PROOF that Libs lied about Fannie and Freddy

[Andy]

Well, since no Liberal on the board has the balls or stomach to put up a counter-argument I will do so for the sake of debate.

As I said, I don't buy this argument, but since none of the libs here want to give a shot, for the sake of debate, here it is.

To a liberal, everything is to gain political points. Since Billy Clinton signed these laws into effect, regardless if they do or do not have merit, there is no political gains to be made. Thus, you won't hear from them.

One reason I was not responding was because I'm more into Science and Technology, and Theology, than I am into accounting and numbers. I have learned far more about this topic than I had ever hoped to, yet... I'll give it my best shot.

2) This however glosses over the bigger problem that these two companies alone are not responsible for the meltdown.

Fannie and Freddie certainly followed the market into higher risk loans, but were stopped from going full-bore into the subprime paper business by their charter and conforming loan limits. They were allowed, by the Government, to keep less capital on hand to offset risk. And they were woefully under supervised by their government regulators. And they (acting like an investment fund) acquired lots of private label MBS’ backed by toxic mortgages.

Hmm... I must be missing something. I was under the impression that the market followed Fannie and Freddie, not the reverse. In fact, it wasn't until the mid 90s when the feds started pushing for more home loans, through their sponsored corporations, that sub-prime loans began to rise.

3) While Republicans were attacking Fannie/Freddie, the housing bubble was being pushed to the limits by other banks, that would have maintained and burst the bubble, even if Fannie and Freddie did not exists.

Is not the vast majority of the loans that have gone bust, been loans from Fannie and Freddie? Cheap low interest loans from Fannie and Freddie are what caused the bubble to exist. Without them, the private bank, most of whom didn't make sub-prime loans, would never have had the wide ranging power to create a bubble.

4) This crisis could have been avoided if regulation was placed on outside investment banks as much as it was placed on Fannie/Freddie, to prevent them from getting to heavily involved in the sub-prime debacle.

That doesn't even follow logic. Fannie and Freddie where chocked full of sub-prime Securitization. There was more regulation on outside investment banks, than was on F&F.

5) In 1999, Congress passed the Gramm-Leach-Bliley Act, which abolished “all of the significant rules put in place at the time of the Great Depression designed to prevent a repeat.” Specifically, this act “destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies.”

It was this deregulation that spiraled "predatory" lending practices by de-regulated banks, who felt secure knowing that they could package these loans together and sell them off to government backed Fannie/Freddie.

What? So if a bank doesn't merge with an insurance company... then it won't engage in predatory lending practices? Not logical.

In the end, the sub-prime melt down, is due to two people. Lenders... Borrowers...

First, Borrowers. A bunch of people choose to get loans they could not afford, on the bet that they could refinance them, due to increasing home values, before the sub-prime loan ballooned or adjusted. They gambled a loan on the economy and rising home values. Like any gamble, eventually you lose. The home values didn't rise as planned, the economy slowed down slightly, preventing them from refinancing, and when their sub-prime loans adjusted or ballooned, they were crushed financially.

Solution: Flat out, don't borrow money unless you know you can pay it back. I'd even say, never borrow money at all, but if your going to, make for sure that you can pay it off in the condition you are presently in. Not some theoretical future situation that doesn't exist yet. Doing so is playing with a snake, and your going to get bitten.

Second, the Lenders. You really don't need regulation on lending because if a lender gets burned enough loaning money to people who can't pay back, they'll be broke and out of business, or they'll figure out not to loan to people who can't pay back.

Now based on what I understand of how the market works, Fannie and Freddie have the greatest, most wide ranging influence in the industry. If they had been required to follow the standards the rest of the market has to, I wager very little of this would have happened. It's because they set the tone by offering secruitizing for loan that were sub-prime, at low interest rates, that caused the rest of the industry to believe it could follow the same pattern.

I'm way out of my zone, so if I'm wrong please do tell. Explain it if you can.

