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Feds take over both Fannie May and Freddie Mac to avoid their failures. Cost Unknown
- Thread starter LanceOregon
- Start date
LanceOregon
Sad to say, you do have a a worry "over the current mortgage crisis". This action by the Federal Government has the potential to cost the average taxpayer big-time. Many feel that the government had no business in the mortgage markets to begin with.....that this is just one more step toward the "Nirvana" of Socialism.
"Effectively, the federal government has now become the nation's mortgage lender. This takes a major financial threat off the table", said Mark Zandi, chief economist at Moody's Economy.com. Probably not what the founding fathers had in mind.
But at least I own my current home free and clear, even though it is a small and cheap place. So I have no worry over the current mortgage crisis.
Sad to say, you do have a a worry "over the current mortgage crisis". This action by the Federal Government has the potential to cost the average taxpayer big-time. Many feel that the government had no business in the mortgage markets to begin with.....that this is just one more step toward the "Nirvana" of Socialism.
"Effectively, the federal government has now become the nation's mortgage lender. This takes a major financial threat off the table", said Mark Zandi, chief economist at Moody's Economy.com. Probably not what the founding fathers had in mind.
MedicineBow
New member
Isn't this due to Democrats forcing the banking industry to make home mortgage loans to those in their base who could not qualify?
Lol.
And the "Democrats" did this exactly how?
"Will people blame the Republicans for the current economic situation?"
Or maybe the Democratic Party Congress?
"(Reuters) - Republican John McCain heads into the final stretch of the U.S. presidential campaign with a 4-point lead over Democrat Barack Obama, a USA Today/Gallup poll released on Sunday showed."
John
P.S. - And I see the U.S. and world stock markets are booming today.
Or maybe the Democratic Party Congress?
"(Reuters) - Republican John McCain heads into the final stretch of the U.S. presidential campaign with a 4-point lead over Democrat Barack Obama, a USA Today/Gallup poll released on Sunday showed."
John
P.S. - And I see the U.S. and world stock markets are booming today.
"(Reuters) - Republican John McCain heads into the final stretch of the U.S. presidential campaign with a 4-point lead over Democrat Barack Obama, a USA Today/Gallup poll released on Sunday showed."
John
P.S. - And I see the U.S. and world stock markets are booming today.
Translation: The fed bailout is all the democrats fault, and it is actually a benefit to the overall economy!
Now that's entertainment!
MedicineBow
In 1995 the Democrats revised the Community Reinvestment Act of 1977. The changes allowed (or actually dictated) an increase in the number of home loans to low- and moderate-income borrowers. Previous criteria including the size of the mortgage payment relative to income, credit history, savings history and income verification were tossed out. Huge numbers of sub-prime mortgages were subsequently given to previously unqualified borrowers, and the debacle began.
And the "Democrats" did this exactly how?
In 1995 the Democrats revised the Community Reinvestment Act of 1977. The changes allowed (or actually dictated) an increase in the number of home loans to low- and moderate-income borrowers. Previous criteria including the size of the mortgage payment relative to income, credit history, savings history and income verification were tossed out. Huge numbers of sub-prime mortgages were subsequently given to previously unqualified borrowers, and the debacle began.
hammer4nc
The bailout may not be their fault, but the Democrats started the journey down the slippery slope to get us here during the Clinton years.
The argument can be made that the takeover of Freddie Mac and Fannie Mae would not have happened were it not for the meddling of the Democrats in the mortgage markets to begin with.
Translation: The fed bailout is all the democrats fault......
The bailout may not be their fault, but the Democrats started the journey down the slippery slope to get us here during the Clinton years.
The argument can be made that the takeover of Freddie Mac and Fannie Mae would not have happened were it not for the meddling of the Democrats in the mortgage markets to begin with.
...this is just one more step toward the "Nirvana" of Socialism.
Absolutely. A state controlled economy is the goal of Socialism. Congratulations.... we are there.
The bailout may not be their fault, but the Democrats started the journey down the slippery slope to get us here during the Clinton years.
Stop looking at this as an "dem" versus "republican" situation. The truth is that the democrats and republicans are both guilty. You are being distracted by their efforts to keep your eyes closed with this political "us" versus "them" stuff. Open your eyes.
If you can't help but to look at it as a battle between dems and republicans, then for sure, the democrats have won because we have a liberal (McCain) running on the republican party ticket.
The guilty parties here were largely all at the loan negotiation tables, rather than in any capitol. Bankers wanted to make the loans to either get the income stream or to monetize (i.e. sell) the debt. Home buyers wanted more home than they could afford (isn't imputed income wonderful), or to get more money out of the current home than it was worth (got to love those home equity loans).
