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U.S. seizes Fannie and Freddie
CNN ^ | 9/7/2008 | David Ellis

Posted on 09/07/2008 9:02:41 AM PDT by CodeToad

NEW YORK (CNNMoney.com) -- Federal officials unveiled an extraordinary takeover on Sunday of troubled mortgage giants Fannie Mae and Freddie Mac, signaling the most dramatic move to date aimed at shoring up the nation's housing market.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Breaking News; Business/Economy; Front Page News; Government
KEYWORDS: fanniemae; freddiemac; govwatch; housingbubble; lp; mortgage; rino
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To: TigerLikesRooster; M. Espinola; Calpernia; CodeToad; Uncle Ike; RSmithOpt; jiggyboy; 2banana; ...
Oh, well, too late now. The government is going down this hazardous road regardless of what millions of people think. Paulson and Berneke are hell bent to bring down the house of cards. Nobody listens to me anyway.

Watch This Video -- If You Have the Courage

Hate say 'told you so' but i did. Who gets bailed out? The Wall Street gang who got America into this mess. The same people who gave F & F enough rope to hang. The BIG Boys get corporate welfare. Not ordinary Americans who got suckered into buying stocks.

101 posted on 09/07/2008 4:26:20 PM PDT by ex-Texan (Matthew 7: 1 - 6)
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To: aimhigh

Greenspan championed the deregulation. Personally, I hope he takes the hit in history books for this debacle of the century. I’ve heard numbers like $2 trillion.


102 posted on 09/07/2008 4:37:39 PM PDT by Rockitz (NObama 2008- Strange we ain't believin')
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To: Freedom_Is_Not_Free
But, But, But Chris Dodd said they are fundamentaly strong.

http://www.marketwatch.com/news/story/sen-dodd-calls-fannie-freddie/story.aspx?guid=%7B6D500286-5BDC-433B-A2EF-A9B3CE520ADE%7D&dist=hpts

"This is not a time to be panicking about this. These are viable, strong institutions," Sen. Christopher Dodd, D-Conn., said at a Capitol Hill press conference. The comments came as the two government-sponsored enterprises continued to be the focus of growing fears they could be insolvent or could face a capital crunch.

"The economics are fine in these institutions and people need to know that," Dodd said. There's no reason "to talk about failure," he added. Dodd, who chairs the Senate Banking Committee, said he had spoken earlier with representatives from the Federal Reserve, Treasury Department, the executives of Fannie Mae and Freddie Mac, as well as their regulator, the Office of Federal Housing Enterprise Oversight.

He said he was reassured that the firms are "fundamentally sound," have access to the capital markets, and have plenty of capital. "These two institutions are fundamentally, fundamentally strong," Dodd said. "There's no reason for the kind of reaction we're getting."

103 posted on 09/07/2008 4:38:00 PM PDT by Orange1998
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To: BatGuano

Is it true that Clinton placed his people in charge of these two agencies before leaving office and they in turn led the agencies into bad banking practices lining their pockets??


104 posted on 09/07/2008 4:40:28 PM PDT by elpadre (nation)
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To: Freedom_Is_Not_Free
Fannie-Freddie debt has been holding up interest rates.

This backing of their debt will lower the yields on their bonds and ease down mortgage rates overall.

105 posted on 09/07/2008 4:43:37 PM PDT by what's up
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To: aimhigh

^^^^^^It should be noted that Clinton signed the 1999 bill that allowed for bank deregulation, resulting in the subprime mess.^^^^^^

Can you elaborate on that?

Link?


106 posted on 09/07/2008 4:47:15 PM PDT by Halfmanhalfamazing (I'm an illegal journalist. Just doing the job that the mainstream liberal media no longer want to do)
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To: Freedom_Is_Not_Free

“ARMs reset “

I was questioning at dinner tonight how many of those ARMs are for homes that will not have the 20% equity or the 36% income ratio required and will not be able to be approved for a 30-year fixed. I suspect that number is in the millions.


107 posted on 09/07/2008 4:48:21 PM PDT by CodeToad
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To: what's up

It was Bank of America that bought Countrywide.