 

[TruthAboveAll]

Exodus 35 verse 2:
For six days work may be done, but on the seventh day you shall have a holy day, a sabbath of complete rest to the LORD; whoever does any work on it shall be put to death.

I'm Glad we don't follow that divine statement...

Not sure what any of this has to do with Freddie and Fannie though.

You don't? Freddie refused to rest on the Sabbath, and insisted on 7 day banking available to offer risky, sub-prime loans. So God, coming to visit as he was prone to do on the Sabbath, called out to Freddie, saying "Freddie, where art thou, and why aren't you in the Garden eating lovely fruit on this beautiful day?"

And Freddie answered the Lord, saying "Lord! I was only trying to make houses for all the birds of the air and dig holes for all the mice in the field! I had to break the rules and labor long and hard, getting all my friends to help, too. Fannie came along also, and we cleaned caves, cleared lagoons of debris, and even erected brush piles for rabbits. We knew that even though you've said we're in your image, that all rights should be afforded the least of all creatures, whether they deserve it or not, need it or not, or even want it."

And God looked upon all that Freddie had done, and saw that it was NOT good. So he promptly grabbed Freddie, turned him around and over his knee. Then he grabbed Fannie, for she had said to Freddie "Do it!" and he had done it, and whipped her through the air, saying, "Because you thought to do so poorly, I will make you a scourge, and a pain on his back side, which he will call from this day forth "Fannie." And the Lord God did scourge Freddie's Fannie for all the housing failures.

 

[BigRob]

I will attempt a rebuttal, but I do agree with what you have said, but here goes.

To a liberal, everything is to gain political points.
Hmm... I must be missing something. I was under the impression that the market followed Fannie and Freddie, not the reverse. In fact, it wasn't until the mid 90s when the feds started pushing for more home loans, through their sponsored corporations, that sub-prime loans began to rise.

"Fannie and Freddie may finance most of the home loans in America, but most of the home loans in America aren’t the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box. It is right to focus on the fact that it was the regulatory and charter constraints of the GSEs that kept that box closed. In the schizoid reality of the GSEs, when they had their “shareholder-owned private company” hats on they did plenty of envelope-pushing. When they had their “affordable housing” hats on, they rationalized dubious theories of credit quality–like the fervent belief that low or no down payment can be fully offset by a pretty FICO score–to beef up their affordable housing goals, often at the expense not of the poor put-upon “private sector” but of FHA, whose traditional borrower pool they pretty thoroughly cherry-picked. Nonetheless, the immovable objects of the conforming loan limits and the charter limitation of taking only loans with a maximum LTV of 80% unless a well-capitalized mortgage insurer took the first loss position, plus all their other regulatory strictures, managed fairly well against the irresistible force of “innovation.” If there has ever been an argument for serious regulation of the mortgage markets, the GSEs are it." (Krugman)

Is not the vast majority of the loans that have gone bust, been loans from Fannie and Freddie? Cheap low interest loans from Fannie and Freddie are what caused the bubble to exist. Without them, the private bank, most of whom didn't make sub-prime loans, would never have had the wide ranging power to create a bubble.

Fannie and Freddie did not give out these loans, they simply bought them from other banks who gave them out. Those banks looked at Fannie and Freddie and the government secured entity that would cover them should these loans start to have problems.

A substantial portion of Fannie’s and Freddie’s credit losses comes from Alt-A mortgages that the agencies imprudently bought or guaranteed in recent years to boost their market share. These are mortgages for which little or no attempt was made to verify the borrowers’ income or net worth. The principal balances were much higher than those of mortgages typically made to low-income borrowers. In short, Alt-A mortgages were a hallmark of real-estate speculation in the ex-urbs of Las Vegas or Los Angeles, not predatory lending to low-income folks in the inner cities.

That doesn't even follow logic. Fannie and Freddie where chocked full of sub-prime Securitization. There was more regulation on outside investment banks, than was on F&F.