Politicans made the "gun" available but greedy individuals pulled the trigger, and violated a host of fundamental financial principles, if not actual regs, in the process.
Politicans made the "gun" available but greedy individuals pulled the trigger, and violated a host of fundamental financial principles, if not actual regs, in the process.
FireMax
A poster asked:
So, I responded with the realities of what precipitated the situation as it now stands. Both parties may share some guilt here, but Barney Frank and company started the ball rolling.
And my eyes are anything but "closed". I KNOW how we got here.......
Stop looking at this as an "dem" versus "republican" situation. The truth is that the democrats and republicans are both guilty. You are being distracted by their efforts to keep your eyes closed with this political "us" versus "them" stuff.
A poster asked:
And the "Democrats" did this exactly how?
So, I responded with the realities of what precipitated the situation as it now stands. Both parties may share some guilt here, but Barney Frank and company started the ball rolling.
And my eyes are anything but "closed". I KNOW how we got here.......
JuanCarlos
New member
There's more than enough blame to go all the way around, including both parties, executives, lenders, and borrowers.
I think all I really have to say is that if there's one thing even more awesome than outright socialism, it's when we privatize gains but socialize losses.
Paraphrasing from elsewhere, but I think it sums the whole thing up pretty well. Obviously we're in a situation where it's necessary to avoid (or reduce) more widespread economic damage, but I say shame on us for letting it get to the point where they have a gun to our economic heads like this.
I think all I really have to say is that if there's one thing even more awesome than outright socialism, it's when we privatize gains but socialize losses.
Paraphrasing from elsewhere, but I think it sums the whole thing up pretty well. Obviously we're in a situation where it's necessary to avoid (or reduce) more widespread economic damage, but I say shame on us for letting it get to the point where they have a gun to our economic heads like this.
Completely agree with Juans statement "There's more than enough blame to go all the way around, including both parties, executives, lenders, and borrowers."
It's a mess and needs to work it's way out. It exists and pointing fingers isn't going to correct it. Just time and pain I guess
It's a mess and needs to work it's way out. It exists and pointing fingers isn't going to correct it. Just time and pain I guess
it's when we privatize gains but socialize losses.
Freddie, Fannie, and Curses on FDR[
What's causing the current panic is that the markets have wised up and started evaluating these institutions by market standards. Freddie and Fannie have collapsing market prices, and their bonds are carrying ever-higher risk premiums.
In other words, we are not talking about market failure. If you have a housetop you can shout that from, please do so, because the press and the government are going to make every effort to blame private borrowers and lenders for this calamity. But the origin of both these outfits is with federal legislation. They are not market entities. They have long been guaranteed by you and me. No, they have not been socialist entities either because they are privately owned. They occupy a third status for which there is a name: fascism. Really, that's what we are talking about: the inexorable tendency of financial fascism to mutate into full-scale financial socialism and therefore bankruptcy.
Government as usual is the culprit, more of their attempts to 'equalize' the playing field and prop up the ineffectual.
McCain is just as much to blame as Schumer.
Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail … we will do what's necessary to make sure that they continue that function. John McCain
azredhawk44
Moderator
it's when we privatize gains but socialize losses.
+1 and a brilliant deduction.
Investors will not LEARN how to invest if they never feel the sting of a bad investment.
People who buy too much house need to lose it and be $25K upside down, living in an apartment. They pay off the $25K and try again.
Lendors who give $400K to undeserving borrowers need to lose an unrecoverable portion of that money and explain that to their board of directors. That lending officer can be demoted/fired/pay cut to make up for the loses.
It's all called "accountability."
This is why the stock market has essentially been stagnant for the last 5-10 years. No one knows how to research successful investments versus silly investments. Instead, Wall Street is busy inventing new investment tools like ETFs that treat all stocks equally (wall street communism), rather than singling out good stocks from bad stocks by this wonderful skill known as "discrimination."
In the meantime, I don't own a house because I don't have my down payment. I won't get a house until I have a down payment of my own. But... my taxes will go up to pay for this bull **** of bailout after bailout.
And... if the FedGov "owns" Fannie/Freddy, I'm going to do my damndest to make sure that my title is held by a real bank... not Fannie/Freddy or some FedGov alias.