108 posted on 09/07/2008 4:50:47 PM PDT by javachip
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To: ex-Texan

Excellent summation. I have said in the past that as long as the bankers(lenders) and appraisers could keep up the delusion of rising property values, it was a no risk scheme.

Till the music stopped.

And now the music is over. The fat lady done sang her heart out. And instead of there being only one fewer chair in the game, there’s only one or two chairs left.

And while there are many here who blame the “greedy borrowers” who wanted more house than they could afford, in truth the banks and lenders were the professionals who had the licenses and responsibilities to do due diligence.

Mr. and Mrs. Joe6P who wanted a little bigger house because she had one in the oven does not even come close to the magnitude and scale of tens of thousands of loans, maybe hundreds of thousands, made by the “professionals” when they KNEW it could not go on forever.


109 posted on 09/07/2008 4:53:36 PM PDT by djf (I always see turkeys in Oregon. Sometimes, I see birds as well.)
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To: ex-Texan
Good Video

I am waiting for the board to sue Merrill's golden boy Stan O'Neil. He pocketed $250 million on his way out the door after destroying the firm.

110 posted on 09/07/2008 4:53:58 PM PDT by Afronaut (It's 1984)
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To: Freedom_Is_Not_Free

When I was a kid, we moved to Sacramento in 1974 and bought a home for $29K. 6117 Jeanine Drive. Had an 18 foot deep back yard and faced I-80. We sold it in 1974 for $32K. In 1979, it sold for $95K. Today, I just checked, it has an assessed value of $237k.


111 posted on 09/07/2008 4:57:29 PM PDT by CodeToad
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To: ex-Texan

When the revolution starts the first people shot should be the CEOs and investment bankers who orchestrated this mess as well as those in the government who enabled them.


112 posted on 09/07/2008 4:59:15 PM PDT by Rockitz (NObama 2008- Strange we ain't believin')
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To: javachip
You are correct.

Wachovia also has huge exposure to the mortgage industry.

113 posted on 09/07/2008 5:00:49 PM PDT by what's up
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To: Virginia Ridgerunner

No offense to the attorneys on this board... but

Lawyers and doctors have some of the worst business sense out there, as a percentage of the management population.

Why oh why would someone put Gorelick, who oversaw part of the justice department (right?) in charge of big business like this?


114 posted on 09/07/2008 5:07:13 PM PDT by laxcoach
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To: Afronaut
I am waiting for the board to sue Merrill's golden boy Stan O'Neil. He pocketed $250 million on his way out the door after destroying the firm.

I want seizures and jail time for this greedy b@$+@rds.

115 posted on 09/07/2008 5:11:17 PM PDT by Rockitz (NObama 2008- Strange we ain't believin')
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To: TruthConquers
"The trouble is that many banks have their required reserves IN Fannie and Freddie “preferred stocks.”

Yeah, right out of the Japan model.

"Given that Treasury can hold these securities to maturity, the spreads between Treasury issuances and GSE MBS indicate that there is no reason to expect taxpayer losses from this program, and, in fact, it could produce gains."

Just don't let HUD get in on this.

The Fed can hold to maturity. More likely, these very banks being bailed out will offer to take the good stuff off Uncle Sam's hands ala the Savings and Loan fiasco. Leaving the Feds with crap.

yitbos

116 posted on 09/07/2008 5:19:45 PM PDT by bruinbirdman ("Those who control language control minds." - Ayn Rand)
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To: Attention Surplus Disorder
We are witnessing the single biggest step towards economic and financial socialism this country has ever taken.

You know its bad when even NBC news hints at the implications.

117 posted on 09/07/2008 5:22:53 PM PDT by Lijahsbubbe
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To: Freedom_Is_Not_Free
It should be noted that the Republicans OWNED the house and Senate at the time. It should be noted that the repeal of Glass-Steagall was sponsored by REPUBLICAN Phil Gramm in the Sentate and REPUBLICAN Jim Leach in the House.