It was this sub-prime securitization that put off the inevitable collapse of the housing market to begin with. The percent of sub-prime loans in the market (that Fannie/Freddie where buying up to increase market share, and were regulated out of getting into other markets) spiked in 2003 and then doubled to its current spot. Blaming a Clinton policy in 1995 for this seems a bit off base.

What? So if a bank doesn't merge with an insurance company... then it won't engage in predatory lending practices? Not logical.

I think the idea was that it enabled all of these companies to combine and sell all these bad loans to Fannie/Freddie, which only makes the problem that much worse.

In the end, the sub-prime melt down, is due to two people. Lenders... Borrowers...

Agreed, so what does some republicans in congress trying to reform Fannie and Freddie, who neither borrowed nor lent, have to do with this crisis?

Second, the Lenders. You really don't need regulation on lending because if a lender gets burned enough loaning money to people who can't pay back, they'll be broke and out of business, or they'll figure out not to loan to people who can't pay back.

Or they will bundle all their bad debt together and sell it to government backed companies, that then tanks the entire sector.

Now based on what I understand of how the market works, Fannie and Freddie have the greatest, most wide ranging influence in the industry. If they had been required to follow the standards the rest of the market has to, I wager very little of this would have happened. It's because they set the tone by offering secruitizing for loan that were sub-prime, at low interest rates, that caused the rest of the industry to believe it could follow the same pattern.

I'm way out of my zone, so if I'm wrong please do tell. Explain it if you can.

I would say that was more a government action than a Fannie/Freddie action.


So, that was my attempt at a liberal rebuttal, hope the debate can continue, or better yet, an actual liberal can come take over my side here.

 

[Andy]

Do you know who the son of Sam is? David Berkowitz. I am sure you probably do. When he was arrested it was right after they abolished the Death Penalty in New York State, so he was never given it. Had the death penalty been an option he would have gotten it and would have been dead within a year or so. But since it was not an option, he just stayed in prison for the rest of his life.

Today David Berkowitz is a saved man. His soul is redeemed. Had he died right after conviction via the death penalty we as a society would have killed his body and soul. I am not willing to meet my Maker with him knowing I supported that.

Anyways, I hope you understand where I am coming from. I do understand where you are coming from and respect it completely

I know what you are saying, and I'm all for God saving any man. No doubt he works in strange and incredible, unbelievable ways.

Nevertheless, the command to deal justice, and to punish murder with the sword, is not an option. It's a word from the creator of the universe. He doesn't say to follow his direction... unless we don't like it, or if violating it might save someone. God is not going to hold it against us for following his command, any more than he will withhold judgment for not following his command. Which side of that do you wish to be on?

Do you believe that if He wants to accomplish something, that us by passing a law is going to thwart God? Just think about that for a second. Is God biting his nails thinking "oh no, they might kill him!". If capital punishment in NY had not been abolished, you can trust that God would accomplished his goal in some other way. This is not such a wimpy God, that a few overpaid elected wind bags passing a law, can stop him. Otherwise, christianity would have been wiped out hundreds of years ago.

Consider this for a moment. Nearly every murderer sitting in death row, and the majority in prison for life, are second time offenders. People who were caught once, and allowed to murder again because we did not follow the Lord's command.

How many of those thousands of innocent murdered victims may not have been saved? How many were denied a chance to hear the Gospel because we failed to stop their killers the FIRST time, as God commanded? I hope you can see it from my perspective... I don't want to answer to God for that.

I don't want to stand before the White Throne Judgment saying the reason I completely disobeyed his command, completely disregarded his word, causing thousands of lives to be murdered before hearing of salvation, because I thought there might be another David Berkowitz on death row.

I can almost hear the reply. You were supposed to do as I instructed and let me worry about the David Berkowitzs of the world.

It reminds me of a bit of TV evangelists who commit fraud and shading accounting, and deceptive TV shows, and then claim they did it all to save people. Yes they might be saving people. However, if you're sinning, you are sinning, and there is no excuse.

