Say Anything Blog

The 9 percenters (i.e. - the Democrat Congress) won’t listen.

What bankers want… bankers get.  It’s been going on since the early 20th century.

Did Angelo Mozilo buy them all off like he did Kent Conrad?

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

I may be a little naieve on this subject. However, I feel that a bailout of banks and investment houses send the wrong message to these institutions. Remember, many bankers
and traders got rich off of questionable loans and trade practices. The problems at Fannie Mae and Freddie Mac have been known for years. But it was more important to indict Barry Bonds for steroid use, than to prosecute those involved. Now investors have lost millions and once again our economic well-being is being put in jeopardy. Will Congress ever force prosecution on the wrong-doers? I hope so. The crooks should be jailed, face heavy fines and loss of all goods obtained from illegal activity.

Banks lie. Pay them. They give asinine loans. Pay them. Just bend over and say ‘f*ck me’.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

While this may go over like a turd in the punch bowl, please hear me out.
As was mentioned, the questionable loans deeply hurt Fan/Fred.
Why were they making them in the beginning?
They were compelled to by litigators that threatened lawsuits on behalf of thosew that shouldn’t have gotten loans in the first place.
The Equal Credit Opportunity Act & HUD in 1973...along with enforcements of the Affirmative Action movement.
Many of those that were denied NEEDED to be denied!
Now, our taxes will perpetuate the entitlement.
This is just another brick out of the wall of America.

Fannie Mae did not make subprime loans.
Banks, Mortgage brokers, etc made the loans.
Fannie Mae bought AAA rated bonds backed
by subprime loans.

Fannie Mae did not make subprime loans.
Banks, Mortgage brokers, etc made the loans.
Fannie Mae bought AAA rated bonds backed
by subprime loans.

I’m not trying to be arguementative, but this passage from the Fannie Mae introduction pdf infers that they have leverage in steering the lenders towards the target recepients:

Fannie Mae maintains partnerships with a wide range of housing advocates, lenders,
and other key players to meet specific affordable goals:
■ Expand access to homeownership for first-time home buyers and help raise the
minority homeownership rate with the ultimate goal of closing the homeownership
gap entirely;
■ Make homeownership and rental housing a success for families at risk of losing
their homes;
■ Expand the supply of affordable housing where it is needed most, which includes
initiatives for workforce housing and supportive housing for the chronically
homeless; and
■ Transform targeted communities, including urban, rural and Native American, by
channeling all the company’s tools and resources and aligning efforts with partners
in these areas.
We are committed to helping support community development, create strong
communities, and stabilize neighborhoods. By fulfilling this commitment, our partners
are able to help people qualify for a mortgage and build equity wealth.
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http://www.fanniemae.com/media/pdf/fannie_mae_introduction.pdf

Fannie Mae did not make subprime loans.
Banks, Mortgage brokers, etc made the loans.
Fannie Mae bought AAA rated bonds backed
by subprime loans.

My understanding of it is that Fannie Mae bought mortgages, packaged them and sold the bonds.

They also kept a ton of others.

To say that they have no culpability in this swamp would be wrong.  They A)Bought any junk they could enabling banks to issue them and B)Sold them as good loans in the market.

Bunch of crooks if you ask me.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

THat’s correct, Whistler.
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.Here’s more:
First, we purchase
mortgage loans from lenders for cash and hold those mortgages in our portfolio. These
lenders, in turn, can use those funds to provide mortgage financing for more home buyers.
In order to finance the mortgages we purchase along with other business activities, we
borrow funds by issuing debt securities in the international capital markets. We offer our
debt products, through dealers, to a diverse group of investors, thereby expanding the total
amount of funds available for housing in the United States.
A second way we make funds available is by issuing Mortgage-Backed Securities (MBS)
in exchange for pools of mortgages from lenders. These MBS provide lenders with a more
liquid asset to hold or sell than their whole loans.
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So, in essence, they would buy out the loan paper for cold cash, so that the bank would have more liquidy to issue more loans ....that Fan/Fred would buy for cash....
It’s the old “perpetual motion” pyramid scheme.

RebTex
YOU NAILED IT.

It’s the old “perpetual motion” pyramid scheme.