It should be noted that the REPUBLICANS caused the subprime mess. Thank you very much. All Clinton did was Co-opt everything the Republicans were pushing for and make it sound like his own idea, so he could take credit for it. Without doubt, Clinton signed the repeal. He is partly to blame. Without doubt, the repeal of Glass-Steagall was written and sponsored by REPUBLICANS in both the House AND the Senate.

The idea from both Donkeys and Elephants is to make Wall Street rich and to rape the little guy of his money. Works great, don’t it?

You're going to hurt alot of people with that post. What will they do without a team to root for?

118 posted on 09/07/2008 5:29:36 PM PDT by Lijahsbubbe
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To: CodeToad

“I don’t think it is either. I see it this way: The feds and the markets have conspired for various reasons using various means over a number of years (75+) to create a housing market by which people must take loans or else least be unable to afford a house. Now that those practices have resulted in a negative outcome for both the markets and the feds, we are treated to the announcement that credit shall be dried up considerably and that we must now pay the price; not the markets pay the price, homeowners and taxpayers will pay the price.’

Well, I am not one for ascribing blame so much. There’s just too much to go around.

Also, I am not so much an absolute purist on the very existence of F&F. Having to borrow to afford a home is not, in and of itself, that much of a bugaboo for me. I WILL say that the process was allowed to run utterly amok. And further, concurent with the gross relaxations of underwriting standards was the wholesale toss-out of nominal debt-servicing guidelines. Which amounts to pretty much the same thing: Homes have sold, before the insane runup of the past 5 or so years, for roughly 3x the median income for a given area. Of course, there are fancier and more spartan homes in any particular area, and that’s how it should be, I’d say.

If we can agree that homeownership is generally a net positive to society, for a pile of fairly obvious reasons, I don’t have a problem with the secondary mort mkt created by the “invention” of F&F. As I’ve said (may have been in another thread) I think most would agree that within nominal bounds the creation of F&F have been net positives. Enable homeownership; free up lending capital on the part of local banks; give investors something good and solid to invest in; Help build up townships & cities. Up to now, they have been a fairly transparent game that offered those benefits to borrowers and lenders, and under good supervisory guidelines (LTV, debt svce ratios, etc) were probably responsible for much of the growth in the country’s housing stock. Yeah, a little bit socialistic, but nothing’s perfect.

By seizing F&F, though, I still believe this is a “biz as usual” move. Because under the plan, per what I’ve gleaned so far, until 12/09, F&F will actually EXPAND their book of business by about 20-25%; and thereafter REDUCE their book of biz by 10% per annum.

Why do I think biz as ususal?

1: Because the Tsy and Fed have effectively given the banks the above deadline before which they will be able to make final determinations as what loans they should dump into the cesspool. Together, F&F are intended to increase their books by $144 billion over the next 16 months.

2: The CURRENT holders of preferred debt are being subordinated (the ol’ switcheroo) behind newly issued preferred shares, which the government will own and which will yield 10%. This in a sub-4% rate environment. The Govt will assume control of 80% (actually 79.9% but let’s not quibble) of the books of F&F. Roughly 9% of current mortgages are in arrears in various forms; but few think that the bondholders would take more than 5% haircut if F&F were liquidated. A loss, sure, but not a catastrophic loss. How this is expected to “strengthen” F&F is totally beyond me. Between the preferred divs old and new, F&F are going to have to earn something like 10.5% to pay that vig on the new shares. I have no idea of the composition of F&Fs’ current book as to adj vs fixed morts, but suffice it to say that nobody with functioning neurons who was able to refi in the 5% range hasn’t done so. So, let’s say 25% of their books average 5.5% fixed and 75% are variables. Maybe my wild-ass guesses are way off, but I see NO BLOODY WAY F&F can pay the Feds 10% interest without forcing fire sales of distressed assets, which, again, I say will be snapped up by “insiders”. And thus, this formula seems specious from the very beginning, meaning it will be forced to change again. And again. Per which side of the bed the Hankster woke up on. The WAY it is likely to change, IMO (which could be 100% wrong) is to FORCE SALES which will drive down collateral values and endanger reserve ratios in the regional banks. So, I kind of see this as a self-built-in “Trojan Horse” defect with its own built-in-from-the beginning failure mode which will force this whole plan to be adapted again and again as time goes on and RE values decline.

