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Why should I have to bother disputing your sites claims when they do that themselves? They note that they took on a bunch of bad loans despite these claims of strict standards.
Yes, but they only took Alt-A and "subprime like" loans...they only held a VERY small percentage of sub-prime loans in their investment porfolio. Look at the chart of new risk on the cite I listed from Krugman's blog and the institutions who had taken it then correlate that to F&F's substantially decreasing marketshare and the types of loans taken. These lending practices had existed for decades without issue...why does it seem to correlate so heavily that that the % of junk loans held by other investment banks expanded SO readily in 02 just as F&F were losing their market share of securitization?
The banks not subject to CRA regulations were by far the largest offenders here...these institutions bypassed fannie and freddie in issuing their mortgage backed securities to unknowing investors and these were the ones that defaulted en masse.
I never have defended the GOP, I have done the exact opposite. The Dems could have done the right thing and reinstituted Glass/Steagal but had no desire to.
Lets see your sources for this then. Mine may have been an opinion piece but listed in text were clear citations to Federal Reserve studies verifying what they were saying.
F&F acquired a lot of junk loans between 06-07 that were dubious in a series of very bad business decisions but it was to increase marketshare and the piece that I cited from CAP states that clearly. They aren't defending F&F in those moves...
THEY STARTED GETTING JUNK LOANS IN 1995
...In 1995, the Clinton Administration changed the law governing GSEs' mission -- the Community Reinvestment Act (CRA) -- to encourage more lending in poor neighborhoods. Previously, the CRA directed government to monitor banks' lending practices to make sure they did not violate fair lending rules in poor neighborhoods. With the 1995 change, the government published each bank's lending activity and started giving bank ratings based primarily upon the amount of lending it performed in poor neighborhoods. These changes empowered community organizations, such as ACORN, to pressure banks to increase lending activities in poorer neighborhoods -- which involved reducing mortgage loan standards -- or face backlash from those organizations' private and political associates. For instance, if Chase made 100 mortgages in a poor Chicago district, and Countrywide 150, the government would likely give Chase a lower CRA rating, and community organizers could pressure politicians to make it more difficult for Chase to get licensed to do full ranges of business in new areas of the country. Low CRA ratings could also disadvantage Chase with regard to government lending programs and make it more difficult for Chase to participate in mergers and acquisitions through Fannie Mae, the government controlled banks' mortgage lending activity rates.
As long as Fannie was willing to buy these mortgages, banks had no problem lowering their standards if necessary, making the loans and selling them off to Fannie Mae. Banks could even buy the mortgages back from Fannie Mae, with Fannie's payment guarantee, thereby eliminating the credit risk (as long as Fannie was government backed). Now, if the US federal government is behind Fannie - and the government has a perfect credit record - there is really little worry for banks, so they might as well make all the mortgages Fannie Mae is willing to buy, and purchase all the guaranteed debt Fannie puts up for sale. However, to the extent investors ever believed Fannie was just like any other company -- without the US government guaranteeing its debts, at least in bulk -- well that would be a different story. The risks involved would go from theoretically near zero, to well, who knows... Throughout the Congressional debate on GSE regulations in 2003-2005, senior Congressional Democrats repeatedly inferred -- even directly stated on at least one public occasion -- the US federal government would bail Fannie Mae out if required.
In written law, the US government only 100% guarantees Ginnie Mae. The other major two GSEs, Fannie Mae and Freddie Mac, exist in more of a grey area. Nothing explicitly states the federal government is 100% behind them, but it has always been implied. That is why statements of top government officials in the run up to the bubble are so very important, as are actions like the US President personally appointing Fannie's CEO and directors.
From 1993-1999, the Clinton Administration replaced many of Fannie Mae's key executives, including the CEO, the CEO's number two, and nearly half the board of directiors. As a government sponsored enterprise (GSE), the President had the authority to make those appointments. The board, which increasingly consisted of Presidential appointments, then worked with the new CEO to change Fannie Mae executives' salary structures in order to incentivize them to reach higher mortgage targets. More specifically, the board promised senior executive millions in bonuses each year as long as Fannie reported certain earnings figures. Just a quick reminder... Fannie's ability to reach earnings targets is directly related to the number of mortgages it buys, as long as those mortgages do not default or as long as Fannie executives do not recognize negative changes in the payment flow.
==================
President Barack Obama was a pioneering contributor to the national subprime real estate bubble, and roughly half of the 186 African-American clients in his landmark 1995 mortgage discrimination lawsuit against Citibank have since gone bankrupt or received foreclosure notices.
As few as 19 of those 186 clients still own homes with clean credit ratings, following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans.
===============================
While we're talking about greed & corruption at Fannie & Freddie, what about The Untouchables? Eliot Ness wouldn't be able to get these four, they are protected by the Democratic machine. I'm not saying there isn't a Republican machine, but what I am saying is that in the case of Fannie and Freddie, it was the Democratic machine at work.
