Fannie wants 5 billion more.

Harry Guerrilla said:

Nearly all of the money loaned to banks was paid back with interest.
What more do you want?

Which people at Fannie and Freddie should be punished and how?

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We took on a ton of the bad loans that the banks were still holding. There is no attempt at getting any of this money back even though the law states they must take them back. (or at least a good portion of them)

Give 5 billion to each household that makes under $60K a year. Put money back into the economy.

AdamT said:

It wasn't F&F that allowed them to get the loans of their books -- it was collateralized debt obligations (CDOs). Fannie and Freddie were killed by the falling real estate market -- not by subprime mortgages that they backed. This is a myth perpetuated by right wing pundits.

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First off I'm not placing blame in any one area. There is plenty to go around. I'm sure you've seen I've stated many times that it's criminal the way we are allowing G.S. (and others off the hook).

That said, the article is full of caca. From your article.

Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.

The facts of the matter.

• 1999, 09. Fannie Mae eases credit requirements for subprime loans. This was done to help low-income consumers purchase homes, and it further encouraged weak borrowers to obtain home loans.

I can provide plenty of sites to verify this.

Going further down the timeline.

• 2002. Fannie Mae and Freddie Mac start purchasing large amounts of subprime mortgages.

Economics of Crisis: The Great Contraction: Timeline of Events

From your article again....

Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion.

Yes, the amount "originated". A totally worthless thing to note. It is the part that should give us an out but isn't though. They were not the originators of these loans BUT as I noted originally and the link I provided shows, they were indeed buying up these "bad" loans.

Banks that originated fraudulent loans were supposed to be on the hook for these loans. We are not forcing them to. Why not?

Give this a read if you want to understand how the meltdown happened:
Understanding the Securitization of Subprime Mortgage Credit --Federal Reserve Bank of New York

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The Fed bank of NY was Timmy Geithners baby and they aren't about to accept any of the blame.

Incredibly, republicans are presently trying to kill the agency tasked with correcting many of these errors.

Click to expand...

Explain to us how this is happening.

1Perry said:

First off I'm not placing blame in any one area. There is plenty to go around. I'm sure you've seen I've stated many times that it's criminal the way we are allowing G.S. (and others off the hook).

That said, the article is full of caca. From your article.

Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.

The facts of the matter.

• 1999, 09. Fannie Mae eases credit requirements for subprime loans. This was done to help low-income consumers purchase homes, and it further encouraged weak borrowers to obtain home loans.

I can provide plenty of sites to verify this.

Going further down the timeline.

• 2002. Fannie Mae and Freddie Mac start purchasing large amounts of subprime mortgages.

Economics of Crisis: The Great Contraction: Timeline of Events

From your article again....

Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion.

Yes, the amount "originated". A totally worthless thing to note. It is the part that should give us an out but isn't though. They were not the originators of these loans BUT as I noted originally and the link I provided shows, they were indeed buying up these "bad" loans.

Banks that originated fraudulent loans were supposed to be on the hook for these loans. We are not forcing them to. Why not?



The Fed bank of NY was Timmy Geithners baby and they aren't about to accept any of the blame.



Explain to us how this is happening.

Click to expand...

That's true, F&F did purchase securities backed by subprime and Alt-A loans going back some time. But the GSE's had much higher standards than the private banks they were competing with. As underwriting standards eroded leading into the real estate bust, F&F's share of the subprime and Alt-A mortgage was essentially cut in half. Why? Because they wouldn't purchase the absolute garbage that private banks were buying up.

I'm not saying that they didn't contribute to the problem, but I think that a lot of people assign them way more blame than they deserve.

AdamT said:

That's true, F&F did purchase securities backed by subprime and Alt-A loans going back some time. But the GSE's had much higher standards than the private banks they were competing with. As underwriting standards eroded leading into the real estate bust, F&F's share of the subprime and Alt-A mortgage was essentially cut in half. Why? Because they wouldn't purchase the absolute garbage that private banks were buying up.