3: And so, the originating banks will end up the beneficiaries NOW by getting rid of their worst crap, and THEN; by being both able (recapitalized) and clued-in to the best deals during the post 2009 cleanup phase.

My bottom line is that the seizure IMMUNIZES the banks (and the Chinese and Japanese) against preferred-share default yet guarantees NOTHING to the taxpayers (flowery language notwithstanding) because there is only most outlier case that the new preferred will be able to support a 10% coupon without scavenging the soundness of the current preferred and current debt. But THAT debt, despite being peddled as NOT backed by the Feds, is NOW BACKED by the Feds! So IMO, the seeds are, as we speak, being sewn for this running sore to get worse and worse. But Paulsen will be kicked out of office by then and someone else can play janitor.


119 posted on 09/07/2008 5:31:56 PM PDT by Attention Surplus Disorder (Congrasites = Congressional parasites.)
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To: Orange1998

We have heard nothing but lies since Bernanke said “subprime is contained and won’t affect the real economy.” In fact, the lies began long before that when Greenscam said there was no housing bubble.

Bank losses. Strength of the economy. GDP. Inflation rate. Employment numbers Nothing but lies. These aren’t the economic numbers you are looking for. Move along, move along...


120 posted on 09/07/2008 5:47:08 PM PDT by Freedom_Is_Not_Free
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To: what's up

OK, that makes some sense. They have a lot of clout and I can see the possibility there. Thanks.


121 posted on 09/07/2008 5:48:39 PM PDT by Freedom_Is_Not_Free
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To: elpadre
There was a post, to that effect, of July 20, 2008. An article from The Economist of 7/17/08. that describes the eventual plunge of the two Gov’t Agencies that have let us all down. Raines and Gorelick were two of many Clinton appointees who have enriched themselves.

Unbelievable banking practices are more like it in this case. Basically they have built a house of cards with derivatives and, with the slump in real estate values, we are in for a rough ride. Is it this President's fault? No, not entirely, he inherited crooks that should have been fired and he did not have a magic ball to tell him that or how and when the bubble would burst.

122 posted on 09/07/2008 5:50:25 PM PDT by BatGuano (Go John and Sarah!)
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To: what's up

By the way, I’ve been under the belief that the higher mortgage rates were due to inflation fears, so I didn’t think FnF would impact the rates much in light of inflation fears. Any comment on that? Don’t the inflation fears still dominate the 10 year bond and mortgage rates, or am I missing something?


123 posted on 09/07/2008 5:50:47 PM PDT by Freedom_Is_Not_Free
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To: Freedom_Is_Not_Free
This you tube gives the scoop in laymen terms. http://www.youtube.com/watch?v=rWP787wq0rQ&feature=related
124 posted on 09/07/2008 6:01:20 PM PDT by Orange1998
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To: Attention Surplus Disorder

I don’t think the 10% on the gov’t super deluxe ultra preferred is a problem. The Treasury is only kicking $1 billion to each company for the super preferred, so FNM and FRE each just added $100 mil per year to their outgoing cash flow. But, they eliminated the dividend payment on all existing common and preferred stock.

Up until this weekend, Fannie was paying 20 cents per year per share of common on over a billion shares. That’s $200 mil of annual dividend payout that they won’t be making under this deal. And they won’t be making dividend payments on the existing preferred, don’t know how much that was. Bottom line - Fannie is now paying out substantially less than they were before. I didn’t check Freddie, but suspect it’s a similar situation.


125 posted on 09/07/2008 6:07:14 PM PDT by javachip
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To: CodeToad

As you would expect, approximations of upside-down home owners are all over the map. But yes, millions of homeowners are certainly upside-down.

Moody’s: 8.8 million are upside-down

http://calculatedrisk.blogspot.com/2008/02/moodys-88-million-homeowners-underwater.html

Goldman and Morgan: 10.5 million

http://poorbuthappy.com/yourthing/post/how-many-northamericans-are-upside-down-in-their-mortgages/

Bloomberg: 15 Million

Seeking Alpha: 14% of all 45 million homes = 6.3 Million

The numbers will get worse as home prices continue to go down. As yet, there is no bottom in sight.


