Skip to comments.US working on plan to help homeowners refinance (Greenspan quotes)
Posted on 10/23/2008 11:57:51 AM PDT by Shermy
WASHINGTON Federal regulators told Congress Thursday they're working on a plan that could help many distressed homeowners escape foreclosure in a global financial crisis that Federal Reserve Chairman Alan Greenspan warned will get worse before it gets better.
Greenspan called the banking and housing chaos a "once-in-a-century credit tsunami" that led to a breakdown in how the free market system functions.
Accused of contributing to the meltdown, but denying that it was his fault, Greenspan told a House panel the crisis left him an unabashed free-market advocate in a "state of shocked disbelief."
The longtime Fed chief acknowledged under questioning that he had made a "mistake" in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions. Greenspan called it "a flaw in the model that I perceived is the critical functioning structure that defines how the world works."
..Greenspan told the House Oversight Committee he was wrong in believing that banks would be more prudent in their lending practices because of the need to protect their stockholders.
...Committee Chairman Henry Waxman, D-Calif., suggested that Greenspan contributed to "irresponsible lending practices" by rejecting appeals that the Fed intervene to regulate a surging subprime mortgage industry.
...."My question for you is simple," Waxman told Greenspan. "Were you wrong?"
"Well, partially," Greenspan said.
But he went on to assign the blame on soaring mortgage foreclosures on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.
He said what had been "a critical pillar to market competition and free markets did break down. And I think that, as I said, shocked me. I still do not fully understand why it happened."
(Excerpt) Read more at news.yahoo.com ...
He is SHOCKED! SHOCKED! Gambling was going on there. HAHAHAHA!! My laugh of the day.
us government is not helping homeowners refinance. the same crooks that got this started are still doing the same old things. 1500 and up added to their oringal loan and financed longer is not help. the us goverment is in the middle of the biggest hiest of taxpayer money that the world has ever seen. the homes could be purchased and given free of charge to the buyers much cheaper than this heist is costing us.
Okay, let's list all the ways the worldwide financial crisis had "victimized" these distressed homeowners who are in danger of foreclosure---
Number One. -- The homeowner signed a mortgage note and is now having difficulty making the payments required under the note.
Number Two.-- ..... Uh........
Hey, maybe the "distressed homeowners" are more the cause of the worldwide financial crisis than the victim of it.
Now explain again, please, exactly why I am supposed to have my tax dollars bail these people out.
the government is holding meetings and making statemenst to keep the panic alive. whay?
“an unabashed free-market advocate in a “state of shocked disbelief.”
...The longtime Fed chief acknowledged under questioning that he had made a “mistake” in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions. Greenspan called it “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”
...Greenspan told the House Oversight Committee he was wrong in believing that banks would be more prudent in their lending practices because of the need to protect their stockholders.
...But he went on to assign the blame on soaring mortgage foreclosures on overeager investors
Greenspan is scary. He’s scared that the “free market” acts freely. And he blames everyone, even himself, except the real culprits — the traders and officials at the very institutions that incentivize them with salaries, bonuses and options to inflate and invent weird instruments and increase risk.
I almost have sympathy for him, though. He always was a delusional libertarian cult-of-the-CEO type. But here he sounds actually dimwitted, stupid. It appears he cannot even imagine that the free market acted freely and in this “free” market market actors acted in their self-interest and profited greatly. He has some kind of fantasy abstraction of a “free market” that is not free and works to his imagination, where “distorted markets” are some kind of non-”free” event.
Waxman arguing about no regualation in the mortgage market is a jewel. Article shows that Bush will not follow Bernanke’s idea and force the banks to restructure loans, they will incentivize it with govt. “guarantees,” which only guarantees that banks will do nothing until they see whether they get this, yet another, taxpayer benefit.
A few years ago, I read a story in the paper that contrasted two thefts...
The first person pilfered approx $100,000 from her company over a number of years. She was caught. The financial part of her punishment was a garnishment of her wages until she paid everything back. However, since she was now a felon, it was expected that she would never dig out of this financial hole.
The second person stole hundreds of millions. He did his time for it in prison. He now commutes by helicopter.
The moral of the story? If you’re going to steal, steal a lot!
What does this have to do with this thread? Well, many people bought homes they knew they couldn’t afford while many more of us bought reasonable homes which we work to maintain. Those who overbought will now receive an “adjustment” to their mortgage to make them more affordable...
“He is SHOCKED! SHOCKED! Gambling was going on there. HAHAHAHA!! My laugh of the day.”
He will blame himself even before giving consideration to his cherished cult-like belief that in his “free” market has secret controls whereby traders, company officials, etc. don’t act in their self-interest to maximize their salaries, bonuses and benefits. It’s a libertarian delusion.
Not only has he always been wrong, he sounds like a complete idiot here. He cannot come to grips that his imaginary fantasy world of “free” market finance has all sorts of assumptions that mandate controls.
My instinct tells me you're right. This post should have a "party" with it (D) or (R)... it's AP - so they want to stick it to Republicans.