The Securities and Exchange Commission has brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, claiming they misled the government and taxpayers about risky subprime mortgages the mortgage giants held during the housing bust.
Two former CEO's, Fannie's Daniel Mudd and Freddie's Richard Syron are the high profile figures charged in the 2008 financial crisis, a crisis which has made both housing entities wards of the taxpayers to the tune of $150 billion and rising.
Mudd worked at Fannie throughout the last decade and was the interim CEO of Fannie Mae in December 2004, after Franklin Raines left, and after the SEC revealed that Fannie had violated accounting rules. From 2005 until 2008, Mudd was the President and CEO of Fannie Mae. He made more than $80 million while at Fannie and was dismissed September 7, 2008.
In December of that year, he testified before the US House Committee on Oversight and Government Reform about Fannie and Freddie.
Richard Syron was the CEO of Freddie Mac. In 2004, David Andrukonis, Freddie Mac risk officer, warned Syron of increasing risk in Freddie Mac's portfolio. Syron did nothing until December, 2007, when he told financial analysts that Freddie Mac would incur heavy losses because of the weakening housing market and rising mortgage defaults.
Syron took over $19 million in stocks, cash, etc, after that time despite his poor stewardship. He was fired in 2008 and testified that same year before the same House panel as did Mudd. Mr. Syron was terminated September 6, 2008, under a Federal Housing Finance Agency plan for conservatorship of Freddie Mac.
The SEC now alleges that Mudd and Syron knew and approved of misleading statements claiming the companies had minimal exposure to subprime loans at the height of the housing mortgage bubble.
Barney Frank is coasting into retirement, Chris Dodd sailed off years ago, and Franklin Raines, Jim Johnson, Jamie Gorelick, and Tim Howard go unscathed. While the SEC was investigating Fannie Mae for accounting irregularities, these people skated. I mustn't forget Maxine Waters and the Maxine ethics probe to nowhere.
The government now admits that the housing crisis, and not Wall Street alone, helped lead us into the worst economic meltdown since "The Great Depression." They are looking for people to blame. I can't answer for the guilt or innocence of Daniel Mudd or Richard Syron, but what about the guilt of the Frank, Dodd, Waters, Raines, Johnson, Gorelick, and Howard?
I never have defended the GOP, I have done the exact opposite. The Dems could have done the right thing and reinstituted Glass/Steagal but had no desire to.
GS wouldnt have done a thing
gs had zero to due with bad loans secured by the government
gs had very liitle to do with the housing bubble, that started in 1995....
Yes, but they only took Alt-A and "subprime like" loans...they only held a VERY small percentage of sub-prime loans in their investment porfolio. Look at the chart of new risk on the cite I listed from Krugman's blog and the institutions who had taken it then correlate that to F&F's substantially decreasing marketshare and the types of loans taken. These lending practices had existed for decades without issue...why does it seem to correlate so heavily that that the % of junk loans held by other investment banks expanded SO readily in 02 just as F&F were losing their market share of securitization?
The banks not subject to CRA regulations were by far the largest offenders here...these institutions bypassed fannie and freddie in issuing their mortgage backed securities to unknowing investors and these were the ones that defaulted en masse.
are you on fannies payroll....you sure are defending them alot
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
.......... the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
The federal government has proposed new rules that would make it easier for low-income house buyers to qualify for mortgage loans....
The proposed rules from the Department of Housing and Urban Development would require two of the largest housing finance companies in the country, Fannie Mae and Freddie Mac, to increase the percentages of overall loans that they offer to lower-income families from the current standard of 42 percent to 48 percent in 2000 and to 50 percent in 2001.
****so even in 2000 42% of their loans were RISKY and in the subprime******
The companies would be required over the next 10 years to buy $2.4 trillion in mortgages from banks and other lenders to assist the 28 million American families with low and moderate incomes. Many of those families are minorities, housing officials said.
too many thing show the the government/ fannie/ freddie/ hud were right in the middle of it
gs had zero to due with bad loans secured by the government
gs had very liitle to do with the housing bubble, that started in 1995....
I've seen nothing to indicate the bubble started this early. If you want to follow the reductionism that I'm ballparking you adere to we may as well say the housing bubble started with FDR and the new deal. 2001-2005 are the agreed upon "start" areas. Between these periods mortgage fraud increased 1,411% (http://www.fincen.gov/news_room/rp/r...eLoanFraud.pdf)
Further in October of 2004 under GOP pressure, the SEC suspended net capital rules for five firms...(Sachs, Lynch, Lehman, Bear Stearns, and Stanley). Freed from government-imposed limits on the debt they can assume, they levered up 20, 30 and even 40 to 1. (http://www.nytimes.com/2008/10/03/bu...3sec.html?_r=0)
These two are a skid mark on American political discourse and should be marginalized as such. Their ideas and policies are so destructive to this country that (thank god) for us Dr. Paul the Elder was essentially marginalized by the GOP elite...but it appears that Rand Paul has more mainstream appeal for reasons unbeknownst to me. Dr. Paul the younger needs to be marginalized just as much as his father. Both Paul the younger and elder support the laughable named "Plan to Restore America."