126 posted on 09/07/2008 6:08:32 PM PDT by Freedom_Is_Not_Free
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To: CodeToad

Real estate has been a solid long term investment over the years, generally keeping ahead of inflation.

FWIW, $29,000 in 1974 is worth about $130,000 today based on inflation, although I am cynical enough to believe that all inflation calculators use the government’s “official” numbers and therefore under report actual inflation over that time. I’ll bet that $29,000 converts between $180,000 to $200,000 in actual experienced inflation, not the governments fudged numbers. But that is a whole different discussion.

Also, FWIW, Zillow shows that home on Jeanine worth $192,000.


127 posted on 09/07/2008 6:20:22 PM PDT by Freedom_Is_Not_Free
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To: Freedom_Is_Not_Free

Yes, I got my heads up at this link:

http://www.nakedcapitalism.com/2008/09/bye-bye-banks-freddie-and-fannie.html


128 posted on 09/07/2008 6:29:28 PM PDT by TruthConquers (Delendae sunt publici scholae)
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To: Halfmanhalfamazing
Can you elaborate on that? Link?

Here's a couple I've read:

http://www.amazon.com/tag/politics/forum?_encoding=UTF8&cdForum=Fx1S3QSZRUL93V8&cdThread=Tx3JQJ161HMTA1N

Here's another one:

http://www.nathanielturner.com/economyworkersandfinancialmarkets.htm

Someday I'll learn how to post real links.

129 posted on 09/07/2008 7:02:01 PM PDT by aimhigh
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To: BatGuano
Basically they have built a house of cards with derivatives and, with the slump in real estate values, we are in for a rough ride

Actually the problem is that under the structure we have set up real estate values are determined by the amount of credit available to fund real estate. The unwinding of leverage is what is producing the collapse in real estate values which is causing further unwinding of leveraged debt and so on.

It started with a bunch of ivy leaguers on wall street and in the Fed thinking they were a lot smarter than everyone else and knew things that the rest of us didn't. As Ronaldus Magnus pointed out about liberals, they know a lot of things that just aren't so.

130 posted on 09/07/2008 7:03:16 PM PDT by AndyJackson
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To: CodeToad
Oh, great.

That will help.

Now it will take a month or more to see a rate or other scenario change that used to happen within minutes.

Now your taxes are going to support not only the home interest deduction, but past transgressions by "homebuyers" and the mortgage markets.

Saints preserve us.

131 posted on 09/07/2008 7:22:19 PM PDT by elkfersupper
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To: CodeToad
"6117 Jeanine Drive"

An interesting exercise is to plug that address into Zillow.com and look at the history of sales.

Then look at an Orange County, CA example of my old homestead, where my family lived for 49 years. Bought in 1952 for $12K. Sold in 2000 for $185K. Look at the 10 year history. High value $559K, last sold for $355K. We're talking 3bdr, lb, 1100 sq ft.

This whole neighborhood became a Sec. 8 barrio. Believe me, none of those buyers were paying Schwarzennegar 9% state income tax.

yitbos

132 posted on 09/07/2008 7:40:32 PM PDT by bruinbirdman ("Those who control language control minds." - Ayn Rand)
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To: narses
What it means, in a nutshell, is that Pres. Bush is giving us a going-away present by effectively doing in and disposing of the untenable structure of two institutions that

a) had no reasons to be set up as GSEs in the first place, i.e. structured in a "Third Way" public-private "partnerships" advocated by New Democrats of DLC and Tony Blair in UK - because these partnerships' profits were great for "private" interests of management and preferred investors but the "corporate" debt was implicitly (ha!) guaranteed by the government / taxpayers.

b) were used by Democrats essentially as slush funds for "their people" (James Johnson, Franklin Raines, Jamie Gorelick, to name just most visible) and bad policy instruments by piling the debt into them and drawing profits in forms of dividends and salaries),

This shines the light on the danger of these structures for the taxpayers, which otherwise are masked by their "private" facade - profits are private for government-connected, risks and debt are public for everyone else - everyone gets to participate courtesy of government, unlike just the common shareholders in other companies.

