Skip to comments.Wells Fargo CEO: Get gov’t out of “the home loan business”
Posted on 01/07/2013 12:25:29 PM PST by SeekAndFind
Policy-wise, this is an oldie but a goodie, I guess, even though we’re still spending tons of money on Freddie Mac and Fannie Mae more than four years after the crash. Wells Fargo CEO Robert Kovacevich can't believe that we haven't learned the lesson from 2008 and gotten the government out of the home mortgage industry, and tells CNBC's Squawk Box that the two organizations made that crash exponentially worse than it needed to be:
Fannie Mae and Freddie Mac exacerbated the 2008 mortgage crisis, and that’s why the U.S. government should get out of the home loan business, former Wells Fargo CEO Richard Kovacevich told CNBC on Monday.
“If it wasn’t for Fannie and Freddie, [the mortgage crisis] would have been a small problem. Fannie and Freddie and other government agencies guaranteed 70 percent of those [bad] mortgages,” Kovacevich said in a “Squawk Box” interview. He argued that without government-sponsored guarantees, there would not have been any private money willing to buy the toxic loans that have been blamed for the crisis.
“There needs to be a decision that the government will not be in the mortgage business in the sense of a hybrid [like Fannie and Freddie],” Kovacevich said. He did say that if the government wants to be in the home loan business, it should do so through the Federal Housing Administration, which has worked well for a long time.
I’m not sure that’s any better, since the Obama administration uses FHA the same way Congress used Fannie and Freddie. Erika wrote nearly two months ago that FHA might need a bailout itself, thanks to their adoption of the Fannie/Freddie model in order to push lending to riskier recipients. I’ve been writing about that since 2009, and even if the bailout would cost significantly less, it’s yet another example of how government distortion in lending and securities markets are nothing but a set-up for disaster — a lesson we shouldn’t have to relearn after 2008.
Speaking of which, remember when the Obama administration and Democrats said that they couldn’t take up Fannie/Freddie divestment in Dodd-Frank because of the complexity involved, and said that taxpayer protection from these sinkholes would be tackled separately? Whatever happened to that effort?
Most of you SOB’s supported Obama. So, enjoy the fruits of your labors.
Wells Fargo is awash in ALT A Mortgage “Liar” loans to illegals which precipitated the whole mortgage debacle. Kovacevich can go choke on those.
What they really want is the govt to stop enforcing property laws so they can foreclose at will.
They like the govt bail outs and free govt loans.
Heck they dont even mind the forced loans since they just sell those back to the govt thereby making a profit coming and going.
Some people still haven’t figured out that Ubama’s government owns your @$$.
An assortment of Federal regulators coming to Get His Mind Right in 3....2.....1.....
I was a bank executive and started preaching against government involvement in the home loan business 3 decades ago.
Did I use FNMA, FHLMC, GNMA and even Countrywide for liquidity? You bet.
Did I turn down or cause my staff to turn down loan requests that didn't make sense? You bet.
The vast majority of bank executives did not do that, and look where we are.
Short-term fees vs. long-term benefits to society, the economy and the health of the banking industry.
The people with a conscience lost that argument.
Only after they 'inherited' them from Wachovia. Before that shotgun wedding (with the Honorable Hank Paulson presiding) Wells had a pretty clean balance sheet.
We started to get a mortgage from Wells Fargo a few months ago(we had always used them for checking and they didn’t seem so bad). They were so disorganized and just flat out stupid about the whole thing, we ‘fired’ them early on in the process.
Wells Fargo is not bad. Bank of America on the other hand is the worst bunch of a$$ clowns ever. Absolute morons.
We used Wells Fargo for our construction loan and it was a nightmarish experience. The problem seemed to be that they were forced to expand their loan department so quickly, to meet the government mandated demands that the loan officers were not fully trained, but after we converted the loan to a regular mortgage, it has been fine, except that they have changed personnel again, this time to bi-lingual employees, again as a result of government dictats.