This seems to read a bit harder than I had intended it to come across. This is not an attack. I am, as always, saying what I know about a topic Please don't take this as confrontational. When I think of how our God would want me to act, I remember this:

"Not everyone who says to Me, 'Lord, Lord,' will enter the kingdom of heaven, but he who does the will of My Father who is in heaven will enter. Many will say to Me on that day, 'Lord, Lord, did we not prophesy in Your name, and in Your name cast out demons, and in Your name perform many miracles?' And then I will declare to them, 'I never knew you; depart from Me, you who practice lawlessness'" (Matt. 7:21-23).

Quiet frankly, that scares the fire out me

 

[Pandora]

I know what you are saying, and I'm all for God saving any man. No doubt he works in strange and incredible, unbelievable ways.

Nevertheless, the command to deal justice, and to punish murder with the sword, is not an option. It's a word from the creator of the universe. He doesn't say to follow his direction... unless we don't like it, or if violating it might save someone. God is not going to hold it against us for following his command, any more than he will withhold judgment for not following his command. Which side of that do you wish to be on?

Do you believe that if He wants to accomplish something, that us by passing a law is going to thwart God? Just think about that for a second. Is God biting his nails thinking "oh no, they might kill him!". If capital punishment in NY had not been abolished, you can trust that God would accomplished his goal in some other way. This is not such a wimpy God, that a few overpaid elected wind bags passing a law, can stop him. Otherwise, christianity would have been wiped out hundreds of years ago.

Consider this for a moment. Nearly every murderer sitting in death row, and the majority in prison for life, are second time offenders. People who were caught once, and allowed to murder again because we did not follow the Lord's command.

How many of those thousands of innocent murdered victims may not have been saved? How many were denied a chance to hear the Gospel because we failed to stop their killers the FIRST time, as God commanded? I hope you can see it from my perspective... I don't want to answer to God for that.

I don't want to stand before the White Throne Judgment saying the reason I completely disobeyed his command, completely disregarded his word, causing thousands of lives to be murdered before hearing of salvation, because I thought there might be another David Berkowitz on death row.

I can almost hear the reply. You were supposed to do as I instructed and let me worry about the David Berkowitzs of the world.

It reminds me of a bit of TV evangelists who commit fraud and shading accounting, and deceptive TV shows, and then claim they did it all to save people. Yes they might be saving people. However, if you're sinning, you are sinning, and there is no excuse.

This seems to read a bit harder than I had intended it to come across. This is not an attack. I am, as always, saying what I know about a topic Please don't take this as confrontational. When I think of how our God would want me to act, I remember this:

"Not everyone who says to Me, 'Lord, Lord,' will enter the kingdom of heaven, but he who does the will of My Father who is in heaven will enter. Many will say to Me on that day, 'Lord, Lord, did we not prophesy in Your name, and in Your name cast out demons, and in Your name perform many miracles?' And then I will declare to them, 'I never knew you; depart from Me, you who practice lawlessness'" (Matt. 7:21-23).

Quiet frankly, that scares the fire out me

Andy, if you make a thread about this I would love to talk more. but I dont want to distract from the real topic, its an important one. I wish we could transfer what we have said so far to some other thread so it stays a fanny freddie topic. sorry for distracting the thread.

Crystal

 

[TruthAboveAll]

Andy, if you make a thread about this I would love to talk more. but I dont want to distract from the real topic, its an important one. I wish we could transfer what we have said so far to some other thread so it stays a fanny freddie topic. sorry for distracting the thread.

Crystal

And back on the subject....

This is from WSJ online from Sunday, 9/28. I'd missed it before. It IS an opinion piece, but the facts are solid and chronologically accurate.

We will look back on the failure of Congress to reform the government-sponsored enterprises at the heart of the mortgage meltdown as one of the most expensive derelictions of its duty ever. Fannie Mae and Freddie Mac used their lobbying clout, political contributions and even charitable largesse to charm or bully anyone demanding reform in their lending practices.

This is the opening paragraph and a brief summary of the conclusions in the piece.