I'm not saying that they didn't contribute to the problem, but I think that a lot of people assign them way more blame than they deserve.

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That is flat false. In 2007 F&F and Fed Home Loan banks underwrote 90% of the home mortgage market, at a time when almost no one else was underwriting. They owned almost all the paper written at that time. F&F and the Federal Home Loan banks underwrote an estimated 5.5 trillion in home mortgages from 2004 to present.

Fannie, Freddie and FHLB Now Provide 90% of Home Loans
Regional Banks Will Pump Another $100 Billion into Mortgages
Fannie, Freddie and the Fed Loan $400 Billion to Financial Markets

Take the links for what they are worth and do your own research into just how deep the government guarantees were and how much govt intervention went into the home market.

AdamT said:

That's true, F&F did purchase securities backed by subprime and Alt-A loans going back some time. But the GSE's had much higher standards than the private banks they were competing with. As underwriting standards eroded leading into the real estate bust, F&F's share of the subprime and Alt-A mortgage was essentially cut in half. Why? Because they wouldn't purchase the absolute garbage that private banks were buying up.

I'm not saying that they didn't contribute to the problem, but I think that a lot of people assign them way more blame than they deserve.

Click to expand...

Is it really a worthwhile arguement to say that a corrupt entity might not be as bad as some think?

Fannie Mae's potentially misleading disclosure comes at a crucial time for the company. Fannie Mae was severely penalized last year for overstating earnings and for a lack of oversight. As part of its punishment, the amount of home loans that Fannie Mae can make was limited.

But now influential members of Congress, including Senator Charles Schumer, want Fannie Mae's watchdog, the Office of Federal Housing Enterprise Oversight (OFHEO), to temporarily lift the portfolio limits on the company and its rival Freddie Mac. Legislators want both lenders to buy more subprime mortgages to help stave off foreclosures.

Note, this is before the crash. They were fudging the books and were in really bad shape. Shumer then argued that they should take on even more bad loans. So yes, this was the dog that was taught to bite, biting someone but that dog aint going to change.

Fannie Mae bad loans: Worse than reported? - Nov. 15, 2007

1Perry said:

Is it really a worthwhile arguement to say that a corrupt entity might not be as bad as some think?

Fannie Mae's potentially misleading disclosure comes at a crucial time for the company. Fannie Mae was severely penalized last year for overstating earnings and for a lack of oversight. As part of its punishment, the amount of home loans that Fannie Mae can make was limited.

But now influential members of Congress, including Senator Charles Schumer, want Fannie Mae's watchdog, the Office of Federal Housing Enterprise Oversight (OFHEO), to temporarily lift the portfolio limits on the company and its rival Freddie Mac. Legislators want both lenders to buy more subprime mortgages to help stave off foreclosures.

Note, this is before the crash. They were fudging the books and were in really bad shape. Shumer then argued that they should take on even more bad loans. So yes, this was the dog that was taught to bite, biting someone but that dog aint going to change.

Fannie Mae bad loans: Worse than reported? - Nov. 15, 2007

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Yes, I think it's well worth mentioning that Fannie and Freddie backed only about a quarter of the subprime and Alt-A mortgages, while unregulated private banks held 75% of the garbage. It's also worth mentioning that the quarter that F&F held are performing much better than the private bank loans due to F&F's stricter underwriting standards. I think it's worth remembering that F&F's subprime and Alt-A losses were not particularly dramatic, but rather, that they tanked because of the dramatic losses from the private banks that rocked the whole real estate market. Fannie and Freddie were no angels, but they weren't responsible for the crash, either.

AdamT said:

Yes, I think it's well worth mentioning that Fannie and Freddie backed only about a quarter of the subprime and Alt-A mortgages, while unregulated private banks held 75% of the garbage. It's also worth mentioning that the quarter that F&F held are performing much better than the private bank loans due to F&F's stricter underwriting standards. I think it's worth remembering that F&F's subprime and Alt-A losses were not particularly dramatic, but rather, that they tanked because of the dramatic losses from the private banks that rocked the whole real estate market. Fannie and Freddie were no angels, but they weren't responsible for the crash, either.

