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Former Fannie Mae executive Ed Pinto, who worked at the mortgage giant before it began buying up risky mortgages, has also described Fannie Mae’s key role in buying up and promoting risky sub-prime mortgages, which Fannie Mae did on a large scale, despite having a capital cushion that was tiny compared to private banks, resulting in its later insolvency and massive taxpayer bailout. A recent book about the causes of the crisis by New York Times business reporter Gretchen Morgenson and financial analyst Josh Rosner, “Reckless Endangerment,” chronicles how “it was Fannie Mae and the government housing policies it supported,...

Banks Not Wanting to Lend is a myth. It’s a trendy thing to blame the banks for not wanting to lend, but it’s not reality. Don’t get me wrong…most everything else might be able to be blamed on them, but not this. This is what makes the problem in mortgage and housing so fundamentally grave. It’s just not as easy as lowering rates, doing a mass refi event, or pulling Foreclosures off the market. After nearly 5 years, if there was an easy fix (such as printing trillions of dollars in order to try to create inflation) housing would be...

Add one more pill to the daily Oxycodone consumption by the Chair Central Planner. In what is about to become the latest headache for Bernanke, popular Chinese economist Lu Zhengwei, a senior economist at China's Industrial Bank Co., has advised that China should promptly sell its GSE holdings on concerns that continued "blank check" writing by Congress to the GSEs will be "almost impossible" as well as fears that as soon as QE2 ends, the entire US bond complex will see a major sell off. In other words welcome to the world of game theory defection: he who sells first,...

Leaning on the megabanks can pay off, if you've got a little muscle and a lot of patience. Banks had paid $21 billion through this past summer to repurchase souring home loans from Fannie Mae and Freddie Mac, the taxpayer-backed mortgage companies, under contracts that oblige lenders or loan servicers to buy back loans that aren't up to snuff.

The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a Congressional inquiry. The government commission that investigated the financial crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors, and risky bets on securities backed by the loans. < snip > ..... Many of the findings have been widely described, but its synthesis of interviews, documents and testimony,...

At a hearing last fall, U.S. Treasury Secretary Timothy Geithner told lawmakers that he and his team were working to put the $700 billion financial bailout fund "out of its misery." But some in Washington now see a second, backdoor bailout in its place. On December 24, the Obama administration announced it was extending an unlimited credit line to mortgage finance agencies Fannie Mae FNM.N and FRE.N Freddie Mac, which would keep them afloat no matter how high their losses.

It's a new year, and Bank of America is moving quickly to put to bed ongoing questions about the mortgage repurchase or "putback" risk that has dogged the stock for the past several months. The bank announced this morning that it will take a $3 billion charge to settle the last of its mortgage putback exposure with the GSEs, Fannie and Freddie. The stock is rallying on the news. That being said, this doesn't end the issues related to other entities, such as the bond insurers, PIMCO, and other owners of private-label mortgages who are also seeking to force the...

http://www.thedailyshow.com/watch/thu-october-7-2010/foreclosure-crisis

Taxpayers are on the hook for about $400 billion, partly because Sen. Obama helped to block reform. Now that nearly all the TARP funds used to bail out Wall Street banks have been repaid, the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac stand out as the source of the greatest taxpayer losses. The Congressional Budget Office has estimated that, in the wake of the housing bubble and the unprecedented deflation in housing values that resulted, the government's cost to bail out Fannie and Freddie will eventually reach $381 billion. That estimate may be too optimistic. Last Christmas Eve,...

Ask most people in America today whether buying a home is better than renting one, and you’ll likely get a response that equates renting with stuffing money down a garbage disposal. The idea of homeownership today is not one that simply evokes the comfort or pride of living in a place of one’s own. Instead, it’s become part of a common investment philosophy. But if you ask Edmund Phelps, the Nobel Prize-winning economist from Columbia University, he’ll proudly declare that he doesn’t own a home. And to him, that’s not a bad thing. “It used to be that the business...

Democrats embarrassing display of the Clintonesque denial techniques Who among us has forgotten the sorry spectacle of liberal Democrats including Nancy Pelosi and Harry Reid, our holier-than-thou leaders of the Congressional House of Representatives and Senate respectively, trying to place the blame for the financial mess and collapse of the two very large Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac, on the Bush Administration and Republicans in general. This outright embarrassing display of the Clintonesque denial technique when applying the cover-up to a very damaging result of a project gone wrong, with no apparent shame while doing so,...

No matter what one thinks of the financial bailout package, we ought to at least agree how we got here. The real actors behind the mortgage panic of 2008:…

UPDATE - US broadens Freddie Mac probe to Wall Street role Tuesday November 18, 10:33 am ET (Adds details, background) WASHINGTON, Nov 18 (Reuters) - A U.S. financial regulator is investigating the role of companies that were counterparties to questionable deals at the core of accounting irregularities at mortgage finance company Freddie Mac (NYSE:FRE - News), an official said on Tuesday. "We are in the process of reviewing the counterparties' roles in transactions relevant to our investigation," a spokeswoman for the Office of Federal Housing Enterprise Oversight, Corinne Russell, said. Russell said the agency has a wide range of actions...

Reuters Ex-Freddie Mac CEO Gets $24 Million Deal Thursday June 12, 8:23 am ET By Bill Rigby NEW YORK (Reuters) - Leland Brendsel, who resigned as chairman and chief executive of Freddie Mac (NYSE:FRE - News) late last week, will get more than $24 million of stock, bonus and benefits, the U.S. No. 2 mortgage finance company says. The generous leaving package, detailed Wednesday on Freddie Mac's Web Site, comes as the company faces criminal and regulatory probes, and is in the process of restating three years of earnings after problems surfaced in its accounting. Brendsel, CEO of the company...