DCBill

Too Big to Fail - Even Greenspan Is Speaking Out

What credibility does this man possess?

He aided and abetted some of these TBTG institutions getting that way helping to hatchet Glass-Steagall!!

He's too addicted to the limelight; AG just should ride quietly into the sunset, enjoy his retirement, and keep his mouth shut.


On Oct 18 12:37 PM chinooking wrote:

> greenspan is a fed bank CRIMINAL ,so is paulson ,so is cox,and little
> george was such a puppet

How Much Are Fannie and Freddie to Blame?

The minor name-calling and putdowns aside, please draw a distinction between Fannie Mae's "community lendign activity"--basically what they did to get to and over the statutory requirement that "55% of their annual business serve low, moderate and middle income families and those living in central cities and other underserved areas" (Quote is from the law.)--and the yield driven subprime purchases in 2006 and 2007, which severely wounded the company. (Fannie had $40 billion in capital on their books when put into "conservatorship," suggesting to me politics not market concerns as the cause for Paulson's move.)

Hosuing Goals:Fannie regularly took in enough quality business in most of their standard acquisitions which helped them get to about 50% of the needed 55%. It was the last slug which relied on their community lending pproducts and all of the flexible underwriting emouluments, they added.

However, most of those loans perofmred only slightly worse than their very solid standard business. In fact, ALL OF THOSE COMMUNITY LENDING LOANS could have gone belly up, which they never did, and Fannie's losses would have been tiny and overwhelmed by their other positive earnings.

But the purchase of high yielding subprime securities--orignated otuside the F&F systems, by Wall Street with direct delievry from mortagge brokers---is what took the GSEs down.

Again, all the "legendary" Fannie D's were gone by that time and the congressional Democrats, who indeed were GSEs cheerleaders, but mostly becausee the GOP had decided, in the Reagan era, to come after the Rossevelt created Fannie for ideological reasons.

Back to the word combat!

How Much Are Fannie and Freddie to Blame?

Peter Wallison has made plenty of money and earned his Right Wing "eagle badge" peeing on Fannie and Freddie, but in his zeal to score "McCain points"--which likely will be a losing effort come Nov. 4--Wallison overlooks many crucial facts.

--The Bush campaign machine called for the "ownerhsip society" and enlisted Fannie and Freddie in that effort, at times taking direct credit for the companies' efforts.

--All of the major D's (Johnson, Raines, Gorleick, et al) were long gone when the company stepped in deep caca, through purchases of Alt A and subprime securities. They refused to originate the stuff, but Dan Mudd (a life long Republcian and McCain contributor) wanted it on the Fannie Mae books and his mistake cost him his job and the company it's structure and private ownership.

Mudd made the same mistake as the managers of Bear, Merrill, WAMU, Wachovia, AIG and dozens more. There was nothing unique in the greed that drove subprime security purchases

Don't forget, when Fannie was atken over, it had cleaned up its books and was SEC compliant. It also had OFHEO officals in its operational offices 24-7, blessing every significant business action and deal, so
who was responsible for what? It was hardly Barney Frank and Chris Dodd.

Fannie's major errors came in 2005-2007, when no Democrats were in authority. Sorry Peter.

The True Nature of Fan and Fred

Holy "spell check" Batman, maybe I am not as smart as I think--at elast when it comes to doing away with typos.

But, I think you get what I mean!

The True Nature of Fan and Fred

Anyone thinking Mr. Tan hasn't anything valid to add to this discussion should stop after reading his first major point--which is so erroneous, it defies categorization. (And anyone who thinks Mr. Ran is correct knows less than that gentleman!)

Thanks to their quasi public and quasi-private status, Fan and Fred can borrow from the government at super low interest rates...."

Really, Mr. Tan?

When did Fannie or Freddie EVER borrow one dime from the US Government? When did the US Traesury ever pay off one of the debt holders? When did the smallest amount of GSE mortgage activity ever show up in the US Budget--of any Administration, Republican or Democrat?

The GSEs borrow on their own in the national and international debt markets. Their debts--in the hundred of billions always have been honored--with the lion's share of their income comign from interest on the mortgages and securities they hold, plus profits.

Mr. Ryan left the the Financial Services Committee to go to Ways and Means.

Ask any DC lobbyist or Member and you'll find that the W&M committee is a "plum" assignment, an exclusive committee which permits service on no other, because of its importance and because its jurisdiction (tax, federal health policies, etc) is so broad. The industries which lobby Ways and Means spend generate thousands upon thousands of dollars in campaign contributions, far more than anyone who serves on House Financial Services.

That's a dirty little "inside the Beltway secret," but that is why Members flee any assignment they have when a spot on the tax writing committee beckons.

Mr. Tan knows little or nothing about which he writes!

A Ways and Means seat is sought by many but few get the nod.

The bailotut hat Mr. Tan seems to worry about hasn't ahppened, since neither F/F has asked for or received any federal funds.

No construe Secy Paulson putting in place a "contingency" with a fact that both companeis will avoid like cancer, since it weould eman their deaths as private companies.

Freddie and Fannie: The Case Against Hybrids

Matt--The collapse of F/F "stock," but not the companies. Big difference.

It's important to "scream" that neither Fannie nor Freddie has asked for emergency Treasury/Fed help and both look like they have sufficient capital and salable assets on their books to counter any losses.

The legislation moving through Congress and likely to be sent to the President this week does have numbers regulatory constraints including, including greater capital.

But, what you are asking is whether we should jettison the "secondary mortgage market"--with its F/F presence--which until the subprime mess--has done a superb job of standardizing mortgage products and lowering consumer costs.

What's the alternative? Banks and thrifts making ARMs and holdingthem? Direct Treasury lending or HUD lending? How about a "new" Fannie and Freddie, called soemthing else but structured the same?

I think we are better off with what we have and making it work better, especially since there is no proof the this model doesn't work.

Did We Learn Anything Over the Past Two Years?

I wouldn't worry about F/F screwing up the market. This week's legislation effectively turned them into "regulated utilities." Look at the details, they've been neutered.

Justice Hardly Reigns Over Fannie Mae's Raines

OFHEO had a very weak case, despite the writer's suggestions.
Literally hundreds of companies had problems implementing FAS 133. OFHEO's allegations were driven more by politics than accounting. The agency's capitulation reflected that.

Fannie Ex-Execs Settle; How Long Will Shareholders Stand For This?

If the "allegations" Raines and the others were true, or even close, don't you think the government would have prevailed?

Hundreds of companies, financial services and others, have redone their books because of mis-applying Fas 133, the core accusation against Fannie and its former officials.

From the beginning, the whole thing was a political witch hunt --hatched in the White House--and it had no legal substance ergo the weird disposition. That disturbing fact just has been exacerbated by OFHEO accepting underwater stock options as payment for "fines."

Only in Washington DC!!

Treasury, Fed Out to Entrap Fannie and Freddie?

The GSEs always have operated under three conflicting objectives, mission, safety and soundness, and satisfying shareholders.

And, it is possible--successfully... do all three, if your regulator hasn't interfered too much in the day to day operations of your business and hiked up your capital requirements, beyond reason--which OFHEO has.

The GSEs won't be able to perform, let alone thrive, until the Bush Administration is history or enough of its political appointees leave town.