Dear John Thain

That Public Resignation Letter Offers Some Good Insight into the AIG Problem

Sorry, you're just dead wrong.

What killed Fannie and Freddie was poor risk management and too much leverage (fueled by accounting problems and a quest to juice earnings).

The C.R.A. had nothing to do with the loans that were securitized and sold by Wall St. banks... By definition, if Fannie and Freddie were in the middle of C.R.A. loans, they would have to be agency product, which has never caused a loss due to default ever (they are guarenteed by the agencies, which taxpayers have propped up, remember?).

Sorry you're so mad, but you should learn about what's really going on before you direct your anger and vent.

I have a post on this topic here: dearjohnthain.wordpres.../

-DJT


On Apr 03 04:45 PM Schwammo wrote:

> The author of this blog is an idiot who missed the point completely.
> The focus on the AIG bonuses was a ploy by Democrats to take the
> spotlight off their obscene spending (3 TRILLION vs. $150 million).
> It's even more clear now that Fannie Mae and Freddie Mac are paying
> out $210 million in bonuses. If not for the hypocracy of the actions
> of our democratic congressmen and senators these dollar amounts wouldn't
> even matter, they're drops in the bucket.
>
> We love to blame companies to invested in these subprime mortgages
> and those who made them under the nice tidy cover of "Wall street
> bad." However it competely ignores the question of why these mortgages
> were made in the first place. Do you think commercial banks just
> woke up one morning and said "gee golly I'd like to loan a bunch
> of money to people who can't afford it." They were FORCED to make
> these loans by the COMMUNITY REINVESTMENT ACT, which was the mutant
> love child of Barney Frank and the ever corrupt Chris Dodd. The
> act was passed under the CLINTON administration not W's.
>
> Once the loans were made, why shouldn't they be sold as securities
> like any other mortgage. If they were good enough that the government
> would force private companies to make them, than implicit in that
> is that they're good enough to sell as investments.
>
> We all know what happened next. Home values dropped and the investments
> failed destroying the books of the companies that invested in these
> products like AIG.
>
> But hey, we can't blame the real bad guys as they're sitting in the
> Senate and the Capitol. Plus if we attack the Community Reinvestment
> Act, we're all racists who don't believe in affordable housing for
> the poor. So instead lets put the force and majesty of our government
> against the AIG execs. We'll send uninformed and violent shock troops
> on busses to their homes, villify them endlessly, and pass ex post
> facto laws to get the money back.
>
> I know that most won't be sheding tears for the execs, I'm not either.
> But come on... how about just a little bit of intellectual honesty.

That Public Resignation Letter Offers Some Good Insight into the AIG Problem

Sorry, you're just dead wrong.

What killed Fannie and Freddie was poor risk management and too much leverage (fueled by accounting problems and a quest to juice earnings).

The C.R.A. had nothing to do with the loans that were securitized and sold by Wall St. banks... By definition, if Fannie and Freddie were in the middle of C.R.A. loans, they would have to be agency product, which has never caused a loss due to default ever (they are guarenteed by the agencies, which taxpayers have propped up, remember?).

Sorry you're so mad, but you should learn about what's really going on before you direct your anger and vent.

I have a post on this topic here: dearjohnthain.wordpres.../

-DJT


On Apr 03 04:45 PM Schwammo wrote:

> The author of this blog is an idiot who missed the point completely.
> The focus on the AIG bonuses was a ploy by Democrats to take the
> spotlight off their obscene spending (3 TRILLION vs. $150 million).
> It's even more clear now that Fannie Mae and Freddie Mac are paying
> out $210 million in bonuses. If not for the hypocracy of the actions
> of our democratic congressmen and senators these dollar amounts wouldn't
> even matter, they're drops in the bucket.
>
> We love to blame companies to invested in these subprime mortgages
> and those who made them under the nice tidy cover of "Wall street
> bad." However it competely ignores the question of why these mortgages
> were made in the first place. Do you think commercial banks just
> woke up one morning and said "gee golly I'd like to loan a bunch
> of money to people who can't afford it." They were FORCED to make
> these loans by the COMMUNITY REINVESTMENT ACT, which was the mutant
> love child of Barney Frank and the ever corrupt Chris Dodd. The
> act was passed under the CLINTON administration not W's.
>
> Once the loans were made, why shouldn't they be sold as securities
> like any other mortgage. If they were good enough that the government
> would force private companies to make them, than implicit in that
> is that they're good enough to sell as investments.
>
> We all know what happened next. Home values dropped and the investments
> failed destroying the books of the companies that invested in these
> products like AIG.
>
> But hey, we can't blame the real bad guys as they're sitting in the
> Senate and the Capitol. Plus if we attack the Community Reinvestment
> Act, we're all racists who don't believe in affordable housing for
> the poor. So instead lets put the force and majesty of our government
> against the AIG execs. We'll send uninformed and violent shock troops
> on busses to their homes, villify them endlessly, and pass ex post
> facto laws to get the money back.
>
> I know that most won't be sheding tears for the execs, I'm not either.
> But come on... how about just a little bit of intellectual honesty.