Finally, now this implicit liability on [off-balance sheets of] governments' books that nobody paid attention to (similar to other obligations that government has but not officially in the "budget") will no longer be covert and cannot any longer be used by Democrats as unaccountable entry for their "unfunded mandates" for "community loan" programs etc. because the local banks and loan originators simply will no longer be able to pass the loans onto Fannie and Freddie without scrutiny.

This is a long overdue action of finally "divorcing" the "public", but unaccounted for [implicit, off-the books] debt from "private" profits, which will finally shine the light on loose standards and tighten the future loan requirements, which will now become accountable for by regulators / Congress, now in full public view instead of being farmed off to a "private" for-profit entity, which Democrats used the way they use government (like a slush fund and source of enrichment). Yes, there will be a pain, but it's already in process anyway, and liquidity will be granted to those who deserve it, as it should have been.

The Federal National Mortgage Association, or Fannie Mae, is a public company operating under federal charter. It is the US's #1 source for mortgage funding, financing one of every five home loans. The firm, like brother Freddie Mac, provides liquidity in the mortgage market by buying mortgages from lenders and packaging them for resale, transferring risk from lenders and allowing them to offer mortgages to those who may not otherwise qualify. As with its private-industry cohorts, the company was hit hard by the subprime mortgage crisis of 2007 and had to be rescued by the Federal Reserve.

The subprime mess not only effectively shut down the home-buying market, it also turned off Fannie Mae's revenue stream. The company suffered huge losses in 2007 and predicted the same for 2008, when the federal government stepped in. Its management team was reshuffled that year.

The company's position is controversial, with critics and competitors saying its federal charter gives it an unfair advantage in attracting investors and bulding market share.

The company is no stranger to bad news or bad press. In 2006 federal regulators hit Fannie Mae with a whopping $400 million fine. Investigators claimed that the company's former executives willfully overstated earnings by more than $10 billion -- and then tried to impede an investigation into the discrepancies -- in order to reap performance bonuses. CEO Daniel Mudd and chairman Stephen Ashley were brought to task by the Senate Banking Committee that June in regard to accounting misdeeds.

(Source: D&B)
133 posted on 09/07/2008 9:27:52 PM PDT by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy

That is idiocy. Stop pissing on me and telling me its raining. This is theft of the taxpayer and put into the pockets of the pigmen.


134 posted on 09/07/2008 10:12:15 PM PDT by Thoreau
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To: Thoreau
This is theft of the taxpayer and put into the pockets of the pigmen.

Theft has already occurred before. The pigs had their turn at the trough. Most people will just now be seeing the result of that theft. That was exactly the gist of my post.

135 posted on 09/07/2008 10:19:37 PM PDT by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: pointsal
"The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions."

~~Alan Greenspan, May 2005

(hat tip to Travis McGree)

136 posted on 09/08/2008 3:42:26 AM PDT by palmer (Some third party malcontents don't like Palin because she is a true conservative)
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To: Freedom_Is_Not_Free
By the way, I've been under the belief that the higher mortgage rates were due to inflation fears,

Not really, the rates were dominated by risk. The rise in spreads of basically all debt, not just mortgage backed debt, against Treasuries is due to the perceived risk. The main reason rates are as low as they are now is that the Fed has traded about 1/2 its 800B supply of treasuries for toxic debt. That keeps the debt price up and the rates lower. This bailout now trades even more treasury debt for mortgage backed debt, this time it's on all of our portfolios, not just the Fed's.

It's hard for me to imagine how this can prevent the further popping of the R/E bubble. The treasury will be easier to negotiate refinancing with, so that will keep some distressed properties off the market. But there is still a huge overhang of unsold properties, plus a generous helping of undistressed property owners who will unload if they perceive the market to be ready for another leg down. They aren't going to be convinced to hold just because the government guarantees a mortgage for somebody.

The real tragedy in all this is the continuation of the dilution of the U.S. Treasury. Already there were not enough future taxes to pay for obligations and we've just made that situation much worse.