He was Chairman of The Fed. The biggest Ponzi scheme in history. The Ponzi is busted and we all fall down. This is going to be much worse than people think going forward.
Yes. I'm feeling screwed over multiple times here. First the speculators drove up the cost of housing beyond what my wife and I could responsibly afford. Then when the music stopped and the speculators were left over their heads in debt, the government starts talking about how to bail out the speculators. This has the net result of keeping housing prices out of reach of responsible buyers like my wife and I.
Thanks a lot D.C.
who holds congress and had the most to do with this mess.
Kermit the Frog Greenspam?
is he still trying to curb the not existent inflation!
what an incompetent $7 Trillion ass...
he should have stuck to the saxophone.
all I wanna know is how much his wife made off the Stock Market while he was Fed Chairman!
He didn’t utter a single syllable implicating Congress.
No mention that guys like Schumer and Conyers were willing to take banks to court for not lending to the poor.
The banks heard, “Do it, or else.” And they did it.
As for the CDS’s, again, nothing. Not a word.
Mr. Andrea Mitchell is a pimp, and holds large responsibility for the mess we are in. Not to mention his testamony undermining the existing administration in Tresury, Reserve, and Banking.
He should hide somewhere and cry a little, because the history books, eventually, are going to hang this one right in his posterior.
"I believe that banking institutions are more dangerous to our liberties than standing armies." (Thomas Jefferson, US President; 1743 - 1826)
“Then when the music stopped and the speculators were left over their heads in debt, the government starts talking about how to bail out the speculators”
Reading between the lines of article, the Bush Admin and Congress are not going to do one thing to compel the banks to refinance loans to eat some losses they caused. There will be “government guarantees” that will supposedly incentivize refinancings — of course this means no risk, no responsibility for banks.
Early on in this crisis Bernanke sounded sane and said banks should be compelled to refinance, a govt. intrusion, yes, but at no cost to the US taxpayer.
No big deal because these were due to “big Oil” layoffs. Anyway, the banks would cry about their losses... The monies they lost were not the numbers they loaned.
I figure banks are doing just fine with this bailout. Money they would never reap over 30 years are being pumped back overnight.
I should be in the ink business!
“The banks heard, Do it, or else. And they did it.”
You know what else they are hearing right now?
They are hearing the government might bail them out, so they are going to sit still until they hear how. To not take advantage of govt. bailouts would be a breach of fiduciary responsibilities to shareholders, and would risk losing jobs.
They are also hearing that under Paulson’s first auction plan mortgage backed securities would be evaluated and valued. To not wait out this valuation process to judge by comparison what the value of the paper they themselves hold would be stupid and maybe a breach of fiduciary responsibilities.
They are also hearing that maybe the auction plan won’t be so big, or not. They certainly don’t trust Paulson and his cronies to be fair across the board. Then they hear the govt. will forcibly take shares in big banks and the Europeans’ urging. Still possible? Now we have Greenspan admitting he was a fool, after Bush’s daily scare noise, and new ideas here presented.
A big reason for the supposed “credit crunch” is the banks awaiting the Bush administration decision, and its ongoing indecision. Complete incompetence.
“I figure banks are doing just fine with this bailout.”
Except for Paulson and his New York investment bank crowd, I don’t see any significant American bank execs or orgs. clamoring for something.
But if something comes for them by happenstance, they might as well take it. They have no incentive to say “we don’t need it”, why give up freebies?
The only bankers reaction I’ve seen is when Bush floated the idea that the govt. would take shares in banks, even if they didn’t want govt. ownership, an idea apparently forced on Bush by the Europeans to whom this seemed the way to go rather than Paulson’s ridiculous direct purchases of derivatives.
The Bush Admin is flopping like a landed fish. The banks must wait for the “conclusion” to caluculate their actions.
Also, we must consider that Bush is not getting the best advice from Paulson who is protecting himself, his prior actions, and his subset of friends and cronies in the finance industry. Yesterday or so he made a comment on behalf of China that we should work with them in the future, blah, blah.
Paulson traveled many times to China to hawk Goldman’s derivatives.
Greenspan needs to exit stage left and stay silent..
Bottom Line: Congress got us here. Period.
That the Bush Administration didn’t know what to do about 64.5 Trillion in CDO liability that would come home to roost if someone didn’t bail out every institution that had CDO exposure? I think I can forgive that in light of the fact that total economic activity globally in 2007 was only 53.7 Trillion.
Consider that Sarbanes Oxley requires companies to notify the market with an 8-K to any material change in projected earnings or material condition of the company. The irony is that if Bear Sterns had actually complied, then it would have tanked the market more suddenly that what actually has occurred.
We don’t know everything, just what we can measure from the outside. It wouldn’t surprise me if the Feds told these failing banks not to comply with Sarbox in the interest of national security.
Starting with Glass-Steagal being repealed, coming up throught he Ethanol bill, and continuing through to the Fannie/Freddie ‘ignorance’ in Congress, it’s on their heads.
That Bush signed the Ethanol act was particularly loony, but hey.
People seem to forget the old adage:
“Banks love foreclosures”