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Before that, when they were buying all those high-risk mortgages (more than 50% of their mortgage purchases) because of HUD mandates, they had a much higher market share than that.
Not really. Most matched Fannie's and Freddie's significantly declining lending standards (due to HUD mandates), which the GSEs dishonestly misclassified as "prime" and "conforming" when they were not. I've already posted the Fannie Mae document clearly indicating they were buying loans from Countrywide and other lenders that were made to people with no/insufficient credit histories and therefore no/low FICO scores. The Clinton-era HUD document I previously posted indicates more than 50% of the loans Fannie and Freddie bought from loan originators like Countrywide, etc., had to have been made to those and low-income borrowers.
Yes, you keep focusing of the relatively minor contributions from the GSEs while ignoring the much larger and more significant actions in the sub-prime marketplace from the likes of Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, AIG, and a whole host of others. Why do you ignore the market for loans that the GSEs wouldn't even touch?
Dodd-Franks intention was to reign in risky investments maybe you can expand on your response and offer some detail as to why this should be dismantled.
Oh, so the bill just did one thing? No other regs in there?
Same bill that Dodd expressed surprise at the last minute clause ensuring AIG execs got bonuses. He had no idea how it got in there. then it was revealed the Treaury Dept's goldman alum, "Tim the tax cheat" put it in without telling him.
Oh, so the bill just did one thing? No other regs in there?
Same bill that Dodd expressed surprise at the last minute clause ensuring AIG execs got bonuses. He had no idea how it got in there. then it was revealed the Treaury Dept's goldman alum, "Tim the tax cheat" put it in without telling him.
Dodd-Frank was passed in 2010, the AIG bonuses were in 2009.
This bill was not perfect not even close since congress can dismantle what was already a watered down bill but it did have it's merits.
The question to you is, do you think that congress is on the right path by allowing investment banks to once again invest in complicated derivatives, should this be the new congress's first action.
What's the rush, do banks once again have a problem making ends meet?
If all these Banks and Mortgage Brokers were merely conforming to HUD guidelines then why did they pay out a few hundred billion in settlement costs.
Same reason why companies pay settlements to people who file nuisance lawsuits. It's cheaper to settle than to fund protracted court cases.
What's interesting is that Fannie and Freddie were far more guilty than any of the Banks or Mortgage brokers, due to the sheer volume of Affordable Lending Goal loans they bought and resold as MBS, and misrepresenting the high-risk nature of such to ratings agencies and investors.
Quote:
"...research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.
In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.
...It is easy to see how this misrepresentation was a principal cause of the financial crisis.
Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007. Of the 26 million subprime and Alt-A loans outstanding in 2008, 10 million were held or guaranteed by Fannie and Freddie, 5.2 million by other government agencies, and 1.4 million were on the books of the four largest U.S. banks."
Fannie and Freddie held or issued as MBS 38.5% of all subprime and Alt-A loans, but didn't disclose them as such. In total, government or government sponsored agencies held or guaranteed 58.5% of all such loans.
Banks, etc., held or issued as MBS 41.5% of those loans. The GSEs and other government agencies drove the mortgage market via their sheer volume. Banks, financial institutions, and brokerages just tried to compete. It was a race to the bottom.
Same reason why companies pay settlements to people who file nuisance lawsuits. It's cheaper to settle than to fund protracted court cases.
.
I don't think I would compare the settlements to nuisance lawsuits. LOL
Countrywide had the best of both worlds, not only did they back subprime mortgages but they discriminated against minorities charging higher rates and then they passed them along. Kind of tough to defend a toxic mortgage that they issued.
Just one of many lawsuits and this was just their own shareholders, there were many lawsuits by the federal government for far greater sums with whistleblowers on the inside that documented the abuses. They all settled, now why would you take that type of hit if you were just following guidelines.
Quote:
The shareholder lawsuit, originally filed in November 2007, contended that the
bank and some of its former senior executives and directors had failed to disclose the bank’s huge holdings in securities known as collateralized debt obligations that were tied to mortgage securities until November 2007, when it took a multibillion-dollar write-down on them. Citigroup later wrote down the C.D.O.’s by tens of billions
of dollars more.
“Countrywide’s improper securitization practices resulted in billions of dollars
of losses to federally-insured financial institutions,” said Stephanie Yonekura,
the acting U.S. Attorney in Los Angeles, in a statement. “For years, Countrywide
and Bank of America unloaded toxic mortgage loans on the government sponsored
enterprises Fannie MaeFannie Mae and Freddie MacFreddie Mac with false representations
that the loans were quality investments,” said Preet Bharara, the U.S. Attorney
in Manhattan, in a statement.
“Countrywide’s improper securitization practices resulted in billions of dollars of losses to federally-insured financial institutions,” said Stephanie Yonekura,
the acting U.S. Attorney in Los Angeles, in a statement. “For years, Countrywide and Bank of America unloaded toxic mortgage loans on the government sponsored enterprises Fannie MaeFannie Mae and Freddie MacFreddie Mac with false representations that the loans were quality investments,” said Preet Bharara, the U.S. Attorney
in Manhattan, in a statement."
Um... no. That is a deliberate lie, which is rather interesting. I smell an attempt at a cover-up of the Fed Gov's complicity.
Fannie Mae, in 2000, specifically stated they wanted to buy what would normally be considered subprime and high-risk (aka, toxic) mortgages from Countrywide and other lenders:
Quote:
"...Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice accepted by the GSEs."
Um... no. That is a deliberate lie, which is rather interesting. I smell an attempt at a cover-up of the Fed Gov's complicity.
Fannie Mae, in 2000, specifically stated they wanted to buy what would normally be considered subprime and high-risk (aka, toxic) mortgages from Countrywide and other lenders:
No established credit history = no FICO score = subprime, high-risk, and as it has turned out... toxic.
That response doesn't correlate with the facts, the private investment companies and brokerages have everything to do with the melt down, Fannie Mae was a small part of the 2008 meltdown. Really no sense in discussing this anymore, you are way off target and hijacked yet another thread with your fixation on Fannie Mae rather than addressing the intended purpose of the thread. I have yet to hear your answer on the original post.
I don't think I would compare the settlements to nuisance lawsuits. LOL
The banks didn't pay out squat in settlements. This was another quid pro quo. This was money that the government simply created to inflate the markets, inflate the banks bottom line and then got their share all on the back of the taxpayers.
Indeed, it does. Fannie Maetold us all in 2000 that they wanted to buy subprime (and as it turns out, toxic) mortgages from Countrywide and other lenders. I posted the published document. The Fed Gov shouldn't be able to get away with telling lies about that.
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