Their policies will destroy this country. Income inequality would be on par with South Africa and Colombia, Wall Street would be free to do whatever it wants, Companies would have zero federal accounting and reporting compliances, Air safety and traffic control would be handled by private contractors, we would have no federal funding, and the government would lose it's abilty to intervene in pending financial crisis..........I don't understand how anyone could support these lunatics.
Everyone knows the facade of Dr. Paul(s) but I think it helps to really SEE their positions laid out to understand just what people are considering.
Here is a brief summary of their positions:
-The elimination of the Dept of Education, Interior, Commerce, Energy, and HUD)
-privatize the FAA and TSA
-slash the federal workforce by 10%
-cut the budgets for all federal branches
-lower the corporate tax rate to 15% despite most fortune 100 countries located in the US paying what amount to an effective rate of 12%
-allow companies to repatriate capital with essentailly no taxation (hello offshore stockpiles)
-permanently extend all Bush tax cuts
-eliminate ALL capital gaines taxes
-sell all federal assets (public parks...thing of the past.)
-repeal obamacare, sarbanes-oxley, and Dodd-Frank...(Enron???)
-conduct a full audit of the Fed (It's audited by indepedent agencies annually anyway)
-deregulate wall street Entirely (really?)
-Phase out Social Security
-Ending the Federal Reserce and our Fiat currency in lieu of the Gold Standard
-Eliminate FEMA and all federal disaser relief.....Sorry Sandy victims...you're on your own.
-Zero federal medical research. (4 billion less for cancer, 3.5 billion less for AIDS, 1.42 billion less for Heart Disease, and over 5 billion less for other major medical issues)
-Repeal of the act that mandate that physicians stablize a patient in the ER if they lack the ability to pay.....(I know that it is a problem but are we seriously going to watch someone die in a waiting room?)
I think that neither person is going far enough. I would fire even more people and get rid of alot more entitlement programs too.
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
.......... the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
The federal government has proposed new rules that would make it easier for low-income house buyers to qualify for mortgage loans....
The proposed rules from the Department of Housing and Urban Development would require two of the largest housing finance companies in the country, Fannie Mae and Freddie Mac, to increase the percentages of overall loans that they offer to lower-income families from the current standard of 42 percent to 48 percent in 2000 and to 50 percent in 2001.
****so even in 2000 42% of their loans were RISKY and in the subprime******
The companies would be required over the next 10 years to buy $2.4 trillion in mortgages from banks and other lenders to assist the 28 million American families with low and moderate incomes. Many of those families are minorities, housing officials said.
too many thing show the the government/ fannie/ freddie/ hud were right in the middle of it
Fannie and Freddie had fault. They made terrible decisions but those are primarily isolated to 06-07...but during that period that bought a LOT of alt-a loans. I'm in no way claiming that they are guilt free...I'm just saying that "people defaulting on their mortgages" isn't the answer. Theres a lot of blame to go around...Fannie/Freddie have blame, Wall Street has blame, those who couldn't afford to be homeowners have blame...it's huge. Literally the global economy was brought to it's knees and it's too broad an issue to reduce to some people defaulting on their mortgages or blaming it solely on the guvmint which the right-wing tends to do.
IRS created in 1862.
Federal Reserve was created 51 years later.
You are confused.
The Federal Reserve was created in 1913: "By December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law, it stood as a classic example of compromise—a decentralized central bank that balanced the competing interests of private banks and populist sentiment." History of the Federal Reserve - Federal Reserve Education
The federal income tax was ratified by Constitutional Amendment in 1913: "In February of 1913, the Sixteenth Amendment to the Constitution (Income Tax) was ratified: 'The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.'" Internal Revenue Service - Wikipedia, the free encyclopedia
I think you mention 1862 as the first time a federal income tax had ever been instated (to pay for the Civil War), but this was always meant to be temporary and expired after 7 years: "The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation." http://en.wikipedia.org/wiki/Interna...nue_ServiceTHe
Yes, but they only took Alt-A and "subprime like" loans...they only held a VERY small percentage of sub-prime loans in their investment porfolio. Look at the chart of new risk on the cite I listed from Krugman's blog and the institutions who had taken it then correlate that to F&F's substantially decreasing marketshare and the types of loans taken. These lending practices had existed for decades without issue...why does it seem to correlate so heavily that that the % of junk loans held by other investment banks expanded SO readily in 02 just as F&F were losing their market share of securitization?
The banks not subject to CRA regulations were by far the largest offenders here...these institutions bypassed fannie and freddie in issuing their mortgage backed securities to unknowing investors and these were the ones that defaulted en masse.
The banks gave the loans in the first place because they knew that the government would gaurantee them. How do I know this? That is exactly what has happened. The government has bought them up through F&F and left us to pay them off.
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