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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (423828)	10/8/2008 5:32:33 PM
From: Brumar89	Read Replies (2) \| Respond to of 1577108

"In 2000, CUOMO required a quantum leap in the number of affordable, low-to-moderate-income loans that the two mortgage banks—known collectively as Government Sponsored Enterprises—would have to buy. ..... Cuomo's predecessor, Henry Cisneros, did that for the first time in December 1995, taking a cautious approach and moving the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. CUOMO raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the "very-low-income." Part of the pitch was racial, with CUOMO contending that Fannie and Freddie weren't granting mortgages to minorities at the same rate as the private market. William Apgar, Cuomo's top aide, told The Washington Post: "We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible." .... Franklin Raines, the Fannie chairman and first black CEO of a Fortune 500 company, warned that Cuomo's rules were moving Fannie into risky territory: "We have not been a major presence in the subprime market," he said, "but you can bet that under these goals, we will be." Fannie's chief financial officer, Timothy Howard, said that "making loans to people with less-than-perfect credit" is "something we should do." CUOMO wasn't shy about embracing subprime mortgages as a possible consequence of his goals. "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas," his report on the new goals noted. VILLAGEVOICE.com/content/printVersion/541234'>http://www.VILLAGEVOICE.com/content/printVersion/541234 Cuomo was HUD secretary. Get it? Countrywide did get into securitizing subprime loans, but you're wrong to claim Fannie Mae wasn't pushed by the government to do so. I know this conflicts with your bias that government is always all wise and beneficial, but how do you explain the above away? ------------------------------------------------------- There sure as hell are insurance regulations. CDS were huge institutions writing insurance by another name to get around the regulations. Insurance companies that don't have adequate reserves get shut down before they do more damage. There aren't any insurance regulations on credit default swaps to get around. No insurance company has reserves equaling the face value of insurance they have out. Any insurance company can therefore be wiped out by a big enough catastrophe. Thats why insurance companies seek to spread their risk geographically and many other ways. Thats why theres such a thing as reinsurance. Maybe these should be regulated but they aren't mainly because they're too new. Also, they don't create the credit problem, they spread it to other parties. The underlying problem is still subprime mortgages.