Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Road Walker who wrote (424449)	10/10/2008 9:40:49 AM
From: tejek	Read Replies (1) \| Respond to of 1578758

Hell! The Dow is down over a thousand points!

To: Road Walker who wrote (424449)	10/10/2008 9:42:26 AM
From: tejek	Read Replies (1) \| Respond to of 1578758

The banks are bouncing! Will they hold?

To: Road Walker who wrote (424449)	10/10/2008 1:22:23 PM
From: Brumar89	Read Replies (1) \| Respond to of 1578758

I'm not denying that government didn't have a hand in lowering the quality of loans. Some progress. But the real toxic stuff happened starting in 2005; before that FME's portfolio was pretty solid. Oh gee, you believe Barney Frank? Please. What happened after 2005 under Mudd was a continuation of what started happening back in the '90's under HUD secretary Cuomo as shown by the Village Voice article I posted earlier. Remember that Cuomo required 50% of the mortgages the GSE's bought be for low and moderate income families. Remember that Fannie Mae massively misreported its income from 2001 - 2004? Report Slams Fannie Mae U.S. Regulators Find Accounting Failures At Housing Financier By David S. Hilzenrath Washington Post Staff Writer Thursday, September 23, 2004; Page A01 Fannie Mae, the giant mortgage finance company, has used improper accounting methods that raise serious questions about the quality of its management and the validity of its financial reports, government regulators reported yesterday. ..... The findings echo those made last year about Freddie Mac, the other large government-chartered mortgage finance company. ..... Federal Reserve Chairman Alan Greenspan and Treasury Secretary John W. Snow have called for tougher oversight of Fannie and Freddie because they worry that, given the huge scale of their operations, serious financial troubles at the companies could put nation's financial system at risk. .... The report added fresh fuel to a long-running debate over the way the government regulates Fannie and Freddie. The Bush administration and some members of Congress have been pushing for legislation to tighten regulation of Fannie Mae, but those efforts stalled this year amid policy disagreements and resistance from the companies. "Investors have been fooled, homebuyers have been cheated, and taxpayers are at risk," said Rep. Richard H. Baker (R-La.), chairman of the House subcommittee on capital markets, calling on Congress to follow through on plans to establish a stronger regulator for Fannie Mae. ..... washingtonpost.com We know how the call for stronger regulations was greeted in Congress: youtube.com Notice that Frank was a vocal guy who opposed greater regulation of the GSE's because they had no financial problems, which claim you're now echoing. Following the big 2004 accounting restatement, the regulatory agency overseeing FMN said: OFHEO CLASSIFIES FANNIE MAE AS SIGNIFICANTLY UNDERCAPITALIZED FOR THIRD QUARTER 2004 WASHINGTON, D.C. — Armando Falcon, Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO), safety and soundness regulator for Fannie Mae and Freddie Mac (the Enterprises), has classified Fannie Mae as significantly undercapitalized under OFHEO’s capital standards as of September 30, 2004.1 ... ofheo.gov Now was FMN really "pretty solid" prior to 2005? Yes they were pressured by Congress and the WH, but as or more important they were pressured by share holders and customers to compete with the investment banks (read "masters of the universe") who were jumping into the housing bubble buying and selling really crappy loans and making tons of money doing it. Sure lots of people were jumping into the housing bubble. There were (and still may be) cable shows about house flipping. But this was allowed to happen cause the mortgage market had been degraded. And this is what FMN/FRE accomplished under government pressure. Freddy/Fannie didn't cause this crisis, but they did exaserbate it. Politicians in Washington CAUSED the crisis. They used FMN/FRE as a tool to achieve political ends. They lowered their standards in response to the marketplace... The first lowering of standards was in response to government mandates. Thats a matter of record. Go back to the Village Voice article and read it again. You'll see "required", "mandated", you'll see specific %'s of loans to go to specific classes of borrowers. villagevoice.com