137 posted on 09/08/2008 4:03:37 AM PDT by palmer (Some third party malcontents don't like Palin because she is a true conservative)
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To: mulligan

I hear its 200 billion more bucks. What is the total sofar? 600, 800 billion?


138 posted on 09/08/2008 4:45:17 AM PDT by TomasUSMC ( FIGHT LIKE WW2, FINISH LIKE WW2. FIGHT LIKE NAM, FINISH LIKE NAM)
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To: narses
What does this mean?

That those responsible for the mess walk away with profit and/or perks, and we pay for it. That a bunch of people should be whipped but won't be.

139 posted on 09/08/2008 5:35:22 AM PDT by polymuser (Taxpayers voting for Obama are like chickens voting for Colonel Sanders.)
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To: Freedom_Is_Not_Free

Unfortunately, your comments apply to all appraisers. There are quite a group that have itegrity.

Lumping all appraisers in the “bad” group is like saying any one who was in the military have committed crimes against mankind - which we both no full well is not true - just as it is not true for all appraisers.


140 posted on 09/08/2008 5:46:31 AM PDT by illiac (If we don't change directions soon, we'll get where we're going)
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To: TomasUSMC

LOL. You fool, they only do that sort of thing for the Wall Street fat cats.


141 posted on 09/08/2008 6:10:52 AM PDT by Obadiah (I remember when the climate never changed, then Bush stole the election.)
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To: aimhigh

Glass-Steagal, that is the name of the bill that was repealed by Clinton in 1999, just before he left office. Don’t forget, Fairness in Lending. Some blame gets put on the Republicans as well from 2004-2006 when they held the majority of the House. The President and that House shares some blame for doing nothing at that time. The 2006-2008 corrupt House of Dems made it worse of course.


142 posted on 09/08/2008 6:57:19 AM PDT by iThinkBig
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To: flattorney
It seems to me that Bush is just being hit by an avalanche of sh#t started by Clinton and Gorelick. What's Bush going to do? Not provide low income loans to people who can't pay it back? I can hear the howls now of racism and classism. Besides, Congress started this ball rolling.

The present subprime financial strains have as its genesis the policies promoted in the Community Reinvestment Act (CRA), compliance with which is a prerequisite for financial institution innovation. The CRA requires the “[A]ppropriate Federal financial supervisory agency” to assess a financial institution's record of “[m]eeting the credit needs of its entire community, including low- and moderate-income neighborhoods…” 12 U.S.C. § 2903. The supervising agency then, “[S]hall prepare a written evaluation of the institution's record of meeting the credit needs of its entire community, including low-and moderate-income neighborhoods. 12 U.S.C. § 2906(a)(1). In this report, it assigns a rating of: "outstanding"; "satisfactory"; "needs to improve"; or "substantial noncompliance." 12 U.S.C. 2906(b)(2).

143 posted on 09/08/2008 8:10:54 AM PDT by TheThinker (It is the natural tendency of government to gravitate towards tyranny.)
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To: AndyJackson

Real Estate has always been a solid, long term investment not the get rich quick business it became a few years ago. I agree that credit available determines value somewhat. Lenders, appraisers, brokers, and sellers all wanted to maximize the flow of money. Speculators licked their chops and dove into the market with gusto. We saw a 32% spike in home prices here in Florida..what would have taken ten years, in a little over a year. The result is short sales, foreclosures and bankruptcy for those who have to move or whose financial situation has changed by sickness, loss of job or jobs etc. A structure that allows one to buy a house with only a small fraction of the cost invested (all leverage) is certainly going to collapse.


144 posted on 09/08/2008 8:24:55 AM PDT by BatGuano (Go John and Sarah!)
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To: AndyJackson
“It started with a bunch of ivy leaguers on wall street and in the Fed thinking they were a lot smarter than everyone else “
>>>>>>>>...........
bingo and they where..Gorelick and the heads of F&F for the last decade or more have walked away with millions $$$
Wall st has golden parachutes by the hundreds where the insiders got paid..now the stock holders get the bill and worst yet the tax payer..
It is obvious they were a lot smarter on wall street and in government..they will not pay a cent back.
145 posted on 09/08/2008 9:24:13 AM PDT by shadowgovernment (From the Ashes of a Republican rout will raise a Conservative Party)
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To: RedBloodedTexan
Coming from a banking perspective, what caused the subprime market was affirmative action. The gov’t forced banks to loan to low-income minorities to meet the requirements of the Community Reinvestment Act. Stupid gov’t.