We need to understand how these entities came to be
To understand the situation, one must study the history of the Federal Home Loan Banks and the Federal National Mortgage Association or Fannie Mae (Freddie Mac's larger sibling). These institutions were products of the New Deal. The mission of the Federal Home Loan Banks, which were created in 1932, was to provide financial support to urban thrift and savings banks. In 1938, the government created Fannie Mae with the express purpose of funding "mortgage loans insured by . . . the Federal Housing Administration."[1] All of this occurred during a time of upheaval in financial markets and were supposedly the remedy needed. Like all such government projects aimed at solving various crises, the institutions outlived their initial purpose and tended to change their focuses to continue operations. Accordingly, in 1968, Fannie Mae was chartered as a GSE and stock was sold to investors. At that time numerous large private mortgage companies purchased stock in the new firm. Likewise, Freddie Mac was chartered as a GSE in 1970.[2] However, Freddie Mac did not become a public company until 1989.[3]
While these institutions have been privatized to a degree, they still remain tied to the federal government in some important respects. In fact, Fannie Mae and Freddie Mac have access to a guaranteed line of credit of $2.25 billion with the U.S. treasury.
You see they were never subject to the free and fair influences of the market.
Freddie Mac: A Mercantilist Enterprise
The day when Freddie Mac (and Fannie Mae) is forced to compete in the marketplace without any special privilege is long overdue. The current status quo is simply a perversion of the free market, and it must end.
To understand the situation, one must study the history of the Federal Home Loan Banks and the Federal National Mortgage Association or Fannie Mae (Freddie Mac's larger sibling). These institutions were products of the New Deal. The mission of the Federal Home Loan Banks, which were created in 1932, was to provide financial support to urban thrift and savings banks. In 1938, the government created Fannie Mae with the express purpose of funding "mortgage loans insured by . . . the Federal Housing Administration."[1] All of this occurred during a time of upheaval in financial markets and were supposedly the remedy needed. Like all such government projects aimed at solving various crises, the institutions outlived their initial purpose and tended to change their focuses to continue operations. Accordingly, in 1968, Fannie Mae was chartered as a GSE and stock was sold to investors. At that time numerous large private mortgage companies purchased stock in the new firm. Likewise, Freddie Mac was chartered as a GSE in 1970.[2] However, Freddie Mac did not become a public company until 1989.[3]
While these institutions have been privatized to a degree, they still remain tied to the federal government in some important respects. In fact, Fannie Mae and Freddie Mac have access to a guaranteed line of credit of $2.25 billion with the U.S. treasury.
You see they were never subject to the free and fair influences of the market.
Freddie Mac: A Mercantilist Enterprise
The day when Freddie Mac (and Fannie Mae) is forced to compete in the marketplace without any special privilege is long overdue. The current status quo is simply a perversion of the free market, and it must end.
It is the governments fault
Fannie Mae: Another New Deal Monstrosity
The shortcomings of Fannie Mae have been overlooked on the basis that Fannie plays a critical role in driving the housing sector, and thus the American economy. As Fannie goes, so goes the nation.[1] Fannie means housing, and accordingly, Fannie is the conduit that takes one from "inequitable ownership" to the American Dream.[2] In a nation where equality is everything, and where advantage need not be earned, but only redistributed, how can anything be more virtuous?
Fannie Mae advertises itself as "a shareholder-owned company with a public purpose." True to its words, in January of 2000 Fannie introduced its "Mortgage Consumer Bill of Rights" program. This rundown of entitlements promised the consumer the "right" to access credit and the "right" to qualify for the lowest-cost mortgage possible. No de facto private corporation can or will guarantee any consumers' rights whatsoever — that is, unless it has the authority of government behind it to bolster its business model and guarantee its guarantees.
This whole notion that Americans have a 'right' to home ownership and by god if we have to take the monies of the responsible and give them to the irresponsible, to make sure they get a house we are going to do it.:barf::barf::barf:
Fannie Mae: Another New Deal Monstrosity
The shortcomings of Fannie Mae have been overlooked on the basis that Fannie plays a critical role in driving the housing sector, and thus the American economy. As Fannie goes, so goes the nation.[1] Fannie means housing, and accordingly, Fannie is the conduit that takes one from "inequitable ownership" to the American Dream.[2] In a nation where equality is everything, and where advantage need not be earned, but only redistributed, how can anything be more virtuous?
Fannie Mae advertises itself as "a shareholder-owned company with a public purpose." True to its words, in January of 2000 Fannie introduced its "Mortgage Consumer Bill of Rights" program. This rundown of entitlements promised the consumer the "right" to access credit and the "right" to qualify for the lowest-cost mortgage possible. No de facto private corporation can or will guarantee any consumers' rights whatsoever — that is, unless it has the authority of government behind it to bolster its business model and guarantee its guarantees.
This whole notion that Americans have a 'right' to home ownership and by god if we have to take the monies of the responsible and give them to the irresponsible, to make sure they get a house we are going to do it.:barf::barf::barf:
mountainclmbr
New member
I think all I really have to say is that if there's one thing even more awesome than outright socialism, it's when we privatize gains but socialize losses.
EXACTLY! Why be careful if there is everything to gain, but nothing to lose?