Click to expand...

Yes, it's no big deal because they were only a little bit dishonest.

OFHEO Wants Fannie Mae Bonus Money Returned

Barney Frank Says Multi-Million Dollar Bonuses for Government-Owned Freddie, Fannie

With attitudes like this there is no reason to ask why America is going broke and, unless the public gets educated quickly, will eventually collapse.

Grant said:

Yes, it's no big deal because they were only a little bit dishonest.

OFHEO Wants Fannie Mae Bonus Money Returned

Barney Frank Says Multi-Million Dollar Bonuses for Government-Owned Freddie, Fannie

With attitudes like this there is no reason to ask why America is going broke and, unless the public gets educated quickly, will eventually collapse.

Click to expand...

No one said that it was okay. But the fact that they were partly to blame is no reason to lose sight of the big picture.

Yes, I think it's well worth mentioning that Fannie and Freddie backed only about a quarter of the subprime and Alt-A mortgages, while unregulated private banks held 75% of the garbage. It's also worth mentioning that the quarter that F&F held are performing much better than the private bank loans due to F&F's stricter underwriting standards. I think it's worth remembering that F&F's subprime and Alt-A losses were not particularly dramatic, but rather, that they tanked because of the dramatic losses from the private banks that rocked the whole real estate market. Fannie and Freddie were no angels, but they weren't responsible for the crash, either.

Click to expand...

F&F were a lot deeper into the market by every indicator and story I see, unless its from a left outlet. Then, the wording becomes very precise using things like "originated" and "held" or it breaks it into categories like you are doing rather than considering the market as a whole.

Fannie and Freddie underwrote mortgages then sold them with an implied guarantee due to the fact they were GSEs and thus got those mortgages a higher rating than they otherwise warranted and better insurance guarantees than they warranted as well. It was part and parcel of why the mortgage market dipped so dramatically. They were artificially inflating mortgage values and the ease of lending also inflated home costs. If you have information to the contrary please post it, Im interested in seeing what research you have.

OpportunityCost said:

F&F were a lot deeper into the market by every indicator and story I see, unless its from a left outlet.

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So you are saying that because Fox News and CO have for the last many years pushed the ideological idea that the whole crisis was F&F fault, then somehow that was factual accurate?

The facts are very clear. F&F have very specific rules and regulations on which they can buy a mortgage from the banks. 80% of the sub-prime mortgage market did not meet said rules so could not be pushed onto F&F. That is why companies like Countrywide went belly up. Had the mortgages met the lending standards enshrined in F&F, then the banks would have been able to pass off the loans to F&F, making their loan giving risk free.

Now you might not like the idea of F&F, but spreading lies about the companies is just immoral.

Then, the wording becomes very precise using things like "originated" and "held" or it breaks it into categories like you are doing rather than considering the market as a whole.

Click to expand...

So you are into the same word games as Fox News and the conservative media ...

Fannie and Freddie underwrote mortgages then sold them with an implied guarantee due to the fact they were GSEs and thus got those mortgages a higher rating than they otherwise warranted and better insurance guarantees than they warranted as well. It was part and parcel of why the mortgage market dipped so dramatically.

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LOL where do you get this stuff from. F&F sole job is to underwrite and buy loans so to inject capital back into the banking system. Those loans were given ratings by ratings agencies... you know S&P, Moody's... who earn their profits from the very same companies that were pushing the loans onto Fannie and Freddie and the rest of the world. As for the mortgage market dipping so dramatically... yea house prices started to fall, and the private sub-prime lending market that had pushed bad loans on people in an unregulated market, was built on the fact that house prices always went up. Again, F&F were not total angels, but they also were not a large part or even a part of the blame for the mortgage market dipping as it did... it was the unregulated private system run by the private banks and their ratings agencies.

