time high. F&F didn't get in on the SUBPRIME action until 2005. Even the FHA has struggled to remain solvent following subprime lending.

What is a subprime mortgage?

Subprimes backed with guarantees from Fannie and Freddie.

Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis

By the time of the crash the government agencies backed half of all mortgages in the country.

 

[Brutus]

By the time of the crash the government agencies backed half of all mortgages in the country.

yes exactly, and as importantly Fanny Freddie set the standards for the entire mortgage industry. The liberal NYTimes writers came to this conclusion in their new book "Reckless Endangerment"

In sum, liberal regulation caused the current great recession

 

[MaggieMae]

let me ask you a question maggie, what points did you think I was making as to the 2 posts I made on the previous page?

I assume you were making the point that a lot of mortgages were financed by F&F. But the economic mess resulting from the housing meltdown was the result of SUBPRIME lending by private mortgagors, which rocketed housing purchases to an all-time high. F&F didn't get in on the SUBPRIME action until 2005. Even the FHA has struggled to remain solvent following subprime lending.

What is a subprime mortgage?

Subprimes backed with guarantees from Fannie and Freddie.

Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis

By the time of the crash the government agencies backed half of all mortgages in the country.

I've never claimed F&F didn't own half the mortgages. Operative word: HALF. My problem with opinions on F&F is when someone (most on the right) blame the ENTIRE subprime mortgage mess which brought down the economy on F&F, which simply is not true. Private bankers and investment houses love it when they escape any blame at all for their MAJOR part in it.

 

[MaggieMae]

By the time of the crash the government agencies backed half of all mortgages in the country.

yes exactly, and as importantly Fanny Freddie set the standards for the entire mortgage industry. The liberal NYTimes writers came to this conclusion in their new book "Reckless Endangerment"

In sum, liberal regulation caused the current great recession

Not quite. Blind political hacks like you are never well versed in history. The repeal of the Glass-Steagall Act had an ultimate impact on the way the banking industry did business. That Act, passed in 1933, required the separation of commercial and investment banking for the sole purpose of protecting small depositors from risky investment and speculation. The banking industry began lobbying for its repeal during the 1980s, during Reagan's market gungho-ism, and was ultimately was signed off on by President Clinton. So once again, there's enough "blame" to go around.

 

[Trajan]

So? Back then, there was no "free down payment," and an income-to-mortgage ratio that they all followed. That went out the window in 2004. Back then, every banker (government sponsored VA, FHA or F&F) and privately run knew the value of each of their loans. By 2008, nobody knew. Nobody.

let me ask you a question maggie, what points did you think I was making as to the 2 posts I made on the previous page?

I assume you were making the point that a lot of mortgages were financed by F&F.

No not really, that speaks for itself, imho, I was crafting examples.

But the economic mess resulting from the housing meltdown was the result of SUBPRIME lending by private mortgagors, which rocketed housing purchases to an all-time high. F&F didn't get in on the SUBPRIME action until 2005. Even the FHA has struggled to remain solvent following subprime lending.

What is a subprime mortgage?

this was all unnecessary you are arguing your own point which I didn't state, I asked a question.

 

[Trajan]

I assume you were making the point that a lot of mortgages were financed by F&F. But the economic mess resulting from the housing meltdown was the result of SUBPRIME lending by private mortgagors, which rocketed housing purchases to an all-time high. F&F didn't get in on the SUBPRIME action until 2005. Even the FHA has struggled to remain solvent following subprime lending.

What is a subprime mortgage?

Subprimes backed with guarantees from Fannie and Freddie.

Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis

By the time of the crash the government agencies backed half of all mortgages in the country.

I've never claimed F&F didn't own half the mortgages. Operative word: HALF. My problem with opinions on F&F is when someone (most on the right) blame the ENTIRE subprime mortgage mess which brought down the economy on F&F, which simply is not true. Private bankers and investment houses love it when they escape any blame at all for their MAJOR part in it.

getting back to my question a few posts up, let me ask another which you'll see was my point in posting those charts and the script from the links ala CRA and what followed;

does gov. influence markets?

 

[MaggieMae]

Subprimes backed with guarantees from Fannie and Freddie.

Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis

By the time of the crash the government agencies backed half of all mortgages in the country.