You're 90% correct, but it was the extension of the CRA, with the drug overdose from Congressional Black Caucus+Hispanic Caucus in Congress, Vincente Fox, and others that created the current mess:

"Community Reinvestment Act Rules

In July['06], the Board, FDIC, and OCC approved a joint final rule to revise certain provisions of their rules implementing the Community Reinvestment Act (CRA). (Regulation BB is the Board's CRA regulation.) The revised rules are intended to reduce regulatory burden on community banks and make CRA evaluations more effective tools for encouraging banks to meet community development needs.

The final rules raise the small bank asset-size threshold from less than $250 million in assets to less than $1 billion in assets without regard to holding company affiliation. Accordingly, the new rules reduce data collection and reporting burden for "intermediate small banks" (banks with assets at least $250 million and less than $1 billion) and, at the same time, encourage these banks to engage in meaningful community development lending, investment, and services.

Under the new rules, intermediate small banks will no longer need to collect and report CRA loan data. Nevertheless, examiners will continue to evaluate bank lending activity during their CRA examinations of intermediate small banks and will disclose those results in the public evaluation. Intermediate small banks will be evaluated under two separately rated tests: (1) the small bank lending test and (2) a new, flexible community development test that includes an evaluation of community development loans, investments, and services in light of the community's needs and the bank's capacity. Satisfactory ratings are required on both tests to obtain an overall satisfactory CRA rating.

For banks of any size, the new rules expand the definition of community development to include activities that revitalize or stabilize designated disaster areas and distressed or underserved rural areas. By doing so, the agencies seek to recognize banks' community development efforts in these areas and encourage further efforts in other rural areas. The rules also clarify when a bank's (or its affiliate's) discrimination or other illegal credit practices will adversely affect an evaluation of its CRA performance. The joint final rule became effective September 1, 2005." Fed Rules

Also see the HMDA sidebar, and other articles showing the path the regulatory agencies took to bend over backwards as 'corruption enablers' at the behest of the Congressional Caucuses....

146 posted on 09/08/2008 9:27:31 AM PDT by CRBDeuce (an armed society is a polite society)
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To: TheThinker

seems to me that Bush is just being hit by an avalanche of sh#t started by Clinton and Gorelick. What’s Bush going to do? Not provide low income loans to people who can’t pay it back? I can hear the howls now of racism and classism. Besides, Congress started this ball rolling. ‘
................................
Seems I remember BUSH pushing HOME OWNERSHIP , something like 5 million more new home owners as a goal..
The dems and GOP with Bush continued the good time party
This is why I say we are all being had...There is no two party system it’s all about elites knowing each other and
protecting each other (think sandy berger as prime example or Scouter Libby both VP Chaney and Marc Rich’s right hand man)..the republic is no more and until we vote each of these pols out it will remain so


147 posted on 09/08/2008 9:31:22 AM PDT by shadowgovernment (From the Ashes of a Republican rout will raise a Conservative Party)
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To: shadowgovernment

I see what you’re saying. I guess we could add George Tenant to your list...


148 posted on 09/08/2008 10:05:39 AM PDT by TheThinker (It is the natural tendency of government to gravitate towards tyranny.)
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To: Virginia Ridgerunner

link no workee


149 posted on 09/08/2008 10:40:00 AM PDT by WOBBLY BOB (Conservatives are to McCain what Charlie Brown is to Lucy.)
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To: palmer

I am so confused now... maybe you can clarify something for me in regards to mortgage interest rates.

I’ve been told multiple times that a GSE bailout would result in a long term INCREASE in mortgage interest rates, which would in turn accelerate the RE market’s price deflation.

True or not?


150 posted on 09/08/2008 10:58:36 AM PDT by sf4dubya (I rebelled against my parents by becoming a conservative)
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