They were artificially inflating mortgage values and the ease of lending also inflated home costs. If you have information to the contrary please post it, Im interested in seeing what research you have.

Click to expand...

Okay.. how can 20% of the market suddenly artificially inflate mortgage values? Why do you ignore the elephant in the room? The private run banking system... THEY were the ones that was pushing bad loans on unsuspecting people who then went out and bought homes pressing up prices and mortgage values. F&F did very little wrong (other than morally wrong bonuses.. but then again so are the bankers) compared to the private banking sector... and yet you and your conservative friends only blame F&F....

Chances are that the only reason you are in your home or many other conservatives.. is because Fannie and Freddie bought your mortgage..

PeteEU said:

So you are saying that because Fox News and CO have for the last many years pushed the ideological idea that the whole crisis was F&F fault, then somehow that was factual accurate?

The facts are very clear. F&F have very specific rules and regulations on which they can buy a mortgage from the banks. 80% of the sub-prime mortgage market did not meet said rules so could not be pushed onto F&F. That is why companies like Countrywide went belly up. Had the mortgages met the lending standards enshrined in F&F, then the banks would have been able to pass off the loans to F&F, making their loan giving risk free.

Now you might not like the idea of F&F, but spreading lies about the companies is just immoral.



So you are into the same word games as Fox News and the conservative media ...



LOL where do you get this stuff from. F&F sole job is to underwrite and buy loans so to inject capital back into the banking system. Those loans were given ratings by ratings agencies... you know S&P, Moody's... who earn their profits from the very same companies that were pushing the loans onto Fannie and Freddie and the rest of the world. As for the mortgage market dipping so dramatically... yea house prices started to fall, and the private sub-prime lending market that had pushed bad loans on people in an unregulated market, was built on the fact that house prices always went up. Again, F&F were not total angels, but they also were not a large part or even a part of the blame for the mortgage market dipping as it did... it was the unregulated private system run by the private banks and their ratings agencies.



Okay.. how can 20% of the market suddenly artificially inflate mortgage values? Why do you ignore the elephant in the room? The private run banking system... THEY were the ones that was pushing bad loans on unsuspecting people who then went out and bought homes pressing up prices and mortgage values. F&F did very little wrong (other than morally wrong bonuses.. but then again so are the bankers) compared to the private banking sector... and yet you and your conservative friends only blame F&F....

Chances are that the only reason you are in your home or many other conservatives.. is because Fannie and Freddie bought your mortgage..

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Let's try something different for a change. You are both partially correct. The housing crisis had many bad payers. F&F were two of them, there are many more. One different is that Countrywide had to be bought out, I think by BAC which is taking the losses. F&F are essentially wards of the state and will drain more of our finances for a few more years.

washunut said:

Let's try something different for a change. You are both partially correct. The housing crisis had many bad payers. F&F were two of them, there are many more. One different is that Countrywide had to be bought out, I think by BAC which is taking the losses. F&F are essentially wards of the state and will drain more of our finances for a few more years.

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... and people continue to protect the private sector.

Countrywide "had to be bought" out is about the biggest bull**** I have ever heard. Countrywide was forced on Bank of America as part of saving the US banking industry from utter and total destruction. Countrywide also committed so many crimes before being "bought up", that now Bank of America is at risk... the rumour for months has been that Bank of America is in fact insolvent due to the crap from Countrywide (on top of Bank of America's own crap). Countrywide was not the only sinner in the private mortgage market, but it was certainly one of the biggest. CITI was another, but it was protected big time by the US government.. it still has tons of bad loans but they were ring fenced.. the list goes on.

No matter how much you want to spin it, F&F was a very small part of the problem... a very very very small part. They are not without blame, but the way you and other conservatives say it, then it is F&F that have ALL the blame. It is dishonest and factually wrong but it fits in the right wings decade long attack on F&F, despite most on the right only being able to own a house because of F&F...