 

[Mr. Carpenter]

Agreed, definitely. My question is, why are there RINO's, but no DINO's?

There are a few, but most, like Zell Miller and Joe Lieberman have left the party because while they may be Democrats, they're not Communists.

Watching the Senate or House in action on C-Span, I can sometimes only shake my head in wonderment (dismay?) that THESE are who we send to Washington to make laws and guide our country? I'm wondering if it's something found in coastal waters... at least north of the Mason-Dixon line.

You won't see them on C-Span, CNN, FoxNews, ABC, NBC, CBS, or anywhere else, except for their own local home TV stations, and then only when they're back home to talk to their constituancy. The Commies in the party leadership in Congress will marginalize them the moment they find out that they're not "politically viable", so they ensure that they never get a spot on any of the "proper" high profile committees, or get recognized by the chair, or even get their name on any legislation, and without those credentials, they don't get noticed.

 

[TruthAboveAll]

There are a few, but most, like Zell Miller and Joe Lieberman have left the party because while they may be Democrats, they're not Communists.

I'm 54. No spring chicken, but still with a limited long-term perspective. I need to go back and re-read Zell's book. I need to read Bernie Goldberg's book, too. We often decry that the Republican party has strayed from Conservatism and is the worse for it; the same is true for the Democrats, as their party is a far cry from what it was even 20 years ago.

Speaking about Communists, I've a point to share but am off to seek a thread that might be better for posting it...

 

[Andy]

the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box. It is right to focus on the fact that it was the regulatory and charter constraints of the GSEs that kept that box closed. When they had their “affordable housing” hats on, they rationalized dubious theories of credit quality–like the fervent belief that low or no down payment can be fully offset by a pretty FICO score–to beef up their affordable housing goals, often at the expense not of the poor put-upon “private sector” but of FHA, whose traditional borrower pool they pretty thoroughly cherry-picked. Nonetheless, the immovable objects of the conforming loan limits and the charter limitation of taking only loans with a maximum LTV of 80% unless a well-capitalized mortgage insurer took the first loss position, plus all their other regulatory strictures, managed fairly well against the irresistible force of “innovation.” If there has ever been an argument for serious regulation of the mortgage markets, the GSEs are it."

I'm lost. Clearly GSEs didn't prevent sub-prime mortgage purchases given the fact it forced Fannie Mae into bankruptcy... right?

Fannie and Freddie did not give out these loans, they simply bought them from other banks who gave them out. Those banks looked at Fannie and Freddie and the government secured entity that would cover them should these loans start to have problems.

Yes of course. Do you believe a private institution would make these loans, if a government backed company, such as Fannie Mae or Freddie Mac, would not securitize it from risk? If you knew, you were going to eat the bullet for a sub-prime Alt-A loan, I doubt you'd make the loan unless you knew for sure you could cover it. They knew they could cover it, not from their capital, but from Fannie Mae's capital. Which Fannie Mae knew they could cover it, not from their company, but from government backing.

A substantial portion of Fannie’s and Freddie’s credit losses comes from Alt-A mortgages that the agencies imprudently bought or guaranteed in recent years to boost their market share. These are mortgages for which little or no attempt was made to verify the borrowers’ income or net worth. The principal balances were much higher than those of mortgages typically made to low-income borrowers. In short, Alt-A mortgages were a hallmark of real-estate speculation in the ex-urbs of Las Vegas or Los Angeles, not predatory lending to low-income folks in the inner cities.

And was it not Frank Raines who championed this program to boost minority home ownership?

It was this sub-prime securitization that put off the inevitable collapse of the housing market to begin with. The percent of sub-prime loans in the market (that Fannie/Freddie where buying up to increase market share, and were regulated out of getting into other markets) spiked in 2003 and then doubled to its current spot. Blaming a Clinton policy in 1995 for this seems a bit off base.