Also, the level of abstraction we have reached, with derived derivatives of future potentialities plus interest…
helps.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

’Preciate that, Sparkie
1 other note.....
According to their charter,the Secretary of the Treasury has discretionary authority to purchase up to $2.25
billion of the corporation’s obligations.

First of all, Fannie Mae and Freddie Mac do NOT buy so-called sub-prime loans.  Never have.  The loans they do buy are referred to as “conventional” or “conforming” loans.  And there certainly have been politically correct pressures brought to bear on both companies to lower standards for certain select victims groups… though of course that is not the language used.  These loans are bought, bundled, and securitized.  That is, bonds are issued with the loans themselves, less servicing, as collateral for the bonds.

The mission of these two GSEs is difficult enough given the vagaries of interest rates.  Obviously, a portfolio of loans with an average yield of 6% can be suddenly worth a lot less if interest rates suddenly go from 6% to 7%.

But the bigger problem has been fraud… Enron style accounting practices by executives of the companies in order to hit the profit goals necessary to “earn” millions in annual performance bonuses.

Former Mondale presidential campaign manager and recent Obama advisor Jim Johnson was CEO of Fannie, until he was replaced by former Clinton White House Budget Director Franklin Raines.  Former Deputy Attorney General Jamie Gorelick was Raines’ Deputy at Fannie.  All three pocketed millions and millions in bonuses which have since been returned after it was discovered that they had cooked the books.  By one estimate, the losses that were covered up at Fannie Mae alone totaled nearly $10 billion.

Many conservatives have argued for an end to both companies.  And they have some very good arguments in their favor.  Both GSEs enjoy tax advantages, lower capital requirements, and other implicit advantages that a true private company would not enjoy.  Obviously, there are benefits for the will-connected to working there as well.

The Postmaster General of the US oversees an organization of over 700,000 employees.  He is paid $175,000 per year.  In her 5 and a half years at Fannie Mae, Ms. Gorelick was paid over $24 million.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Now investors have lost millions and once again our economic well-being is being put in jeopardy.

Nope.  No money has been “lost”; it has just been redistributed, but not the way you lefties want assets to be redistributed.

RebTex: Don’t forget the “Fair Housing Act” and the “Fair Lending Act”.

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

Reb-Tex,

With all due respect, your overview is a bit too simplistic, but I wonder if you have given any serious thought to any alternatives?

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

BAt One hates welfare for the poor. loves welfare for the rich and egregiously irresponsible.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Bat One:
I accept that my can be simplistic.
As for thought for an alternative?
Absolutely not.
THere’s no assistance for me when I go buy a dinner.
Therefore, I purposely go to restraunts that I am sure that I can afford.
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On this point of yours:
“These loans are bought, bundled, and securitized.  That is, bonds are issued with the loans themselves, less servicing, as collateral for the bonds”
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The problem I see is that the intrest from the original loans doesn’t exist when the “security” is issued.

Let’s see… adds nothing meaningful or worthwhile to the conversation, unable to discern fact from innuendo, jabbers incoherently about subjects of which he knows next to nothing…

Yep, must be Sparkie!

So… when ya gonna publish that thesis?

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Reb-Tex,

First, I apologize if my comment came across as disparaging.  It wasn’t meant to be.  But I have some working knowledge of all this as I have been in the business for a very long time.

That said, please explain this,

The problem I see is that the intrest from the original loans doesn’t exist when the “security” is issued.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

It’s my understanding that Fan/Fred buys paper for “futures”. By that, I mean the profits from the pay-off.
/It’s probably not the correct term, but I’m an out-sider
Another way I think of it is that they are fronting the cash for the paper.
So the profits that don’t exist are being paid to the lenders so they can use it to cover principle pay-out on more loans.
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My background is in owning a machine shop & running a farming operation.
In both, I need tangeable monies to continue.

My background is in owning a machine shop & running a farming operation.  In both, I need tangible monies to continue.

Reb-Tex,

My hat’s off to you… and to anyone else who owns their own business.

When you think about it, running the type of operation that Fannie and Freddie have, never mind on such a huge scale, is a daunting task.  Even for competent manager with a proven record of integrity rather than the sort of political hacks that were helping themselves, a la Dennis Kozlowski.