I do not know anyone here saying it was all F&F's fault but for some reason the only defense is that FOX says it was all their fault and that's wrong. Really, if that's the best defense you can come up with you are on pretty thin ice.

Getting caught cooking the books wasn't just a one time thing. Fannie Mae has made Enron look like an amatuer pick pocket. I've railed on Goldman Sachs also but for some reason we get these excuses that F&F weren't the only ones at fault.

The government (correctly) went after Enron and brought them down. For some reason we are on the hook for who knows how many billions and nobody at Fannie or Goldman Sachs has been charged with anything.

Hell, they went after Martha Stewart with more zeal.

PeteEU said:

... and people continue to protect the private sector.

Countrywide "had to be bought" out is about the biggest bull**** I have ever heard. Countrywide was forced on Bank of America as part of saving the US banking industry from utter and total destruction. Countrywide also committed so many crimes before being "bought up", that now Bank of America is at risk... the rumour for months has been that Bank of America is in fact insolvent due to the crap from Countrywide (on top of Bank of America's own crap). Countrywide was not the only sinner in the private mortgage market, but it was certainly one of the biggest. CITI was another, but it was protected big time by the US government.. it still has tons of bad loans but they were ring fenced.. the list goes on.

No matter how much you want to spin it, F&F was a very small part of the problem... a very very very small part. They are not without blame, but the way you and other conservatives say it, then it is F&F that have ALL the blame. It is dishonest and factually wrong but it fits in the right wings decade long attack on F&F, despite most on the right only being able to own a house because of F&F...

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I get tired of simple minded people on this site. It is especially interesting because during my life in corporate America I was joked upon because I was the house liberal. Now on this site I am called a conservative because I do not agree with your views.

I was going to say that countrywide went bankrupt because that is what essentailly happened but did not want to get corrected by some wordsmith like you. I know that it will costs BAC tens of billions of dollars, and might even take down BAC. But to ignore F&F and call them bit players, when they have already cost the American public in excess of $100 billion and that number will go much higher is to be so blind to the facts it is sad.

Not sure if you really come from california or Europe. Either of which is in much more dire straights than the Federal government.

1Perry said:

I do not know anyone here saying it was all F&F's fault but for some reason the only defense is that FOX says it was all their fault and that's wrong. Really, if that's the best defense you can come up with you are on pretty thin ice.

Getting caught cooking the books wasn't just a one time thing. Fannie Mae has made Enron look like an amatuer pick pocket. I've railed on Goldman Sachs also but for some reason we get these excuses that F&F weren't the only ones at fault.

The government (correctly) went after Enron and brought them down. For some reason we are on the hook for who knows how many billions and nobody at Fannie or Goldman Sachs has been charged with anything.

Hell, they went after Martha Stewart with more zeal.

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Perhaps the defenders of F&F are in bed with Barney Frank, pun intended.

The facts are very clear. F&F have very specific rules and regulations on which they can buy a mortgage from the banks. 80% of the sub-prime mortgage market did not meet said rules so could not be pushed onto F&F. That is why companies like Countrywide went belly up. Had the mortgages met the lending standards enshrined in F&F, then the banks would have been able to pass off the loans to F&F, making their loan giving risk free.

Click to expand...

And they needed a bailout why? They underwrote a lot of bad loans. They underwrote almost all of the market in 2007. Because they backed the mortgages they recieved much higher ratings then they deserved. Bad monetary policy is a big part of what is going on right now.

No loan is risk free. Totally stupid statement. Passing it through the government doesnt make it so.

OpportunityCost said:

And they needed a bailout why? They underwrote a lot of bad loans. They underwrote almost all of the market in 2007. Because they backed the mortgages they recieved much higher ratings then they deserved. Bad monetary policy is a big part of what is going on right now.

No loan is risk free. Totally stupid statement. Passing it through the government doesnt make it so.