I've never claimed F&F didn't own half the mortgages. Operative word: HALF. My problem with opinions on F&F is when someone (most on the right) blame the ENTIRE subprime mortgage mess which brought down the economy on F&F, which simply is not true. Private bankers and investment houses love it when they escape any blame at all for their MAJOR part in it.

getting back to my question a few posts up, let me ask another which you'll see was my point in posting those charts and the script from the links ala CRA and what followed;

does gov. influence markets?

To an extent, yes. But it depends on whether Wall Street investors like what they hear out of "government" or not. And you'll have to repeat your original question. I haven't had much time for "boarding" lately, so I've lost the momentum.

 

[Trajan]

I've never claimed F&F didn't own half the mortgages. Operative word: HALF. My problem with opinions on F&F is when someone (most on the right) blame the ENTIRE subprime mortgage mess which brought down the economy on F&F, which simply is not true. Private bankers and investment houses love it when they escape any blame at all for their MAJOR part in it.

getting back to my question a few posts up, let me ask another which you'll see was my point in posting those charts and the script from the links ala CRA and what followed;

does gov. influence markets?

To an extent, yes. But it depends on whether Wall Street investors like what they hear out of "government" or not.

excellent, thank you, I agree all the way, now why do you suppose this happened;

in the 90's capitalization limits required were taken lower so as to drop the creditworthiness required for a mortgage to be considered "sub-prime".


and Q- do you think, that the gov. should be in the bus. of guaranteeing mortgage loans?

 

[flacaltenn]

Where did the jobs go?

Obama FINALLY contributed to our understanding of this last week. FINALLY he started to learn about markets and innovation and what role the govt should assume. He pointed out that there are too many people chasing jobs in the wrong sectors of the economy. THat we are losing American college graduates in the sciences and engineering. And that are graduate schools are overtaken by foreign students who may or may not decide to stay here.

When the global markets started to flatten, the free traders TRIED to tell you that America needed to move forward in the hi-tech, more difficult professions. EVEN Al Gore had his capitalist moments with the "information super-hiway" crap. We need to make cheap labor less relevent. You do that by encouraging the development of new paradigms for manufacturing based on automation, materials science, and quality management. Yes even a leadership in automation can CREATE jobs if we export enough of it. Nanotech gives us unbelievable advantage in the very materials that go into the manufacturing stream. BioTech does the same thing for energy development, medicine, and food production.. GUESS -- just GUESS which political faction HATES both of these ideas? (hope I don't have to answer that one myself). It's called frankinfood and frankinslime materials by the folks who CLAIM that anyone not annointed as a leftist is a technical Luddite..

Can't do these things when the kiddies are choosing soft sciences and business school over nanotechnology, robotics, and bio sciences.

And in the OP, the whining goes back to the 70's. Well folks -- what the heck happened in the 80's when Mao was still sending Bejing professionals to the rice fields. COMPUTERS. The 1st major displacement of labor that started the jobs decline. Supposedly -- we are all now just fantastic productivity engines. Those of us who spend ALL day (and right now) performing feats of communications and organization that would have been pure magic to Adam Smith. Well that revolution never ended. In FACT --- employers make that labor decision every day between people and machines. Look at the supermarket clerks. The fossilized union bosses have no CLUE how to stop those "self-check-out" lanes at the market. IT's a check on the entire careers of anyone who relies SOLELY on a union to protect their livlyhood. So don't blame the Chinese entirely for this new era of "labor".

We CAN make most cheap labor irrelevent if we work at it. We've had 25 years to prepare for it. And we were warned.

BTW: As far as the political ramifications and contributions.....

What happens when govt spending as %GDP goes from 18% to 24%? How does THAT affect the "job creation" market? How does THAT affect the type of market sectors that are Darwinian candidates for extinction? And nobody seems interested in the thread I put into the economy section on how GE recieved all those GREENIE tax breaks that contributed to them "not paying any taxes". I guess BOTH the left and right still have their favorite subsidies and don't see the energy extracted from innovation and job development that those inefficient subsidies create...

 

[asterism]

I assume you were making the point that a lot of mortgages were financed by F&F. But the economic mess resulting from the housing meltdown was the result of SUBPRIME lending by private mortgagors, which rocketed housing purchases to an all-time high. F&F didn't get in on the SUBPRIME action until 2005. Even the FHA has struggled to remain solvent following subprime lending.

What is a subprime mortgage?

Subprimes backed with guarantees from Fannie and Freddie.

Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis

By the time of the crash the government agencies backed half of all mortgages in the country.

