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Glitzy titles are a dime a dozen. He was a nobody at Fannie Mae at a time when nothing of any consequence or bearing on far into the future events was going on.
Actually, having a background in how things SHOULD have been done is very valuable in evaluating where things went wrong.
The first thing they need to clean up is the credit score industry. Many people have scores that are all over the board. FICO, FAKO, Vantage, etc. People need to know where they stand.
Obama wants to rig credit scores because he doesn't think enough minorities are qualifying for mortgages:
Otherwise, isn't it simple? How much house can a person afford? How much is their income? How much debt do they have?
Didn't matter. A credit history wasn't required, and the Clinton-era HUD mandate required Fannie and Freddie to have 50% of the loans they bought from originators be those made to people who were at or below median income, with 20% of all loans being made to "very low-income families."
Fannie Mae document stating no credit history or credit score required to qualify for a loan:
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."
Even the progressive Roosevelt Institute picked up on the de facto multi-trillion dollar taxpayer-funded bailout of Fannie and Freddie:
You think of John Hussman as a progressiv??? Wow!!!
Meanwhile, who is paying whom these days? Congressional concern of late has been over the GSE's becoming unregulated cash cows for the General Fund. Did you want to comment on that? Were you even aware of it?
50% of those loans had to be made to those at or below the median income (Clinton-era HUD mandate). That's not enough income to pay a mortgage, especially when home prices were rising.
You think of John Hussman as a progressiv??? Wow!!!
No, the Roosevelt Institute. They even describe themselves as progressives, and they've picked up on the fact that Hussman explained how the GSEs offloaded about $2 trillion worth of toxic MBS guarantees and agency debt to the Federal Reserve, which used Treasury-issued taxpayer debt to buy them.
It's all in my post. Read it. And explain where the over $2 trillion worth of agency guaranteed mortgages from 2008 disappeard to, since Fannie Mae itself states that 77% of its $2.9 trillion book of single-family mortgage guarantees has been acquired since the start of 2009.
Quote:
Originally Posted by InformedConsent
Furthermore, Fannie Mae reports (on page 2) that 77 percent of its book of single-family mortgage guarantees has been acquired since the start of 2009. What happened to all the loans they guaranteed before that?
In 2007: $2.9 trillion
In 2013: about the same, $2.9 trillion - 77% of which was acquired since 2009.
So what happened to the $2.23 trillion in mortgages that Fannie Mae suddenly didn't guarantee in 2008, just one year later?
Coincidentally, the Federal Reserve has about that much in agency MBS and debt on its books, bought with taxpayer money (Treasury-issued debt to the public) since 2009.
Last week, Ben Bernanke appeared before Congress for his regular Humphrey-Hawkins testimony. For most of that testimony, it fascinated me that every time the Bernanke said that the Fed has taken no losses on its operations, there was absolutely no remark that the reason the Fed has not lost money is that the Treasury, directly (Fannie, Freddie) or indirectly (AIG) has made the liabilities held by the Fed whole.
From that perspective, the critical part of Bernanke's testimony was the following exchange with New Jersey Congressman Scott Garrett of the House Financial Services Committee. Importantly, Bernanke concedes that by placing two-thirds of its balance sheet into the liabilities of insolvent agencies (Fannie Mae and Freddie Mac), now under conservatorship, the Fed is essentially relying on Congress to make these institutions whole at taxpayer expense. The Fed has put the public on the hook to bail out the GSEs.
SCOTT GARRETT: You bought over a trillion dollars of GSE debt, and to that point, under normal circumstances, on the Fed's balance sheet what you have on there are Treasuries, or if you had anything else on there, I assume you would have a repurchase agreement for those securities on your balance sheet. Now of course around two-thirds of that are in GSE debt.
BEN BERNANKE: Correct.
GARRETT: So right now, those are guaranteed - whether they're sovereign debt or not, we don't know - but they're guaranteed by the U.S. government. But they're only guaranteed to when? 2012, right? After that, Congress may in its wisdom make another decision, and at that point in time, you may be holding on your balance sheet - two thirds of your balance sheet - something that is not guaranteed by the Federal government. First of all, you don't have a ... do you have a repurchase agreement on those with anyone? No.
BERNANKE: I don't know what you mean by a repurchase agreement. We own those securities.
GARRETT: You own those securities. Right. So there is no repurchase agreement outside to buy them back. You own them.
BERNANKE: Right.
GARRETT: So after 2012, if they're no longer guaranteed, is it fair to say that you may at that point in time actually engage in fiscal policy, because you basically are creating money at that time? And I know that you'd agree that it would be an unconstitutional role for the Fed to engage in fiscal policy - so where will you be at 2012 if they had to take a haircut on those because they're no longer guaranteed?
BERNANKE: Well, first from the government's perspective, I, uh, such an act would, uh, there would, the Federal Reserve would lose money which the Treasury would gain. There would be no overall change to the position of the U.S. government. Secondly, the Federal Reserve act explicitly gives..
GARRETT: How would we be gaining? How is the Treasury gaining?
BERNANKE: Well, if there's a bad mortgage and the Treasury.. it requires $10 to make it good, if the Treasury refuses to do that then the Fed loses $10, so one way or another the government's going to lose $10. But I would just say two things, one is that I think, uh...
GARRETT: But if you didn't purchase them in the first place, it would just be a total - then what would have occurred? There would not have been the creation of that $10. Now that you've purchased them, and in essence if we don't back them up, then you will have created that additional $10.
BERNANKE: Well, I hope that doesn't happen, because I think it's very important for financial stability and confidence that we, that we guarantee...
GARRETT: Let's play out that hypothetical that it does happen.
BERNANKE: Well, then the Fed would lose money there. But let me just point out that the Federal Reserve Act, that we did not invoke any emergency or unusual powers to buy those agencies. It is explicitly in the Federal Reserve Act that we can buy Treasuries or agency securities and so we did not do anything unusual there.
Except the Fed WON'T lose money on those bad mortgages they bought from the GSEs. Why? The Fed very quietly changed the rules in 2011, after Congressman Garrett's questioning on who gets hit for the GSE MBS and debt losses, to offload losses to the Treasury, otherwise known as the American taxpayers.
Quote:
"Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.
The significant shift was tucked quietly into the Fed's weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on January 6.
But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world's most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted.
"Could the Fed go broke? The answer to this question was 'Yes,' but is now 'No,'" said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. "An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital."
The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital."
This thread is definitive proof that leftist liberal politicians and bureaucrats are certifiably insane. It's also proof that leftist liberals are incapable of telling the truth when their ideology fails.
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