Click to expand...

It is impossible for an underwriter to ensure that the lenders they are working with are in fact upholding the lending standards without the gift of foresight (which we have hindsight). This in my opinion was a total failure on the part of the SEC and in some aspects the Treasury Secretary. The blame cannot be passed to F&F.

AdamT said:

No one said that it was okay. But the fact that they were partly to blame is no reason to lose sight of the big picture.

Click to expand...

The big picture is that they are dishonest and unaffordable. It is a racket.

The USA has a huge debt problem and the idea that these crooks can come back to the taxpayer for more money, and actually have those who support this insanity, tells me that the decline has set in and recovery is unlikely. Only when adults are put in charge can the the United States possibly recover.

OpportunityCost said:

And they needed a bailout why? They underwrote a lot of bad loans. They underwrote almost all of the market in 2007. Because they backed the mortgages they recieved much higher ratings then they deserved. Bad monetary policy is a big part of what is going on right now.

No loan is risk free. Totally stupid statement. Passing it through the government doesnt make it so.

Click to expand...

Actually, F&F underwrote only about 25% of the subprime and Alt-A loans by the end of the bubble, while non-GSE lenders underwrote the other 75%. And the 25% that F&F underwrote were of higher quality.

It's important to remember, btw, that subprime and Alt-A loans aren't inherently bad. They can be reasonable investments if the underwriting is done correctly and the derivatives are properly rated.

Goldenboy219 said:

It is impossible for an underwriter to ensure that the lenders they are working with are in fact upholding the lending standards without the gift of foresight (which we have hindsight). This in my opinion was a total failure on the part of the SEC and in some aspects the Treasury Secretary. The blame cannot be passed to F&F.

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F&F have both been hit over and over for fudging the books. Maybe you are right and they are simply eternally clueless. That's an arguement for ending them though.

AdamT said:

Actually, F&F underwrote only about 25% of the subprime and Alt-A loans by the end of the bubble, while non-GSE lenders underwrote the other 75%. And the 25% that F&F underwrote were of higher quality.

It's important to remember, btw, that subprime and Alt-A loans aren't inherently bad. They can be reasonable investments if the underwriting is done correctly and the derivatives are properly rated.

Click to expand...

But they weren't. That's the bad part. Yes, there are people who can benefit from sub prime loans. Too bad that so many screwed that up for them.

AdamT said:

Actually, F&F underwrote only about 25% of the subprime and Alt-A loans by the end of the bubble, while non-GSE lenders underwrote the other 75%. And the 25% that F&F underwrote were of higher quality.

It's important to remember, btw, that subprime and Alt-A loans aren't inherently bad. They can be reasonable investments if the underwriting is done correctly and the derivatives are properly rated.

Click to expand...

Can I see any sort of source from you on this info? It doesnt seem to be accurate with what Im reading from several sources.

OpportunityCost said:

Can I see any sort of source from you on this info? It doesnt seem to be accurate with what Im reading from several sources.

Click to expand...

Yes, I would like to see it also.

Goldenboy219 said:

It is impossible for an underwriter to ensure that the lenders they are working with are in fact upholding the lending standards without the gift of foresight (which we have hindsight). This in my opinion was a total failure on the part of the SEC and in some aspects the Treasury Secretary. The blame cannot be passed to F&F.

Click to expand...

Thats why you dont trust the dang government to do it. You let government oversee the people that take the risk in doing so and if they fail, tough cookies. They then declare bankruptcy and the market learns that its a bad investment and doesnt do it again. The problem is government intervention and socialization of the risk both through bailouts and underwriting of the home mortgage market.

Thats kind of my point, if the government cant be blamed in forseeing something in the realm of business, they should only oversee that business as required by our system of government and let the market work with its ups and downs. The downs are gonna suck but thats to remind business what risk means. They live and learn or they dont live as an ongoing business.

Government is supposed to be the ref, not one of the teams on the field.