The point of both companies/agencies is to provide liquidity to the mortgage market.  They bundle, buy, and securitize mortgage loans so that there will be mortgage money to be loaned tomorrow.  Without the proceeds from the sale of those bonds, Fannie and Freddie would not be able to buy any more loans.  Which means there would be no mortgage money to be loaned next week, because if ABC Mortgage brokers or XYZ Bank cannot sell the mortgages they write, sooner or later they are out of money to lend… and out of business too.  In the mortgage business, the raw material is money.

Both companies do a lot of hedging and there are inherent risks in all this, even without the corruption.  But when interest rates move up and down, as they do daily, the value of those bonds, and the value of the GSE’s own portfolios change as well.

Now add the problem of redemptions.  As rate go down, the portfolio of higher rate mortgage is worth more than before, but as rates go down, a lot of people will refinance to take advantage f the lower rates, effectively eliminating that higher rate (and more profitable) portfolio with one that is larger in volume but worth less on average because of the lower rates.  When rates go back up again, the larger portfolio of lower rate mortgage becomes worth less relative to current interest rates, while the number of newer mortgage loans decreases as rates climb.

The interest payments however, forwarded by the servicers of each individual mortgage, do not simply vanish, but are instead used to fund the payments on the bonds that were issued.

At least, that’s how its supposed to work.  Managing all those risks in a volatile interest rate environment is a daunting task.  And as the country’s population grows, and the economy grows, and the portfolios grow, that task becomes all the more daunting.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Thanks for that explaination!
I see that my impression is, in fact, greatly simplified.
And it seems that the mortgage market is a lose/lose situation,given the lack of forcing the contract signor to maintain the agreed rate.
It’s hard to figger why many brokers in my area steer retirement investments towards these financial markets.
But,then, what do I know?!
I lost my posterior in Enron.
I thought that utilities were a good long term solution!
Now days, MUD’s are the giong thing here.

Bat: When you find yourself engaged with one of our lefties, especially ellinas and Sparkie, you might want to keep this in mind:

How do you debate with such people? You don’t. You can’t. St. Augustine once said that there’s no use wasting your time arguing with someone who won’t grant a subject’s basic premises. How much more so with people who won’t grant a common reality?

Conservatives tend to be exemplars of civility, given to upholding standards of discourse, always giving their opponents the benefit of the doubt. This is a point of pride, and should not simply be thrown away. But after a certain definite point, you simply become an enabler. To cooperate with such behavior is to concur with it. Instead of acquiescing in this form of deceit (or, as is occasionally still seen, acting shocked that it even occurs) we need to find alternatives.

Happy Trails!

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

How do you debate with such people? You don’t. You can’t. St. Augustine once said that there’s no use wasting your time arguing with someone who won’t grant a subject’s basic premises. How much more so with people who won’t grant a common reality?

“Conservatives tend to be exemplars of civility, given to upholding standards of discourse, always giving their opponents the benefit of the doubt. This is a point of pride, and should not simply be thrown away. But after a certain definite point, you simply become an enabler. To cooperate with such behavior is to concur with it. Instead of acquiescing in this form of deceit (or, as is occasionally still seen, acting shocked that it even occurs) we need to find alternatives. “

puke....

puke....

The truth is sickening, isn’t it?

… adds nothing meaningful or worthwhile to the conversation, unable to discern fact from innuendo, jabbers incoherently about subjects of which he knows next to nothing…

Bat. You and Pilgrim (to say nothing of Proof and his French tree posts) come up with faulty equivalences, crap arguments, and drivel… on the reg. Don’t fault me for it.

So… when ya gonna publish that thesis?

I’m not going to publish my thesis. Luckily, I am not studying econ, banking, or high tech con artistry. Thanks for the personal dig though. My dissertation will be on naturalized, social epistemology.

catmeow

St. Augustine once said

who cares what st augustine said. one has to argue for premises. they are assumptions that need to be proven. no one should just grant them.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

one has to argue for premises. they are assumptions that need to be proven. no one should just grant them.

Wrong again, Sparkie: to “prove a premise”, you need a previous premise.  Bottom line, premises are those things we accept without proof.  They are usually items of common knowledge, life experience, or common sense.
Sorry you don’t know that.