I would suggest it was also securitization that led those companies to believe they had shifted the risk off enough to make the risky loans. Now I'm not against securitization. However, I would suggest that it's possible without F&F securing sub-prime loans, I don't think other private institutions would have done it. If they hadn't done it, I don't think there ever would have been a sub-prime bubble.

I think the idea was that it enabled all of these companies to combine and sell all these bad loans to Fannie/Freddie, which only makes the problem that much worse.

I'm not seeing it. Merging with an insurance company, or are stock broker company, and being able to bundle Conventional and sub-prime mortgages, to me does not seem to be related. Further, the bill in question only address the merger ability, not the bundling loans ability.

Agreed, so what does some republicans in congress trying to reform Fannie and Freddie, who neither borrowed nor lent, have to do with this crisis?

There is two issues at hand. First is the cause of the sub-prime bubble, and the second is Fannie and Freddy going broke. I contend neither are a crisis.

With F&F going broke, the problem was not keeping the capital on hand to cover the loans outstanding should they fail. This has to do with F&F being government sponsored, and cooking the books, and not following the established rules the govern the rest of the industry. The Republicans attempted to reform this, and the democrats thwarted that attempt. The results are obvious.

The second, I would suggest is not directly responsible, but played a major part. By allowing F&F to secure questionable risky Alt-A loans and sub-prime loans, F&F set a tone for the industry, since they are the dominate ones. Private mortgage companies became willing to lend these risky loans because they knew F&F would buy them. Once F&F started buying them, the rest of the industry followed suit.

I would say that was more a government action than a Fannie/Freddie action.

F&F are ultimately pawns. Socialized. Yes some might claim they were privatized, but as I pointed out in the other thread on Socialist CEOs... all the CEOs were government appointed, and a revolving door for liberals who needed a place to stay. Obviously it was socialized since it required government about 1 day to plan to take completely control again. There wasn't even a hint at letting the companies fail, like would be expected if a private company failed.

 

[Libsmasher]

BigRob:

3) While Republicans were attacking Fannie/Freddie, the housing bubble was being pushed to the limits by other banks, that would have maintained and burst the bubble, even if Fannie and Freddie did not exists.

Where the hell did you come up with that??? What "other banks"? NO BANK would make ANY of the kind of risky loans that caused the credit crisis unless Fanny and Freddy agreed to be a secondary market for them, which they did. The inability of people here to grasp what happened, when it is crystal clear what happened, is driving me up the wall!

 

[BigRob]

Where the hell did you come up with that??? What "other banks"? NO BANK would make ANY of the kind of risky loans that caused the credit crisis unless Fanny and Freddy agreed to be a secondary market for them, which they did. The inability of people here to grasp what happened, when it is crystal clear what happened, is driving me up the wall!

Don't get mad here, I do not even agree with my comments, I am just attempting to make the liberal argument since the resident liberals don't have the balls to argue it.

 

[Mr. Carpenter]

Bill Clinton admits that the Democrats in Congress are responsible for the current crisis...

OOPS!

 

[bododie]

Bill Clinton admits that the Democrats in Congress are responsible for the current crisis...

No, HE'S responsible. Congress merely backed HIM. Oh wait a minute, no he's totally irresponsible and immoral about everything. Never mind....

 

[Mr. Carpenter]

Oh, and while we're at it, CONCLUSIVE PROOF that the Bush Administration has been trying since he has been in office to fix the problems with Fannie and Freddie, but has been blocked by the Democrats in Congress.


And why would the Democrats block efforts to fix Fannie and Freddy? Follow the money!

Chris Dodd, Barack Obama, Harry Reid, Hillary Clinton, Barney Frank, Chuck Schumer, Maxine Waters, Gregory Meeks, Lacy Clay (who plays the "race card" because his "boy" Raines screwed up so bad and got called on it), Artur Davis, but who else was involved?

Does the name Andrew Cuomo ring any bells? Franklin Raines? Jim Johnson? Jamie Gorelick?

Now, you libs were saying...WHAT?????

 

[bododie]

Now, you libs were saying...WHAT?????

Something equally important like Palin shot a moose...