I've never claimed F&F didn't own half the mortgages. Operative word: HALF. My problem with opinions on F&F is when someone (most on the right) blame the ENTIRE subprime mortgage mess which brought down the economy on F&F, which simply is not true. Private bankers and investment houses love it when they escape any blame at all for their MAJOR part in it.

Without government backing the loans there would not have been a bubble. Even artificially propping up the market with 20% of the loans would result in a bubble.

 

[flacaltenn]

Here's a little gem I clipped years ago that people might want whenever the apologists come out to distract attention away from the govt involvement in the housing bubble..

Note the 1999 date on the UN-impeachable NY Times story. (probably still in archives)

Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

Note: It's the earliest FORMAL announcement I found of F/F helping to design subprime loans. AND -- the important bit is that when you're a GSE with powerful support in Congress from "it won't cost the taxpayers a nickel" Frank et al, you don't have to be the fastest horse in the race. You only need to organize the race..

The pathethic part of the govt role is how much they ignored KNOWN dangers of what they had set in motion. From Barney Frank's booting of the regulators, to this statement from the Chief Fanny exec while the market was going down in flames.

Fannie's Perilous Pursuit of Subprime Loans

Discussing the company's successes, Mudd said one of Fannie Mae's achievements in 2006 was expanding its involvement in the market for subprime and other nontraditional mortgages. He called it a step "toward optimizing our business."

Internal documents show that even late in the housing bubble, Fannie Mae was drawn to risky loans by a variety of temptations, including the desire to increase its market share and fulfill government quotas for the support of low-income borrowers.

"By entering new markets -- especially Alt-A and subprime -- and guaranteeing more of our customers' products at market prices, we met our goal of increasing market share from 22 to 25 percent," Mudd wrote in a 2006 year-end report to the Fannie Mae board dated Jan. 3, 2007.

In other internal documents, there was a common refrain: One of Fannie Mae's objectives for 2006 was to "increase our penetration into subprime."

Buying Alt-A and subprime mortgages was part of Fannie Mae's effort to meet the challenge. Fannie Mae sought to reap the rewards and protect itself from the downside of the investments through a feat of financial engineering it called its "Risk Transformation Facility," which was meant to transfer the riskiest elements to other investors.

"We engaged in the subprime market, for the first time closing deals to guarantee and securitize subprime loans, with help from the new facility that allows us to sell off the riskiest layers," Mudd wrote. By October, the company had signed $3 billion of such deals.

By March 2007, when Mudd sent the board an update, major subprime lenders were failing, delinquency rates were climbing, and the emerging crisis was impossible to ignore.

The subprime sector "is in partial meltdown," Mudd wrote. He reported to directors that Fannie Mae's investment in subprime mortgage assets totaled about $55 billion.

Mudd told the board that Fannie Mae had run its subprime portfolio through a stress test to determine the losses in a hypothetical scenario that involved a two-percentage-pointrise in interest rates and two years of 5 percent declines in home prices. The resulting prediction: "zero credit losses net of earnings."

Everything's cool. There's no problem.. Hey -- someone cooking popcorn??
And while the left is calling for indictments of "crooked wall street traders" on this scam.. Somebody just MIGHT want to sneak a look at the "Risk Transformation Facility" that I underlined in the quote above.. Betcha that thingy has plenty of jail time associated with it..

 

[expat_panama]

...One in four Americans say the best way to create more jobs in the U.S. is to keep manufacturing in this country and stop sending work overseas...

That means 3 out of 4 Americans don't buy into that stupid "keep manufacturing in this country and stop sending work overseas" nonsense. Once again proving Americans can figure things out.

 

[Truthseeker420]

Reaganomics is what happened.

 

[Mr Natural]

...One in four Americans say the best way to create more jobs in the U.S. is to keep manufacturing in this country and stop sending work overseas...

That means 3 out of 4 Americans don't buy into that stupid "keep manufacturing in this country and stop sending work overseas" nonsense. Once again proving Americans can figure things out.

No, it just means that the employers of those 3 out of 4 Americans haven't figured out yet how to send their jobs overseas.

Give them time, they will.

 

[expat_panama]

...the employers of those 3 out of 4 Americans haven't figured out yet how to send their jobs overseas. Give them time, they will.

This hatred for employers has become so widespread over the past couple years, and my take is that it's a major reason for the lack of hiring. Like, I got a number of employees and anytime I find one of them with an attitude like yours I have to chuck him and look for someone else.