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

Luckily, I am not studying econ, banking, or high tech con artistry. Thanks for the personal dig though. My dissertation will be on naturalized, social epistemology.

Sparkie,

The question wasn’t intended as a dig at all, but as an honest expression of interest, as before.  However, on second thought, go f*ck yourself!

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

puke....

Cat,

That was probably the single most cogent and telling comment you’ve made since you showed up here.  It speaks volumes for your wisdom, wit, and flair for the language.  Don’t bother the rest of us trying to top it.  You couldn’t!

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

R108,

Thank you, once again, for the perspective.  It helps!

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

puke....

Action, reaction; Truth, Consequences!  Perfect.

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

r108
you keep getting wounded out here, but you apparently have a good medic.

Wrong again, Sparkie: to “prove a premise”, you need a previous premise.  Bottom line, premises are those things we accept without proof.  They are usually items of common knowledge, life experience, or common sense.
Sorry you don’t know that.

r108
premises are true or false. arguments constructed with premises that are not true can only be valid, and not sound. sound arguments use premises that can be found true in the world. form alone gets you validity (if A then B. A. therefore B). the relation of the contents of that form to the world gives you soundness (i.e. what does the variable A stand for? is that statement true?). hence, one must prove their premises true, or suffer the fate of plying valid, but unsound arguments (your forté). no wonder you are confused.

additional statements that support premises are not included in the argument as premises. if they were, any argument would contain an incredibly high number of statements. we don’t just use common sense to satisfy our premises. that’s what dumbasses do. we use science, empirical investigations, and so on… if we are checking facts in the world. in other words, merely citing a newspaper article and having it conform to ‘common sense’ doesn’t get one a sound argument. some would hold that there would have to be some appropriate causal mechanism between the argument and the state of affairs in the world. the process used for arriving at the premise would have to be reliable so-to-speak. common sense is not reliable. to appreciate that, pick up any 2000 year old text and dig in, pre-science. the ‘common sense’ on display is great:
hey, did you know that insects, mites, and some mice spontaneously generate? sure do. common sense told me that. screw checking the state of affairs in the world. its a premise! 

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Sparkie: As usual, you missed it: you gibbered about “proving premises”, and you were wrong.  Spewing more gibberish to try to cover your mistake only makes you look more uninformed.

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

As usual, Sparkie, you come to a gunfight with a rolled-up newspaper(probably the NYT).

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

r108
did you know that insects spontaneously generate? mice too.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

bat

The question wasn’t intended as a dig at all

bullshit. look at the context. tell me that’s not a dig.

Let’s see… adds nothing meaningful or worthwhile to the conversation, unable to discern fact from innuendo, jabbers incoherently about subjects of which he knows next to nothing…

Yep, must be Sparkie!

So… when ya gonna publish that thesis?

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

r108
did you know that insects spontaneously generate? mice too.

Thanks for sharing some of your premises with us...it reveals even more of your profound ignorance.

"Give the lefties a pile of money, and they’ll spend it buying votes.” - Rush Limbaugh on the “bailout”.

For me, Hope is why someone buys a lottery ticket or sends Ed McMahon their entry for the Publishers Clearinghouse drawing.
I wouldn’t even THINK of using hope to steer a cross country trip.
I ESPECIALLY wouldn’t think of guiding the greatest Nation on this planet....and by proxy, the entire planet.....using hope!

oops!
Somehow, I got the wrong room!

FANNIE MAE AND FREDDI MAC SWINDLERS ESCAPE JUSTICE

It is notoriously suspect that the Subprime Lending and Stock Trading Scam on the American People was shrewdly pulled off by crooked lobbies working in collusion with Bush, Reid, and Pelosi Government, who systematically allowed control to be taken away from the strict oversight by the historically trustworthy government buyers of “conforming” housing loans, Fannie Mae and Freddie Mac.

Criminal investigations leading to heavy fines, long prison sentences, and a full recovery of the assets stolen from the America People are imperative, to sustain honest government; rather that the proposed ruinous inflationary government bail-outs so desperately proposed by Podhoretz Neo-Con Bush.